Tianlu Technology: The main business of light guide plate is stable, and TAC film is expected to open up a new growth space

On the evening of April 17, Tianlu Technology (301045) released its 2023 annual report. Affected by objective unfavorable factors such as the downward adjustment of the panel industry cycle and the sluggish performance of the terminal consumer electronics market, the upstream light guide plate industry will be at a trough in the industry in 2023. During the reporting period, the company achieved operating income of 596 million yuan and net profit attributable to the parent company of 8.8372 million yuan. In the first and second half of 2023, the company's gross profit margin will be 17.05% and 17.91% respectively, achieving a bottoming rebound and keeping pace with the industry trend.

During the reporting period, the company raised 117 million yuan from Meitan, one of the actual controllers, and at the beginning of 2024, the issuance has been successfully completed, and Meitan's shareholding ratio has increased to 25.71%, becoming the company's largest shareholder. This refinancing not only strengthens the company's financial strength, but also demonstrates Metan's strong confidence in the company's future development.

Based on the main business of light guide plates, we continue to deepen our R&D strength

In 2023, in addition to cultivating internal skills and hardening its own scientific and technological attributes, the company has achieved good results in market development and product application.

In terms of product market application, Tianlu Technology's light guide plates are widely used in notebook displays, desktop monitors, LCD TVs and high-end lamps and lanterns. Its products have been adopted by many well-known brands such as Lenovo, HP, Samsung, Dell, etc., and also serve Microsoft, LG, Dell and other companies in the field of desktop displays. According to the 2023 annual report, benefiting from the company's production capacity optimization strategy, Tianlu Technology's light guide plate business revenue of notebook computers and LCD TVs increased by about 26 million yuan and 14 million yuan respectively compared with 2022.

At the same time, Tianlu Technology's prism-type network technology products, which were successfully mass-produced in 2022, will achieve a revenue of about 20 million yuan in 2023, and the current monthly sales will reach 3 million yuan. The mold obtained by the ultra-precision machine tool processing and recasting process enables the light guide plate product of prism-type dot technology to accurately control the direction of light output, and achieve a 5%-12% increase in the brightness of the display panel without increasing energy consumption. According to the annual report, the gross profit margin of this product in 2023 will reach 40%, which is higher than the company's overall gross profit margin.

Since its establishment, Tianlu Technology has been committed to becoming a platform-based enterprise of core precision components of display panels, focusing on the research and development, production and sales of light guide plates. The company adopts R&D methods based on optical theory, mathematical calculation, modeling simulation and statistical analysis, focusing on technological innovation and path optimization. In addition, Tianlu Technology has also set up a precision mold processing department and an optical analysis laboratory, which further enhances its technology research and development and product testing capabilities.

It should be pointed out that the light guide plate, as the core material of the display backlight module, plays a key role in the brightness and uniformity of the display panel. Tianlu Technology's light guide plate products have a wide range of sizes, ranging from 8 inches to 86 inches, and thicknesses ranging from 0.3 mm to 3 mm, which can meet the market needs of various high customization, high precision and strict technical requirements. Based on this, the company continues to promote the innovation of light guide plate products, achieves the goal of thinner products, higher brightness and wider application fields, and effectively supports the development trend of ultra-thin, narrow bezel, high resolution and low energy consumption of display devices.

Entered the TAC membrane business and worked together to promote the independent and controllable industrial chain

In addition to consolidating its advantages in the field of light guide plates, the company actively opened up the second growth curve and invested in the construction of TAC film production line for polarizers. It is understood that polarizer is an important part of the display panel, and TAC film, as one of the main materials for the manufacture of polarizers, accounts for about 50% of the cost of the entire film material, with a global market space of about 1.2 billion square meters per year.

Although the localization ratio of polarizers is increasing year by year, the TAC film required for polarizers used in TFT-type display technology is still mainly dependent on imports from Japan and South Korea, which greatly limits the autonomy and cost-effectiveness of the domestic industrial chain.

In order to accelerate the degree of autonomy of core materials and break the foreign monopoly, in March 2023, Tianlu Technology invested in the establishment of a wholly-owned subsidiary, Anhui Jiguang New Materials Co., Ltd. (hereinafter referred to as "Anhui Jiguang"), in Chuzhou, Anhui Province, which is mainly engaged in the localization of TAC film R&D and production. The annual report shows that the company's R&D investment in 2023 will be 29.3253 million yuan, a slight increase over 2022, and part of the R&D budget will be invested in the new film business, which will affect the profit of the year to a certain extent.

At the beginning of its establishment, Anhui Jiguang planned to carry out strategic cooperation with relevant industrial chain leading enterprises in the industry, aiming to give full play to the advantages of their respective fields and promote the development of the whole supply chain system. Specifically, Anhui Jiguang has introduced a number of industry-related enterprises and investment institutions, including Tianjin Xianzhi Chain Investment Center, Shenzhen Sanlipu Optoelectronics Technology Co., Ltd., and Beijing Electronic Control Industry Investment Co., Ltd. The participation of these partners not only increases the capital of the project, but also forms a strong support chain from the upstream to the downstream of the industrial chain.

It is worth noting that the important partners of Tianjin Xianzhi Chain Investment Center include BOE Innovation Investment Co., Ltd. and Beijing Electronic Control Industrial Investment, of which BOE Innovation Investment is a wholly-owned subsidiary of BOE, and BOE is also a participating shareholder of Beijing Electronic Industrial Investment.

From a strategic point of view, BOE, as a leading enterprise in the panel industry, its in-depth participation not only provides dual support for technology and market, but also brings the joint effect of capital, so that the entire project can be more comprehensively guaranteed in terms of resource integration, market expansion and technological progress. The participation of Beijing Electronic Control Industry and Investment has further strengthened the integration of the industrial chain, especially in the resource optimization and strategic layout in the field of electronic information.

After experiencing a cyclical deep adjustment, the voice of Chinese enterprises in the panel industry has been significantly enhanced, the cyclical attribute of the panel has gradually weakened, and the growth attribute has begun to appear. According to data from Qunzhi Consulting, since the beginning of 2024, the prices of TV and monitor panels have continued to rise, while the prices of laptop panels have stabilized.

In this context, the company continues to promote the innovation of technology and technology and the improvement of lean management capabilities through industry-university-research cooperation, actively seize the strategic opportunity of the transfer of the global display panel industry chain and the domestic substitution of core precision parts, strengthen the alliance and collaboration of upstream and downstream through acquisition, restructuring and cooperation, and is committed to building a high-end film material industry chain to further consolidate its market position as a platform enterprise for core precision parts of display panels.