Turning losses into profits, OFILM has come back to life?

Turning losses into profits, OFILM has come back to life?

Turning losses into profits, OFILM has come back to life?

Author: Taylor, Editor: Xiaoichi Mei

"There is no winter that is insurmountable, and there is not a spring that will not come. Everything will pass, and everything will come. ”

The spring that Cai Rongjun has been looking forward to seems to have come.

On the evening of April 19, OFILM released its 2023 annual report, achieving operating income of 16.862 billion yuan, a year-on-year increase of 13.73%, and net profit attributable to the parent company of 76.905 million yuan, turning losses into profits year-on-year.

After being kicked out of the "fruit chain" by Apple, who is OFILM's next big customer, it has been reported that OFILM has obtained most of the orders for Huawei Mate 60 series rear cameras, front cameras and fingerprint modules

Regarding the supply of mobile phones to Huawei, due to the confidentiality agreement, Cai Rongjun did not respond positively, but said: "Stubborn alive." "It seems that the clouds are light and the wind is light, but in fact, there is a feeling that the light boat has passed over the ten thousand mountains.

Judging from the company's increase in production lines, the recruitment of a large number of workers in the factory, and the research of professional institutions, OFILM's main supplier to Huawei is basically solid.

Like Huawei, Cai Rongjun is also looking forward to a U-shaped reversal.

On April 23, 2023, Cai Rongjun pointed out that after the lowest trough in 2022, the company has bottomed out and stabilized in 2023 and entered a new stage of development.

Bound to Huawei, OFILM's "resurrection" also confirms its technical strength. Moreover, due to the suppression of technology in the United States, Huawei's mobile phones adopt a domestic supply chain, and the related performance improvement will also have strong sustainability.

In terms of lenses, O-film is deeply involved in Huawei's 6P-7P high-end lens project, and the next-generation 7P products have been sampled to Huawei. Therefore, next year's new products, OFILM modules are likely to be the main supply.

Moreover, because consumer electronics is in a period of cyclical adjustment, parts suppliers have been greatly reshuffled, and after the withdrawal of enterprises with weak competitiveness, the position of the head enterprises will be more stable.

In addition, the downstream demand is hot, the short-term supply of modules such as lenses is insufficient, and suppliers have also increased prices. An analysis report pointed out that at present, the price of related products of the under-screen optical fingerprint module supplier of the Huawei Mate 60 series has been increased by 15% to 20%, and the price of some models has even increased by 30%.

Volume and price twins, and the probability of reversal of OFILM has increased greatly. The capital market has taken the lead in reacting, after the company's stock price rose for six consecutive days, and the market value soared by 15 billion.

After being kicked out by Apple, OFILM's performance plummeted.

In addition, since 2020, Huawei, the company's major customer, has fallen into a trough due to the suppression of the United States. In 2021, Huawei's shipments fell out of the top five in the world. Both major customers have suffered major changes, and Cai Rongjun ushered in the darkest moment of his life.

In the three years from 2020 to 2022, OFILM lost more than 9.7 billion yuan, plus the loss in the first half of 2023, with a total blood loss of more than 10 billion.

The secondary market was afraid of it, and OFILM's share price fell nearly 80% from its peak, and its share price rose more than 10 times in the glorious period of 2012-2013. From 2012 to 2017, at its peak, the stock price rose by more than 21 times, and the market value exceeded 70 billion yuan.

With the rise and fall of the stock price, the wealth of the Cai Rongjun family has also experienced a rollercoaster of ups and downs. Since 2014, after the company's performance has entered an upward trend, the Cai family's wealth has swelled from 5 billion yuan to 17.2 billion yuan in 2018.

But since then, its wealth has declined year after year, and its ranking has fallen outside the top 400, and it will not even be among the top 500 in 2022-2023.

With ups and downs, ups and downs, OFILM is probably one of the companies with the most hardships in the A-share market.

The consumer electronics industry is updated and iterated very fast, and each generation of products will have new technologies and experiences, which are fatal for companies that fail to bet on the stroke and fail to lay out in advance.

In addition, over-reliance on a single large customer, especially enterprises in Apple's industrial chain, such as Goertek and OFILM, are very hurt, and today's Cai Rongjun should be deeply aware of this.

It can be said that "survival" is a topic that industry participants must face, and it is also the main theme of Cai Rongjun's shopping mall.

Cai Rongjun graduated from the Department of Mechanical and Electrical Engineering of Shantou University, which was established by Li Ka-shing's donation, and Li Ka-shing has always been his idol. In 1995, after graduating from university, he joined Kodak Corporation in Japan, working his way up from a grassroots technician to a core engineer. Therefore, Cai Rongjun is not only from a professional class, but also has a deep scientific research accumulation.

During this period, in 2001, Hong Kong Xunqi and Shenzhen Zhixiong Electronics jointly established OFILM, which was initially engaged in precision thin film components for optical fiber communication.

In other words, Cai Rongjun is not the founder of OFILM. Later, OFILM invited Cai Rongjun and Cai Gaogao brothers to serve as general managers and deputy general managers to help the company's research and development.

In September 2004, the original shareholders transferred the controlling stake to the Cai brothers at a price of 4.39 million yuan, and OFILM officially entered the era of Cai Rongjun.

The Cai brothers are familiar with optoelectronic technology, and two years later, OFILM launched infrared filters, which became the world's first in this market segment, accounting for one-third of the global market share. With this advantage, OFILM was successfully listed on the Shenzhen Stock Exchange in August 2010.

But in the first year of listing, Cai Rongjun smelled the crisis, and the company's revenue increased sharply that year, but the net profit stood still. He is soberly aware that the original business is approaching the ceiling, and there is not much room for growth.

At that time, Apple led the boom of touch-screen smartphones, and Cai Rongjun was keenly aware of the huge opportunities in the mobile consumer electronics industry, and invested all the funds raised in the IPO in the touch field.

The battle was a great success, and Cai Rongjun led the company to surpass TPK and become the world's largest touch screen manufacturer. After a short hibernation in 2011, OFILM's performance shone in 2012-2014, with revenue and net profit like a rocket, and its stock price soared more than 10 times in just two years from 2012 to 2013. Since then, OFILM has become an important supplier in the consumer electronics industry.

But the only constant in the high-tech industry is "change" itself. Since then, Apple and Samsung have adopted different touch screen solutions, and the industry reshuffle has intensified. In 2015, OFILM's profits declined again, the old business touch screen was squeezed into the low-end market, the profit was getting thinner, and the new business did not improve.

At this time, OFILM was "in internal and external difficulties, and there was no connection".

At this time, the micro-camera project in which Cai Rongjun intervened in 2012 provoked the main beam. With the gradual increase in consumers' requirements for mobile phone photography and videography, the whole machine manufacturers have correspondingly raised the order volume and technical requirements of the camera, and Cai Rongjun, who has laid out in advance, once again stepped on the outlet. At the same time, Cai Rongjun also decided to enter the field of fingerprint recognition.

After the company's performance went through the trough period in 2015, it stood on the second peak in 2016-2017, achieving net profit of 719 million and 823 million respectively in two years. The share price also soared to an all-time high in November 2017.

However, in 2018, due to excessive investment expenditure, poor management, and stepping on Lei LeTV and Gionee, the company's inventory was impaired and the loss was more than 500 million, which exposed the internal control problems of OFILM after years of rapid growth.

Judging the situation and learning from failures is an important sign of maturity for entrepreneurs. Mr. Cai said he was more focused on failures than on success stories.

The first blow in 2018 made him settle down to carry out the internal management reform of OFILM "to create efficiency with precision". This year, the company successfully turned losses into profits.

But the later story, contrary to the outside world's expectations, Apple tore up the cooperation agreement, which made Cai Rongjun see the cruelty and cold-bloodedness of business competition. OFILM fell from the top to the quagmire, and was even used as a negative teaching material by the outside world, and frequently criticized it.

But as he said: life is about repeating adversity, no one can avoid it, and it will come. Seemingly terrible adversity is the source of success. In the face of adversity, what we need to do is to face it calmly, accept it, and then solve it.

At present, Huawei has been reborn in adversity, and OFILM has the confidence to survive, and the company has increased its horsepower and sounded the clarion call for a counteroffensive.

Don't forget, as early as the trough of 2015, Cai Rongjun also took the lead in the field of Internet of Vehicles, and raised 1.37 billion yuan the following year to strengthen the research and development of automotive lenses and seize the intelligent business of automobiles. In the first half of 2023, smart car products will contribute 616 million yuan in revenue, accounting for nearly 10%.

From infrared cut filters to touch screens, to micro cameras and fingerprint recognition, to automotive electronics, O-film keeps "tossing", even in the face of difficulties, Cai Rongjun has not stopped betting on the future.

The development process of OFILM is the history of the rise and fall of the consumer electronics industry, but in the trough period, Cai Rongjun devoted himself to the layout of forward-looking technology, and finally ushered in the moment of Jedi counterattack.

If it weren't for years of technology accumulation, this "luck" would not have fallen on OFILM's bald head.


The content of this article related to listed companies is the author's personal analysis and judgment based on the information publicly disclosed by listed companies in accordance with their legal obligations (including but not limited to temporary announcements, periodic reports and official interactive platforms, etc.), and the information or opinions in this article do not constitute any investment or other business advice, and Market Value Watch does not assume any responsibility for any actions arising from the adoption of this article.


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