Following the decline in revenue and net profit in 2022, Changxin Technology (300088. SZ) continued its declining performance in 2023. On the evening of April 25, the 2023 annual report disclosed by Changxin Technology showed that the company achieved operating income of 8.889 billion yuan, an increase of 27.21% year-on-year, and a net profit attributable to the parent company of 242 million yuan, a year-on-year decrease of 64.46%.
According to the data, Changxin Technology's main business includes automotive electronics business and consumer electronics business. The company's automotive electronics business includes automotive sensors, automotive sensor modules, vehicle covers, vehicle display modules, and vehicle screen modules, and consumer electronics business includes ultra-thin LCD panel thinning business, ultra-thin glass cover business, ITO conductive glass and VR display modules, smart wearable display modules, mobile phone display modules, NB and PAD display modules, light guide plates, e-paper drive substrates and other intelligent hardware products.
Changxin Technology said that the year-on-year increase in operating income was due to the growth of revenue from smart wearable products, VR products and vehicle products. In terms of regions, domestic revenue was 5.457 billion yuan, a year-on-year increase of 19.65%, accounting for 61.4% of revenue, and overseas revenue was 3.431 billion yuan, an increase of 41.37% over 2022, accounting for 38.6% of revenue.
However, as the scale of revenue expands, the profit side is under significant pressure. Changxin Technology said that the decline in net profit was due to the fierce competition in the industry product market, the decline in sales prices, and the maintenance of a certain rigidity in the prices of main raw materials and labor costs. According to financial data, the gross profit margin of touch display device materials, the only source of revenue, fell 9.01% year-on-year to 10.15%.
Based on the continuous rapid growth of the automotive electronics industry and the huge potential for future development, competitors are rapidly entering this field, and the market competition situation is becoming increasingly severe. Changxin Technology expects that in 2024, the investment of new entrants will be completed, the production capacity will be released, and the gross profit margin level of the entire industry may decline.
In terms of quarters, Changxin Technology's performance declined significantly in the second half of last year. Q2 net profit attributable to the parent increased by 10.79% month-on-month to 115 million yuan, Q3 and Q4 achieved net profit attributable to the parent of 85.9246 million yuan and -64.0337 million yuan, down 25.58% and 174.52% month-on-month respectively, Q4 has fallen to a loss.
However, the quarterly performance will improve by 2024. According to the first quarter report of 2024, Changxin Technology achieved revenue of 2.603 billion yuan in Q1, a year-on-year increase of 76.87%, and the corresponding net profit attributable to the parent company was 49.4764 million yuan, an increase of 177.27% month-on-month, but still a decrease of 52.52% compared with the same period in 2022.
Due to the characteristics of the industry, Changxin Technology's accounts receivable have always accounted for a relatively high proportion. According to the first quarter report of 2024, the company's accounts receivable was 2.828 billion yuan, a year-on-year increase of 82.43%, which has caught up with the total revenue in the same period. In addition, the inventory reached 1.168 billion yuan, a year-on-year increase of 34.88%. The high amount of accounts receivable and inventory occupied a large amount of working capital, and the operating cash flow plummeted by 132.91% to -86.638 million yuan. At the end of 2023, the company's operating cash flow was 568 million yuan.
At the same time, Changxin Technology is also under heavy financial pressure. In Q1 2024, the company's book currency funds are 1.422 billion yuan, but short-term borrowings are as high as 1.752 billion yuan in the same period, and non-current liabilities due within one year are 273 million yuan, and monetary funds cannot cover short-term borrowings.
At the same time as the release of the financial report, Changxin Technology simultaneously terminated the year-long restructuring plan.
On February 14, 2023, Changxin Technology disclosed the details of the restructuring for the first time, and the company intends to purchase 43.86% of the shares of Wuhu Changxin New Display Device Co., Ltd. (hereinafter referred to as "Changxin Xinxian") held by the railway fund and Wuhu Xinzhen through the issuance of shares and cash payment. At present, Changxin Technology directly and indirectly controls 56.14% of the equity of Changxin Xinxian, and after the completion of this transaction, the company will control 100% of the equity of Changxin Xinxian. It is reported that the transaction price is 966 million yuan, of which a total of 193 million yuan is paid to the counterparty. At the same time, it is planned to raise matching funds of no more than 697 million yuan.
Changxin Xinxian is mainly engaged in new touch display module devices, ultra-thin liquid crystal display panels, ultra-thin glass cover (UTG) and other businesses. Changxin Technology will further enhance the profitability of the listed company by acquiring the remaining equity of Changxin Xinxian and integrating high-quality assets. The reason for the termination of this transaction is that the restructuring has lasted for a long time since the planning, and the market environment has changed greatly compared with the beginning of the restructuring planning. Titanium Media APP called Changxin Technology many times to verify the specific reason for the termination of the reorganization, but the phone was never connected.
It is worth noting that the top 10 shareholders of Changxin Technology will change at the end of the first quarter of 2024. Chinese Life Insurance Co., Ltd. - Magnum - China Life Rui'an, Liu Dapeng and Chen Qi became new shareholders, holding 0.39%, 0.37% and 0.36% respectively. It replaced the Industrial and Commercial Bank of China Co., Ltd.-HFT Reform-Driven Flexible Allocation Hybrid Securities Investment Fund, China Everbright Bank Co., Ltd.-Xingquan Business Model Preferred Hybrid Securities Investment Fund (LOF), and BARCLAYSBANKPLC at the end of 2023. (This article was first published in Titanium Media APP, author: Lu Wenyan)