On August 3, Shenzhen Laibao High-tech Co., Ltd. (stock code: 002106; Securities abbreviation: Laibao Hi-Tech) released a record of investor relations activities, and the company accepted the investigation of Zhongtai Securities and Minsheng Jiayin Fund. Laibao Hi-Tech said in the survey that in view of the uncertainty of the company's new product development and market demand changes in the company's automotive touch screen business segment, there is some uncertainty about whether the overall sales of the company's automotive touch screen business segment in 2024 can finally achieve year-on-year growth. The microcavity e-paper display device (MED) project is expected to officially start construction in the second half of this year, with a construction period of 24 months, and is expected to gradually realize the small batch production and sales of some MED products in the second half of 2024 before the MED project is completed and put into operation.
According to public information, Shenzhen Laibao High-tech Co., Ltd. is a leading manufacturer specializing in the research and development and production of upstream materials and touch devices for flat panel displays, which was established on July 21, 1992. It was listed on the Shenzhen Stock Exchange on January 12, 2007. The company's leading products include small and medium-sized (mainly below 10 inches) ITO conductive glass, color filters (CF), TFT-LCD panels and capacitive touch screens (currently mainly medium and large size products, 10-27 inches), which can provide complete technical solutions for flat panel display materials, with complete product specifications and varieties, which are widely used in consumer electronics applications such as tablet computers, touch laptops, integrated computers, and on-board instrumentation, home appliances, office, medical, Industrial control panels and other professional applications.
In terms of performance, Laibao Hi-Tech reported outstanding revenue and net profit in the first quarter of 2024. In the first quarter of 2024, the company achieved operating income of 1,468,098,200 yuan, an increase of 27.34% over the same period of the previous year; The net profit attributable to shareholders of the listed company was 117.4145 million yuan, an increase of 448.08% over the same period of the previous year. Laibao Hi-Tech said that the company's sales revenue in the first quarter of this year increased significantly compared with the same period last year, the company's capacity utilization rate and production efficiency increased compared with the same period last year, product costs were reduced, and gross sales profit increased significantly year-on-year.
Laibao Hi-Tech said that due to the large year-on-year base, the large year-on-year increase in notebook computer touch screen shipments in the first quarter of 2024, and the slowdown in the demand for notebook computer touch screens in the second quarter of 2024, it is difficult for the company's operating performance in the second quarter of 2024 to achieve year-on-year growth.
Recently, Laibao Hi-Tech replied to investors' questions on the interactive platform, saying that more than 85% of the company's product sales come from export sales, and are mainly settled in US dollars, and at the same time, the company also needs to import and purchase some raw materials, and need to pay US dollars or Japanese yen in foreign currencies accordingly, and the US dollar-RMB exchange rate in the first half of 2024 is in an overall appreciation trend, which will bring certain exchange income to the company; In addition, in the first half of this year, the company has invested a total of RMB 2 billion to cooperate with local governments to invest in microcavity electronic paper display device (MED) projects, which correspondingly reduced foreign currency funds and reduced the exchange income brought by the appreciation of the exchange rate of the US dollar against the RMB to a certain extent. In the first half of 2024, due to the overall appreciation trend of the exchange rate of the US dollar against the RMB and the comprehensive factors such as the above-mentioned registered capital contribution and the distribution of cash dividends in 2023, the company has not carried out the hedging business of US dollar foreign exchange for the time being.
It is understood that since 2023, Laibao Hi-Tech has continued to increase its position with northbound funds, and the number of shares held in Shenzhen-Hong Kong Stock Connect has reached a new high. Among the top ten outstanding shares of the company, many Huaan funds increased their positions in the first quarter, and a new individual shareholder was added. Since the second half of 2020, the number of shareholders has continued to decrease, the average number of shares held by each household has increased, and the concentration of chips has continued to increase.
In the secondary market, as of August 2, the share price of Laibao Hi-Tech was 8.90 yuan per share, with a total market value of 6.282 billion yuan.
▎The following is the main content of the institutional research Q&A:
Q: Please tell us about the composition of the operating income of the company's main products.
Answer: The company's "2023 Annual Report" released on March 30, 2024 under the "Section 3 Management Discussion and Analysis" under the "Fourth, Main Business Analysis" of the 2023 annual sales revenue of the company's main products in 2023 has been explained accordingly, on the whole, the company will achieve an overall sales revenue of 5.586 billion yuan in 2023, of which: the sales revenue of touch screens for notebook computers (product shipments are mainly based on fully laminated products) accounts for more than 85% of the company's overall sales revenue. The sales revenue of the automotive touch screen business segment (including vehicle cover glass and vehicle touch screen) accounted for less than 10% of the company's overall sales revenue.
Q: What are the main reasons for the company's promising operating performance in the first quarter of 2024, which achieved significant year-on-year growth? Is there any hope for the continuation of the strong year-on-year growth trend in the second quarter of 2024?
Answer: As stated in the "Company's First Quarter Report of 2024" released by the company on April 27, 2024, the company's operating income in the first quarter of 2024 was 1468.0982 million yuan, an increase of 27.34% over the same period of last year, mainly due to the significant increase in the production and sales of large-size capacitive touch screen full lamination and vehicle cover glass products in the reporting period compared with the same period last year; The net profit attributable to shareholders of the listed company was 117.4145 million yuan, an increase of 448.08% over the same period of last year, mainly due to the significant increase in sales revenue in the reporting period compared with the same period last year, the improvement of the company's capacity utilization rate and production efficiency over the same period last year, the reduction of product costs, the large year-on-year increase in gross profit from sales, and the significant decrease in financial expenses due to the realization of foreign exchange gains in the reporting period and the large exchange losses in the same period last year.
In addition, the company achieved sales revenue of 1.603 billion yuan in the second quarter of 2023, which is the highest sales revenue quarter in each quarter of 2023. The specific operating results are subject to the regular report data of the company's subsequent official announcements.
Q: Is the company's sales of touch screens for laptops expected to increase year-on-year in the second half of 2024?
Answer: Considering the forecast of a third-party industry consulting agency, the global notebook computer shipments in 2024 are expected to achieve single-digit growth compared with 2023, the global notebook shipments in normal years will generally increase in the second half of the year compared with the first half of the year (considering factors such as summer vacation promotions, Christmas promotions and year-end sales sprints), customer communication and understanding, the company's sales of touch screens for notebook computers in the second half of 2024 are expected to increase year-on-year, and the company will seize the favorable opportunity in the future market. Strive to achieve year-on-year sales growth in the second half of this year. However, the company's touch screen business for notebook computers is also facing increasing competition in the industry, substitution competition from on/in cell and other structures, and market demand may be affected by changes in the global economic situation, consumers' future income expectations and changes in purchase demand, etc., and there may be certain uncertainty about whether sales can grow in the second half of 2024.
Q: What changes are likely to occur in 2024 in the sales of the company's notebook touchscreen business segment?
Answer: According to the statistics and forecasts of professional market research institutions, the global notebook (Notebook, referred to as "NB") shipments in 2022 and 2023 will continue to decline month-on-month, based on the gradual reduction of the comparison base and the global PC demand is expected to gradually return to normal in 2024, as well as the gradual establishment of a new AI PC ecosystem and the gradual promotion and application of related new models may bring new demand to the global PC industry. Global notebook shipments in 2024 are expected to achieve single-digit year-on-year growth.
Affected by the above-mentioned global demand for notebook computer industry as a whole, as well as the fact that touch screen can bring more convenience and may bring different operating experience to notebook computers, and gradually be accepted by more and more consumers, the penetration rate of touch screen in notebook computers is expected to increase steadily in the future. The Company's notebook computer touch screen business segment is expected to benefit from corresponding growth, and the company will actively strive to seize the favorable opportunity for the growth of such market demand, and strive to share the market opportunities for the growth of notebook computers with touch function with customers. However, at the same time, the fierce competition between manufacturers in the same industry is increasing, and by the increasing marketing efforts of display panel manufacturers in recent years and the corresponding technological progress, the embedded touch display integrated products (on cell/in cell) have an increasing impact on the substitution competition of the company that is currently all external touch screen structure. Correspondingly, it has a certain adverse impact on the sales of touch screens for the company's notebook computers. The company will actively strengthen and enhance the company's technology and market competitiveness of touch screens for notebook computers through various measures such as continuous development of new products, promotion of high-end touch screens with GMF structure using Film Sensor, low-cost touch screens with AOFT structure, continuous improvement of production efficiency and reduction of production costs, and actively respond to the challenges and difficulties brought by industry competition.
To sum up, there is some uncertainty about whether the company's sales of the touch screen business segment for notebook computers in 2024 can achieve year-on-year growth, please look at it objectively and rationally for all investors, including you, and please refer to the relevant announcements issued by the company for specific sales and operating performance data.
Q: Please talk about what kind of laptop products are likely to continue to choose external touch screens in the future?
Answer: According to the quotation of normal display module and touch screen, taking the mainstream 14-inch products of notebook computers as an example, the price difference between the external structure touch screen of the same specification size and the touch screen of On Cell/In Cell structure is generally only a few dollars, relatively speaking, the external structure touch screen does not have the problem of signal interference, the touch performance is better, the reliability and durability are better, therefore, in the case of little price difference, based on the perspective of better touch performance, Personally, I judge that in the future, high-end commercial laptops and 2-in-1 laptop products should still choose touchscreens with external structures. At present, the touch screen used in high-end commercial laptops and high-end 2-in-1 laptops represented by Surface is dominated by "glass + film" structure (GF2/GMF). Combining the advantages of self-made film sensor and self-designed and manufactured GMF structure touch screen, the company will further increase the development of high-end commercial notebook computers and 2-in-1 notebook computers in the future.
In addition, with the gradual establishment of a new ecology of AI PC and the gradual promotion and application of related new models, in terms of AI PC supporting touch screens, the laptops currently launched on the market that support AI applications have certain needs for touch functions, but they are not necessary requirements, and there is no essential difference with the performance requirements of existing laptop touch screens. In the future, AI PC products may require more AI functions to match the stylus operation with precise touch, and as the demand for AI PCs gradually grows in the future, it may bring more new demand for external touch screens that better support stylus operation. The company actively pays attention to and supports the development of new notebook computers including supporting AI applications, and strives to share possible market growth results with customers on the basis of continuously meeting customers' needs for higher performance, more functional integration and customization.
Q: Is the company's automotive touch screen business segment expected to achieve year-on-year sales growth in 2024?
Answer: The product line of the company's on-board touch screen business segment mainly includes on-board touch screen and on-board cover glass, of which on-board touch screen refers to the company's on-board touch screen products with touch sensor film (Sensor), including G-G structure, OGS structure, etc.; Automotive cover glass refers to the lamination process of the company's on-board cover glass (which does not require the company to make a touch sensor layer), and then hand it over to a Tier 1 customer or its designated partner to complete the lamination process of the vehicle-mounted touch display integrated module with an embedded structure (On Cell/In Cell). With the increasing development of automobiles in the direction of electrification, intelligence, and networking, the traditional instrument panel, center console, and passenger seat of automobiles are gradually developing in the direction of integrated production, which correspondingly brings the vehicle cover glass from the original single screen (center console) to the current gradual expansion to the direction of double screen and triple screen.
In 2024, while consolidating the existing vehicle touch screen market and customer resources, the corresponding demand for different shapes of cover glass products such as dual screens, triple screens, 3D, and curved surfaces will continue to increase. The overall sales of the company's automotive touchscreen business segment in 2024 are expected to increase year-on-year in 2023.
From January 2024 to the present, except for the impact of the Spring Festival holiday, the order demand and product production and sales of the company's automotive touch screen business segment have been good.
In view of the uncertainty of the company's new product development and market demand changes in the company's automotive touch screen business segment, there is some uncertainty about whether the overall sales of the company's vehicle touch screen business segment in 2024 can finally achieve year-on-year growth.
Q: Please briefly explain the purpose of the microcavity electronic paper display device (MED) project invested by the company in cooperation with the local government and the main impact that may be brought to the company after it is completed and put into operation.
Answer: As stated in the company's announcement on October 21, 2023, the company cooperated with the local government to invest in the microcavity e-paper display device (MED) project, and the purpose of this cooperative investment is to actively respond to the survival and development crisis, grasp the development opportunities of the global medium and large-size color e-paper segment blue ocean market, and maintain long-term sustainable development.
After the MED project is completed and put into operation, the company will realize the independent and cooperatively developed micro-electric cavity display (MED) technology and the industrialized production of products, improve the layout of the medium and large-size color e-paper display product line, and grasp the growth opportunities of the global medium and large-size color e-paper segment blue ocean market; It will also greatly enhance the company's core competitiveness, broaden the international market of the company's products, and continuously cultivate new business and profit growth points, which is conducive to the company's high-quality and sustainable development. In addition, it will also significantly improve the company's asset scale and operating scale, the company's profitability and level will be significantly improved, and the asset-liability ratio will be increased, but it will still be within a reasonable and safe range.
Q: Please tell us about the products of the MED project and their positioning.
Answer: The micro-cavity e-paper display device (MED) project jointly invested by the company and the local government intends to use the micro-cavity display technology independently and cooperatively developed by the company. Micro Electric-Chamber Display (referred to as "MED", also known as "plasma display") belongs to the category of microcavity e-paper display devices, which is one of the types of e-paper, which is a reflective display device that relies on reflected ambient light to achieve information display, without backlight and polarizer, and can achieve bistability (no power consumption for displaying static pictures, only power consumption at the moment of switching screens), pure reflection, full-color e-paper, paper-like, high contrast, and high resolution, narrow bezel display, with intrinsic eye protection, ultra-low power consumption, light and thin, comfortable reading and other significant advantages, but the color display image quality is not as good as TFT-LCD and AMOLED and other mainstream display panels, the product is mainly positioned in the color e-paper market, covering large, medium and small full-size series.
The products of the project are micro-electric cavity display screens (including supporting touch display integration products), which are mainly positioned in the medium and large-size color e-paper market, and are used in medium and high-end electronic labels, color e-book bags, color e-book readers, e-paper tablets, extended displays, eye-protection displays, electronic signage, electronic bus stop signs, electronic information boards, electronic whiteboards, public displays and other eye-protection, power-saving, paper-like display terminal fields, which belong to the differentiated segmented blue ocean market.
Q: What is the current progress of the MED project invested by the company in cooperation with local governments?
Answer: The microcavity e-paper display device (MED) project invested by the company in cooperation with the local government is currently progressing normally, and the joint venture company of the MED project, Zhejiang Laibao Display Technology Co., Ltd., was registered and established on December 20, 2023, and the registered capital of 4.5 billion yuan in cash has been fully paid on May 29, 2024. Leybold Display is currently gradually carrying out the preliminary preparations such as equipment selection and technical specifications, environmental impact assessment, and energy-saving evaluation of the MED project as planned. The construction period of the MED project is 24 months, counting from the date of official commencement of the project. It is expected that the construction will officially start in the second half of this year, and the specific progress is subject to the company's subsequent official announcement information (if any).
Q: What is the expected impact on the company before the MED project is completed and put into operation?
Answer: As stated in the relevant explanation of "(5) Possible Risks" under "Section 3 Management Discussion and Analysis" of the "2023 Annual Report of the Company" released by the Company on March 30, 2024, under "Section 3 Management Discussion and Analysis", the MED project is expected to have the following major impacts on the Company before it is put into production and profitable:
The company's cooperation with local governments to invest in MED projects in 2023 will help the company actively respond to changes in the competitive environment of the industry, meet the needs of optimizing product structure, grasping the initiative of future development, continuously cultivating new business and profit growth points, and striving for high-quality and sustainable development. On December 20, 2023, the company and its partners jointly registered and established a holding subsidiary, Zhejiang Leybold Display Technology Co., Ltd., and took it as the main body of the MED project, and included Leybold Display in the scope of consolidated accounting statements in 2023. According to the relevant provisions of the "Agreement on the Joint Venture Establishment of Zhejiang Laibao Display Technology Co., Ltd." signed by the company and the partner, the 2 billion yuan cash contribution of Nanxun Optical Core Equity Investment Partnership (General Partnership) (hereinafter referred to as "Optical Core Company") to Laibao Display is repurchased by the company in accordance with the agreed period and conditions and the price of "principal + five-year LPR", and according to the relevant provisions of the "Accounting Standards for Business Enterprises" and other relevant provisions, the 2 billion yuan capital contribution is recognized as a "financial liability" in the company's consolidated accounting statements (The final audit results are subject to the audit results of the audit institution), and before the company completes the repurchase, a certain amount of financial expenses will be recognized at the agreed interest rate price when the company consolidates the accounting statements every year; In addition, the planned construction period of the MED project is 2 years, and the investment and construction period of the MED project from 2024 to 2025 will be in the MED project.
In order to actively respond to the above impacts, the company will actively and steadily promote the implementation of the MED project, strictly control the necessary expenses of the project, plan in advance and make relevant preparations before the project is put into production, and strive to realize the commissioning of the MED project as soon as possible.
Q: How to carry out the preliminary work before the MED project is completed and put into operation?
Answer: Before the MED project is completed and put into operation, the company plans to combine the existing 2.5 generation TFT-LCD display panel, micro cavity display module pilot line and other production line resources (if necessary, it can also be combined with other cooperative production line resources), as well as the existing global notebook computer and other well-known brand customers and e-paper terminal brand manufacturers to gradually establish business relationships and other customer resources, and actively do a good job in the preliminary work of MED product sample production, verification, promotion and application. Efforts will be made to realize the gradual production and sales of medium and large-size micro-cavity display module products of some specifications, and on this basis, efforts will be made to shorten the cycle of gradual increase in output after the MED project is put into operation. Please refer to the company's subsequent official announcements for the specific progress of the MED project.
Q: When is the company's MED products expected to be mass-produced and sold?
Answer: At present, the company uses the existing 2.5 generation TFT-LCD display panel production line, micro cavity display module pilot line and other production line resources, has successfully produced a variety of samples of black and white and full-color MED products, and is sending samples, verification and related pre-promotion work to customers, MED products have not yet achieved mass production and sales. The follow-up company will combine the above-mentioned production line resources (and cooperate with other cooperative production line resources if necessary), and the company is expected to gradually realize the small batch production and sales of some MED products in the second half of 2024 before the MED project is completed and put into operation. There is a certain degree of uncertainty in the early promotion progress and production and sales of MED products, and the specific progress is subject to the company's subsequent official announcement information (if any).
Source: Reading and Entrepreneurship