Wright Optoelectronics' new third board turned into the second answer to the science and technology innovation board, and revenue, accounts receivable, technology, etc. were concerned

Recently, Capital State learned that Shaanxi Lite Optoelectronic Materials Co., Ltd. (hereinafter referred to as "Lite Optoelectronics") replied to the second round of inquiries on the Science and Technology Innovation Board.

Image source: The official website of the Shanghai Stock Exchange

The company is mainly engaged in the research and development, production and sales of OLED organic materials. The company has realized the whole industry chain operation of OLED organic material intermediate synthesis, pre-sublimation material preparation and terminal material production. The company has a variety of OLED terminal materials independent patents and achieve large-scale production.

In January 2016, the company's shares were listed on the New Third Board for public transfer, and the transfer method was agreement transfer. The company code is 835249, and the company is referred to as "Wright Optoelectronics". On October 20, 2017, the company's shares were terminated from listing on the national SME share transfer system.

In the second round of inquiries on the Science and Technology Innovation Board, the Shanghai Stock Exchange mainly inquired about eight aspects of Lite Optoelectronics technology, business, BOE, revenue and accounts receivable, and inventory.

Regarding technology, according to the response to question 2 of the first round of inquiries, the current technical level of the issuer's RedPrime materials has been able to meet the standards of international manufacturers.

There are only a few companies in China that have mastered OLED terminal material technology and can mass-produce it, and OLED terminal material technology is one of the most difficult technical fortresses in OLED organic materials.

The technical objectives to be achieved by issuers and competitors in the same industry are the same, but the selection of groups and the specific technologies of modification and modification are the core secrets of each company, and cannot be compared based on the above information.

The SSE requires the issuer to explain: (1) "The technical level of the company's RedPrime materials can reach the level of international manufacturers" and "there are only a few companies in China that master OLED terminal material technology and can mass-produce", and the rationality of the above conclusions cannot be drawn without comparing performance indicators; (2) the performance indicators of the company's OLED terminal materials cannot explain the reasons and rationality of the advanced technology of OLED terminal materials through performance indicators. The company's products meet the needs of downstream manufacturers, which further illustrates the embodiment of the advanced nature of core technologies.

Wright Optoelectronics replied that the intermediary of this offering confirmed the above situation through interviews with major customers BOE and Huaxing Optoelectronics, as follows:

After the interview confirmed that there are many suppliers of BOE and Huaxing Optoelectronics RedPrime materials, of which Lite Optoelectronics is its only domestic supplier, and the others are international manufacturers. Customers such as BOE implement a strict material certification system, and only if the product performance can meet the requirements can choose the company's products. The above manufacturers believe that the technical level of Wright Optoelectronics' products can reach the domestic leading or international advanced level, and in terms of RedPrime materials, Lite Optoelectronics technology is at the same level as foreign manufacturers, so it will choose Lite Optoelectronics materials.

In summary, during the reporting period, the company's sales revenue to BOE continued to grow rapidly, passed tests in boe's previous device iterations, and maintained the continuous supply of RedPrime materials in competition with international manufacturers.

The conclusion that "the technical level of the company's RedPrime materials can reach the level of international manufacturers" is reasonable.

After searching all A-share listed companies involved in the OLED industry enterprise information (as of September 25, 2021), and according to their main business and main products, there are currently about 16 A-share listed companies involved in the production of OLED panel-related materials, including OLED terminal materials only one Olaide, and the products of other listed companies are mainly used for The Array process section and The Module process section. Therefore, at present, the number of OLED terminal materials companies in A-share listed companies is small.

In addition to listed companies, due to the limited public information of non-listed companies, the intermediaries of this offering learned about the domestic suppliers of OLED terminal materials through interviews with downstream customers BOE, Huaxing Optoelectronics, and Hui Optoelectronics. According to OMIDA statistics, the production capacity of the above three customers in 2020 occupies 64.87% of the market share of the domestic AMOLED market, which is representative. The interviews with the above customers are as follows:

(1) BOE: At present, only a few domestic material manufacturers enter BOE and supply, and the domestic material manufacturers that supply RedPrime materials are only Lite Optoelectronics.

(2) Huaxing Optoelectronics: The domestic material manufacturers that supply OLED terminal materials are only Lite Optoelectronics.

(3) Hehui Optoelectronics: There are 4-5 OLED terminal material manufacturers at home and abroad.

According to the information obtained from the above interview, there are currently fewer domestic manufacturers engaged in the production of OLED terminal materials and the supply of clients.

In summary, after retrieving public information and confirming through interviews with BOE, Huaxing Optoelectronics, and Hehui Optoelectronics, the company's conclusion that "there are only a few companies in China that master OLED terminal material technology and can mass-produce" is reasonable.

OLED terminal materials are characterized by the fact that they need to be combined with other layers of materials and formed OLED devices through the evaporation process to evaluate their performance. The main performance indicators of OLED panel are luminous efficiency, driving voltage and lifetime. Since the device structure of each panel manufacturer is different, and the layers of materials are not the same, according to different device structures, each material supplier needs to design a product that can match the customer device structure and meet the customer's performance requirements.

Due to the above characteristics of OLED terminal materials, they are not general-purpose standardized products, and there is no open market data or performance index data of other supplier products that can be used for comparison. From a global perspective, the current major enterprises in the OLED panel industry are Samsung, LG, BOE, Huaxing Optoelectronics, Hehui Optoelectronics, Tianma Group, Visionox, etc. The above 7 companies occupy more than 90% of the market share of OLED panels, and the industry concentration is high. In the case of a high concentration of downstream panel manufacturers, all OLED material suppliers are targeted at the above manufacturers, so the current objective criterion for evaluating the technological advancement of OLED terminal materials lies in whether it can enter the supply chain system of mainstream OLED panel manufacturers and achieve batch supply.

Since its inception, in the field of OLED terminal materials, the company has successively entered the supply chain system of domestic OLED panel industry leaders such as BOE, Huaxing Optoelectronics, and Hui Optoelectronics, and formed a batch supply of RedPrime and other materials, reflecting good product competitiveness.

During the reporting period, many of the company's products have passed the test of BOE and achieved batch supply, which can objectively prove that the company's OLED terminal material technology is advanced.

During the reporting period, the company continuously improved product performance, and product sales increased year by year. The company continues to carry out product iteration, with new materials launched every year, and maintaining a continuous supply of RedPrime materials after passing BOE tests, which can match the changes in the needs of downstream panel manufacturers.

In addition to BOE, the company has also successively developed domestic OLED panel leading enterprises such as Hehui Optoelectronics and Huaxing Optoelectronics. From January to June 2021, the company's revenue from the sale of OLED terminal materials to the above customers grew rapidly.

Hehui Optoelectronics achieved sales revenue of 5.915 million yuan from January to June 2021, which is basically equal to the sales revenue of the whole year last year. Huaxing Optoelectronics achieved revenue of 20.916 million yuan from January to June 2021, an increase of more than 5 times over the sales revenue of the whole year last year. The company's products continue to be recognized by downstream customers.

At present, the main market share of the OLED terminal material industry is still occupied by foreign manufacturers, BOE, Huaxing Optoelectronics, Hehui Optoelectronics and other customers olED terminal material suppliers, in addition to Wright Optoelectronics, the others are mainly foreign material suppliers.

During the reporting period, the performance of the company's products was tested to meet the requirements of customers such as BOE, and the continuous supply of products was achieved in the competition with other suppliers of CUSTOMERS such as BOE, the sales revenue of the company's OLED terminal materials continued to grow, and the company's products and core technologies were advanced.

Regarding revenue and accounts receivable, according to the first round of inquiry question responses, the sponsoring institution and the reporting accountant in the process of verifying the accounts receivable and income, the amount and proportion of the reply letter are very small, most of which belong to the "reply letter does not match but can be recognized". The sponsoring institution and the reporting accountant believe that during the reporting period, there were no abnormal situations in the company's customers, revenue and accounts receivable.

The SSE requires the sponsoring institution and the reporting accountant to explain the meaning of "the reply letter is inconsistent but the amount can be recognized", whether the basis for confirmation is sufficient and accurate, whether the verification of the company's revenue and accounts receivable is compliant and sufficient, and whether the company's customers, revenue and accounts receivable are true and accurate.

Wright Optoelectronics replied that the reply letter did not match but the amount could be recognized: there was a time difference between the company and the customer in the accounting treatment and there was a difference in the tax in the customer's provisional valuation, resulting in a difference between the amount recognized at the balance sheet date and the company.

Since the amount of the letter is the sales revenue and the ending balance of the accounts receivable, and the above differences constitute part of the sales revenue or part of the accounts receivable, the total sales revenue and the ending balance of the accounts receivable that contain the above differences are uniformly classified as "the amount that does not match the reply but can be recognized". The main differences above are as follows:

1. Tax difference: After the transfer of control of inventory, the company recognizes accounts receivable, revenue and value-added tax, and the customer temporarily estimates the accounts payable according to the quantity of goods received after receiving the goods, and records input tax after receiving the invoice, so on the balance sheet date, if the customer has not received the invoice, there is a VAT difference between the issuer's accounts receivable and the customer's accounts payable.

2, the time difference: the company will transport the goods to the designated place and obtain the customer to sign and confirm the goods to confirm the receipt of the receipt to recognize revenue, the customer in the receipt of the goods, warehousing procedures and entry into the system as its inventory point, and confirm the corresponding accounts payable, so the customer and the company to confirm the above accounting time there is a difference, the customer to confirm the debt later than the company to recognize the revenue at the time, the formation of a temporal difference.

During the reporting period, the difference rate of discrepancies in the company's accounts receivable replies was low, and it was mainly due to differences in tax and temporality. For differences in reply letters, the sponsoring institution and the reporting accountant have performed the following alternative procedures upon receipt of the reply:

(1) Perform a substitution test for the difference in the reply letter; For tax differences, temporal differences, etc., to obtain the corresponding accounting vouchers, orders, invoices, outbound receipts, logistics receipts, customs declarations and bills of lading, etc., the sales records that form the differences are checked, and check whether the reasons for the differences are reasonable and can be confirmed; For the difference between the recovery of the bill, obtain the corresponding accounting voucher, the copy of the bill and the notice of recourse to check the authenticity of the note recourse;

(2) Implement the cut-off test of operating income, extract the sales revenue details of the first month before and after the asset-liability date, pay attention to whether the corresponding sales revenue of the time difference part is included in the correct accounting period, and whether there is a large return after the period;

(3) Obtain the difference reconciliation table of the issuer's accounts receivable reply letter.

Upon confirmation by the alternative procedure, the amount of the receivables letter for the difference in the receivables reply letter can be confirmed.

After confirmation by the alternative procedure, the amount of the business income letter corresponding to the difference in the operating income reply letter can be recognized.

This article originated from Capital State