Huang Youqian, a researcher at times business school
In recent years, with the production of downstream mobile phones and TV OLED panel production lines and the rampage of production capacity, the OLED panel market has grown rapidly, and its upstream OLED organic materials market has also expanded rapidly. According to the DSCC, the global OLED organic materials market size reached $925 million in 2019 and is expected to increase to $2.18 billion in 2023, with a compound annual growth rate of 23.9%.
Shaanxi Lite Optoelectronic Materials Co., Ltd. (hereinafter referred to as "Lite Optoelectronics"), as the main supplier of OLED organic materials in China, has steadily increased its operating income in recent years. The company submitted its IPO filing materials to the Shanghai Stock Exchange's Science and Technology Innovation Board on June 16 this year, and will be reviewed by the Listing Committee on November 1.
According to the prospectus, although the operating income of Wright Optoelectronics has risen steadily in the past two years, times business school found that the company's performance is mainly supported by BOE, and its core technology originates from a third party and relies heavily on third parties. At the same time, the two versions of the documents disclosed by the company have inconsistencies in the data, and there are letters or loopholes.
In response to the above questions, on October 27, Times Business School sent a letter to Wright Optoelectronics to inquire, but as of press time, it had not received a reply from the other party.
Business and technology rely heavily on third parties
From 2018 to the first half of 2021, the main business income of Lite Optoelectronics was 82.5597 million yuan, 179 million yuan, 245 million yuan and 148 million yuan, respectively. Among them, more than 60% came from BOE, accounting for 75.81%, 86.16%, 74.22%, and 62.88% respectively. It can be seen that the company's customers are highly concentrated and rely heavily on BOE.
In order to highlight its own technical advantages, Wright Optoelectronics has repeatedly mentioned in the prospectus that the company is the first domestic manufacturer to provide OLED luminescent functional materials for BOE, and is the only domestic supplier of BOE OLED luminescent functional materials, and is one of the few enterprises in China that have independent patents for a variety of OLED organic materials and achieve large-scale production.
However, after flipping through the prospectus, The Times Business School found that Wright Optoelectronics did not rely on its own technical advantages to attract BOE, but through a company called Material Science Co., Ltd(hereinafter referred to as "MS"),it was able to enter the list of BOE suppliers, thus achieving rapid performance growth.
OLED display panels are mainly used in smart phones, TV wearable devices and other fields, and end users include Huawei, Apple, Samsung and other enterprises. The above-mentioned end users have a strict control system for patents, and the materials provided by panel manufacturers need to have patent protection. Therefore, whether there is a corresponding patent is one of the necessary conditions for panel manufacturers to choose a supplier.
Due to the early start of foreign OLED organic material enterprises, most of the patents are controlled by enterprises in Europe, the United States, Japan and South Korea, and the patent protection of corresponding materials is formed, which occupies a pre-emptive advantage in the industry. Domestic OLED industry enterprises are late, so they are at a competitive disadvantage in terms of market share and number of patents.
According to Wright Optoelectronics, in 2016, in order to cut into the field of OLED terminal materials, the company found an MS that supplied terminal materials for the ORDOS plant of BOE and sought cooperation opportunities. After consultation, the two parties decided that Lite Optoelectronics would invest US$7.14 million in currency, MS would invest US$6.86 million in 6 intangible assets (proprietary technologies), each accounting for 51% and 49% of the equity to establish Litemax, and Litemeis would conduct research and development, production and sales of OLED terminal materials in China, and MS would no longer establish R&D and synthesis companies in China through sole proprietorship, joint venture or other means.
After the establishment of LiteMax, MS is responsible for the technical guidance of OLED material research and development, manufacturing, sales business support for factory production products, MS Korea is also responsible for the training of the main technical personnel of Lite Optoelectronics; Lite Optoelectronics is responsible for the management of the company's operation and workshop production line, the research and development and production of OLED materials, and the domestic sales of factory production products. After that, the original business of MS and BOE was all undertaken by Litemax, and MS could no longer be sold to BOE in China.
It can be seen that the OLED terminal material related technology of Lite Optoelectronics mainly comes from MS, and its business also relies heavily on MS. According to the financial data disclosed by Wright Optoelectronics in the past years on the new third board, the company's operating income from 2013 to 2016 was 19.3215 million yuan, 36.3344 million yuan, 77.3845 million yuan and 93.4035 million yuan, respectively. Since the introduction of BOE as a customer, the company's revenue scale has doubled.
MS, as a supplier of BOE OLED material terminals, has reached a stable cooperation with BOE, but still established a joint venture with Wright Optoelectronics, and then chose to withdraw, selling its 49% equity, two patents and part of the inventory to Lite Optoelectronics, and no longer selling patent licensed products to BOE or other customers. Is there a relevant interest behind this?
On September 16, 2019, Wright Optoelectronics hired Kim Young-kook from South Korea with a high salary as the company's chief scientist. According to the prospectus, Jin Rongguo's annual salary is 3.3428 million yuan, which is more than 10 times the annual salary of other core technical personnel in the same period, and the current salary of chairman Wang Yalong is 1.2046 million yuan, which is about 1/3 of Jin Rongguo's annual salary.
As the core technical personnel of Lite Optoelectronics, Jin Rongguo contributed 15 patents to the company during his tenure (less than 2 years), accounting for 24.6% of the total number of patents of Lite Optoelectronics. It can be seen that Jin Rongguo has made great contributions to the technology research and development of Wright Optoelectronics.
As mentioned above, the technology of Wright Optoelectronics to enter the OLED organic materials market mainly comes from MS, and then hired Kim Yong-kook from South Korea as the company's chief scientist to lead the R&D team to engage in OLED material research and development. This raises questions about its R&D independence and the overall R&D capabilities of its R&D team.
Data may be inaccurate
In order to prove that it has R&D capabilities and R&D independence, Lite Optoelectronics clarified in the first round of inquiries that the company's R&D technical team has a background in organic chemistry, fine chemicals, optics, electronic information and other disciplines, and after the initial MS Korean training, it has established a certain theoretical foundation for OLED terminal materials and their research and development directions. Subsequently, through digestion, absorption and re-innovation, it has gradually formed its own R & D technology system, and the company's later products and technology development are independent of MS.
However, the Shanghai Stock Exchange is still skeptical about this, and continues to ask questions in the second round of inquiries, asking Wright Optoelectronics to further explain the content, revenue and proportion of its self-developed products and other source technology products; combined with the relationship between MS and other companies and Lite Optoelectronics in technology, to further explain its technical independence.
Under this premise, times business school compared the relevant data of the two rounds of reply drafts and found that the sales amount and proportion of the products independently developed by Wright Optoelectronics were inconsistent.
According to the information of the first round of inquiry reply (2021 semi-annual report financial data update) "THE APPLICATION OF MS-related technologies in OLED terminal material products", from 2018 to the first half of 2021, the sales amount of Lite Optoelectronics' independent patented products was 6.266 million yuan, 13.6117 million yuan, 101 million yuan and 115 million yuan, accounting for 10.01%, 8.79%, 52.66% and 96.01% of the operating income of each period, respectively.
The second round of inquiry response draft "The content, sales amount and proportion of the company's self-developed products and other source technology products in the company's OLED terminal materials" shows that during the reporting period, the sales amount of the company's independently developed products was 0, 6.1461 million yuan, 96.1947 million yuan and 114 million yuan, accounting for 0, 3.97%, 50.01% and 95.37% of the operating income of each period, respectively.
Both documents were released on September 30 this year, but there is such a big gap in the data of the same content that the authenticity is really doubtful.
summary
The field of OLED terminal materials has a high threshold and high requirements for technology. Through cooperation with MS, Lite Optoelectronics has been able to master the relevant core technologies and important customers BOE, and its dependence on MS is high. However, the technology iteration in this field is relatively fast, and whether Wright Optoelectronics, which has separated from MS, has the research and development capabilities to respond to market changes remains to be discussed.
Although the company has hired a high-paying technician Jin Rongguo to engage in research and development work, will the world's different salaries and benefits bring hidden dangers to personnel management for Lite Optoelectronics? Can Wright Optoelectronics attract Jin Rongguo to work for it for a long time?
In addition, the information released at the same time has a data discrepancy, is it the negligence of the staff that fills in the data incorrectly? Or is the data itself misrepresented, resulting in discrepancies in disclosure?
【References】
"Shaanxi Lite Optoelectronic Materials Co., Ltd. Initial Public Offering of Shares and Listing on the Science and Technology Innovation Board Prospectus" (Draft of the First Meeting).
"Reply to the First Round of Review Inquiry Letter of Wright Optoelectronics and Sponsoring Institutions" (2021 Semi-annual Report Financial Data Update).
Reply to the Second Round of Review Inquiry Letter of Wright Optoelectronics and Sponsoring Institutions. Shanghai Stock Exchange Science and Technology Innovation Board