*St Huaying said “preliminary hemostasis” but still faces 800 million depreciation costs every year

As the first Taiwan funded backdoor listed company of a share, Huaying Technology (Group) Co., Ltd. (hereinafter referred to as “Huaying technology or * ST Huaying”, 000536. SZ) The bankruptcy of Zhonghua image tube Co., Ltd. (hereinafter referred to as “Zhonghua yingguan”) as the former actual controller and the largest shareholder, directly led to the suspension of the company’s core business and the loss of net profit for two consecutive years. However, it is on the verge of delisting, but it is slowly recovering. In an interview with China business daily on November 4, Lin Jun, chairman of Huaying technology, said that as of September 30, 2020, Fujian huajiacai Co., Ltd. (hereinafter referred to as “huajiacai”), a subsidiary of Huaying technology, had completed 1.174 billion yuan of operating income and net cash flow from operating activities was 316 million yuan, a significant increase. At present, Huaying technology has stopped bleeding It should be said that it is a preliminary success and has formed hematopoietic function. < p > < p > according to the third quarter report of 2020, in addition to the operation recovery, the net profit of Huaying technology attributable to the listed companies in the first three quarters reached 1.304 billion yuan through the sale of subsidiaries, which has successfully turned around the deficit. Lin Jun said that the company has basically recovered from the bankruptcy of Zhonghua yingguan. However, Lin Jun also admitted to the reporter that the biggest problem in the future development of Huaying technology is the depreciation cost brought by the 6th generation line invested by huajiacai. Although the net operating cash flow is positive, it still needs to face the equipment depreciation cost of nearly 800 million yuan per year, which will exert great pressure on the net profit after deducting non-profit in the future. < p > < p > according to the financial report data, Huaying technology had a loss of RMB 4.966 billion and RMB 2.587 billion in 2018 and 2019 respectively, and it has been listed in * ST shares (stocks with delisting risk). < p > < p > at the end of 2018, Lin Jun was appointed by Fujian electronic information group to serve as the executive deputy general manager of Huaying technology, and took over the board chairman of Huaying technology in February 2019. “We have made a big change in two years.”. Lin Jun said. < p > < p > the introduction of new capital is an important direction of Huaying technology. On June 10, 2020, * ST Huaying announced that Fujian Electronic Information Group intends to take over 5.53% of the company’s equity by way of judicial transfer to repay debts with shares. Lin Jun told reporters that in order to improve the company’s cash flow, in the past year, Huaying technology stripped off some inefficient assets, sold “Huaying Wujiang” to Wujiang Development Zone, and sold its wholly-owned subsidiary Huaying optoelectronics to Fujian electronic information group through related party transactions. At the same time, Taiwan Zhonghua image tube owes Huaying technology nearly 2.9 billion yuan, which is also under litigation. < p > < p > in terms of business, Huaying technology is also trying to get out of the quagmire. Huajiacai invested in 2016 is an important breakthrough point. Huajiacai’s panel technology is the core. Huaying technology plans to implement “large panel + small module” to make up for the panel resource gap after the bankruptcy of China image tube. < p > < p > at present, Huaying technology has changed from the original processing mode of Taiwan Zhonghua image tube and export module processing mode to the manufacturing mode of “large panel + small module” with the panel technology of subsidiary huajiacai as the core. However, “the strategy has not yet been fully implemented.”. Lin Jun added, “one of the reasons is that Huaying technology is best at car modules. After the problems of Taiwan Zhonghua yingguan, the former controlling shareholder of Taiwan, we can’t get the glass substrate now, so we need to use huajiacai’s glass to re authenticate with the automobile manufacturer. It will take about two years for Huayi’s glass, and samples have already been sent.” < / P > < p > “secondly, the revenue from only selling panels is relatively small. Therefore, we hope that the whole industry in the future should be the panel as a major sales product, and at the same time, it can expand the proportion of module shipment. In the future, the mode of shipment should be that our own module factory can consume 50% of our glass, because the module assembly shipment has a four times effect than the panel shipment alone. ”Lin Jun said. < p > < p > according to the latest three quarterly reports released by Huayin technology on October 22, the company’s operating revenue in the first three quarters was 1.461 billion yuan, with a year-on-year increase of 26.75%; the net profit attributable to shareholders of listed companies was 586 million yuan, up 139.28% year-on-year; the net cash flow from operating activities was 415 million yuan. At present, the operating income of Huaying technology mainly comes from its subsidiary huajiacai. Lin Jun told reporters that by the end of September, the sales revenue of the whole panel of huajiacai was 1.174 billion yuan, and the net cash flow from operating activities was 316 million yuan. However, the net profit of Huaying technology after deducting non-profit is still negative, although huajiacai has gradually improved and Huaying technology has turned losses into profits in the third quarter of this year. According to the financial report of Huaying technology, the net profit attributable to shareholders of listed companies after deducting non recurring profit and loss in the first three quarters of 2020 was 932 million yuan, up 48.84% year on year. < p > < p > the reporter noted that the net profit attributable to shareholders of the listed company in the first three quarters of 2020 was 586 million yuan, an increase of 139.32% compared with the same period of last year. Huaying technology explained in the financial statements that it was mainly caused by the sale of its subsidiary Huaying Optoelectronics in the current period. < p > < p > for how to turn losses into profits, Lin Jun further explained that the first is to sell Huaying Wujiang to Wujiang Development Zone; the second is to sell the wholly-owned subsidiary Huaying optoelectronics to Fujian electronic information group, the largest shareholder at present, through related party transactions; third, with the net operating cash flow, the consolidated statements of the third quarter are positive at present. “Up to now, from the consolidated statements of Huaying technology, the operating cash flow, excluding depreciation, is positive. In the first three quarters, there were more than 1.4 billion yuan of non operating profit and loss, and the profit was mainly realized through the sale of assets,” Lin Jun said < / P > < p > it is worth noting that if the audited net profit of the company in 2020 continues to be negative, according to the relevant provisions of Shenzhen Stock Exchange Stock Listing Rules, the company’s shares will be suspended from the date of announcement of the annual report in 2020. Speaking of whether or not to take off the hat, Lin Jun said: “I have strong confidence in turning losses into profits this year, but whether to take off the hat also depends on the annual report of this year, which is judged by the exchange.” Lin Jun also admitted to the reporter that the biggest problem in the future development of Huaying technology lies in the depreciation cost brought about by the 6th generation line invested by huajiacai. Although the net operating cash flow is positive, it still needs to face the equipment depreciation cost of more than 800 million yuan per year, which will exert great pressure on the net profit after deduction. < / P > < p > “from the perspective of operation, this is an action that must be done. At present, there are four listed companies controlled by Fujian electronic information group, including Huaying technology. From the perspective of the industrial chain, there are solution providers, the top three module manufacturers in China, and the whole machine factory. As a panel supplier, Huaying technology has chip companies under Fujian electronic information group From the terminal point of view, its entire industrial chain is complete. Therefore, as a panel manufacturer, Huaying technology should be able to do a lot of things relying on Fujian electronic information group Lin Jun said. < / P > < p > as far as the global panel market is concerned, an external competition pattern between China and South Korea has been formed. In China, the mainland and Taiwan have also formed an internal competition pattern. In the mainland, there are enterprises such as BOE, shentianma, Huaxing optoelectronics and CLP panda, while in Taiwan, there are Youda and Qun Chuang. Generally speaking, the volume of each family is larger than that of huajiacai. Huaying technology’s approach is to play a differentiated competitive strategy in product positioning, hoping to seek a breakthrough through its mastery of metal oxide technology. < / P > < p > in terms of the current mainstream technologies in the panel industry, one is the OLED panel manufacturer led by Samsung, and BOE also has OLED manufacturing technology, two technologies, and the other is LTPS low-temperature polysilicon technology represented by shentianma. And Huaying technology is currently doing MOX (metal oxide semiconductor) technology. According to Lin Jun, huajiacai’s line generation line is the most advanced. It is characterized by a mixed line, which can be used to make alpha silicon and igzo, which is a production line of Huaying technology MOX (metal oxide semiconductor). < p > < p > at present, in terms of igzo technology, there are only Huaying technology and CLP panda in China. According to Lin Jun, igzo metal oxide semiconductor technology originated from sharp company in Japan. CLP panda uses the technology of this project. Compared with CLP panda, huajiacai metal oxide technology does not use sharp’s patent. Basically, 100% of its metal oxide technology is self-developed. At present, the annual investment in technology research and development accounts for about 12%. Huajiacai has 167 independent patent applications. At present, it has high resolution and high frame rate. From the touch products, it belongs to the characteristics of narrow frame and low power consumption. At present, Huaying technology has successfully developed embedded touch control, including mobile phone Liu Hai screen, water drop screen and hole punching screen, realizing full coverage of 5.4-14 Inch series of mobile phones and tablet computers. However, Lin Jun said frankly that the most important layout and challenge of Huaying technology in the next year is to make efforts in medium size in the future, and how much recognition the market of izgo technology can have for the company. < / P > < p > Disclaimer: the purpose of this article reprinted by china.com finance and economics is to convey more information and does not represent the views and positions of the website. The content of this paper is for reference only and does not constitute investment advice. Investors operate accordingly and bear their own risks. < p > < p > Chinanet is a national key news website under the leadership of the Information Office of the State Council and managed by China foreign language publishing and Distribution Bureau. Through 11 versions in 10 languages, the website releases information 24 hours a day, which is an important window for China to carry out international communication and information exchange.