In a few years, the stock market has raised hundreds of billions of funds. Behind the scenes, BOE has been bloodthirsty all the way, this China's most successful technology and industry catch-up has expanded again, and the future will be counted.
On the evening of January 15, BOE announced the non-public issuance of A shares in 2021. It plans to raise 20 billion yuan to acquire equity, increase capital and expand production, repay loans, and supplement working capital.
After the announcement was re-released, it attracted great attention from the market. BOE was once again given the title of "shareholder harvester". At the same time, an industrial problem also surfaced: BOE reproduced the LCD era in the OLED field. Does the model really work?
From the verge of bankruptcy to the world's second largest panel manufacturer, BOE has spent 13 years. In these 13 years, BOE has started construction of 13 display panel production lines. The speed of expansion is visible to the naked eye, and there are several large-scale fixed increases behind it. Financing has also been repeatedly criticized.
The daughter is gone. BOE integrates the strength of local governments in Beijing, Hefei, Chengdu, Chongqing and other places to wipe out the fighting power of Japan and South Korea and become the global LCD king. But can the protracted war master still win the pursuit?
The old and the new technology alternate, South Korea's duo heads across the top of large-size, medium- and small-size OLEDs, looking at the world. How much combat power can BOE + local government, state-owned outstanding students and local financial subsidies have?
01. BOE "Bloodthirsty Past"
In August 2011, BOE announced that it would build the country's first 5.5-generation AMOLED production line in Ordos. In exchange, the Ordos government promised to allocate no less than 1 billion tons of coal mining rights for BOE.
Two years after creating the historical precedent of "production line for coal", BOE announced a private placement of 46 billion yuan, setting the record of the largest refinancing in the A-share market at that time.
Ten years later, the former "difficult brothers" in the A-share market have become the leaders in the LCD field. China's display panel industry has the confidence to confront Korean factories. The BOE model of "bundling" the government + "sucking blood" stock market continues.
BOE's fixed growth road began in 2006. In order to raise funds for the construction of the production line of the Fertilizer 6th generation line, it has issued a total value of 1.86 billion yuan in stocks. After taste the sweetness, BOE has again in the following years Three rounds of fixed increase were carried out.
Until 2014, BOE launched the fifth round of fixed increase since its listing. This time the total amount reached an unprecedented 46 billion yuan. After the announcement of the fixed increase plan, BOE's stock price fell rapidly. In less than two months, The stock price fell from 5.04 yuan to 2.64 yuan, and the market value was nearly cut in half.
This has almost become a law. When BOE's stock price rises, BOE will issue a fixed increase plan, and these fixed increase shares will eventually return to the secondary market, and the stock price will fall because of dilution. It has also been questioned.
However, from a realistic perspective, BOE did use the funds raised in practice. Taking the fifth round of fixed increase in 2014 as an example, BOE used all the funds raised in Hefei 8.5 generation line and Chongqing 8.5 generation line. In the follow-up construction of the three major projects of the Ordos 5.5-generation AMOLED production line, these three production lines have become a strong guarantee for BOE to smoothly ride through the periodic lows of the panel after being put into production.
However, what BOE is really criticized is its disproportionate dividend. Public information shows that BOE has accumulated less than 5.3 billion yuan in cash dividends since it went public in 2001, and even created a history of no cash dividends for ten years.
Corresponding to this is the six fixed increase with a total amount of 90.8 billion yuan.
In contrast, TCL Technology, which is also a domestic "panel duo", has paid cash dividends for 9 consecutive years since 2012, with a cumulative dividend of more than 8.1 billion yuan. During this period, TCL Technology's targeted financing financing was still less than 8 billion yuan.
In addition, TCL Technology has also carried out several share repurchases to increase shareholder returns. In 2019 alone, the total amount of shares repurchased by TCL Technology reached 8 billion yuan.
Perhaps it is the market sentiment that has long been expected. After throwing out a 20 billion fixed increase plan, BOE also released a shareholder dividend return plan for the next three years, promising to distribute the profit in cash every year if it is profitable in the current year. Not less than 10% of the distributable profit realized in that year.
02, OLED catching up, it's a big deal
In May 2020, "Wall Street Journal" columnist Christopher Mims wrote an article reviewing the history of the LCD industry from the invention of the United States to the rise of Japan, to the three pillars of Korea, Japan, and Taiwan, and now, mainland China has occupied half of the country.
Mims judged that in China, where the LCD manufacturing industry is dominant, subsidies for its display panel industry make it difficult for any other country to compete.
Chinese companies such as BOE are now trying to extend this battle to the OLED field-a combination of government subsidies and price competition.
Taking Visionox as an example, the 6th generation AMOLED production line started in Hefei in 2018 has a total investment of 44 billion yuan, of which three companies controlled by the State-owned Assets Supervision and Administration Commission of Hefei have contributed as much as 81.82%. Loans after the project started Hefei SASAC also provided important assistance in the financing.
BOE, which holds the top spot in the LCD field, naturally does not want to be left behind in the OLED field. According to the announcement issued by BOE, the 20 billion yuan raised this time is planned to invest in 6 projects. Except for the repayment of the Fuzhou Urban Investment Group loan and supplementary liquidity, each of which will occupy 3 billion yuan, and the Chengdu BOE 100 million yuan project will occupy 500 million yuan. Of the 13.5 billion yuan are used for capital increase and production expansion projects.
Among them, it cost 6.5 billion to increase the capital of the 6th generation AMOLED production line in Chongqing. The total financial investment of this production line reached 46.5 billion yuan, and the design production capacity was 48K/month. It is mainly targeted at small and medium-sized panels such as smartphones and tablet computers. It is planned to be 11 this year. The construction and production of the first phase of the project will be completed in December, and the third phase of the entire project is expected to be completed in December next year.
Counting the three production lines in Ordos, Chengdu, and Mianyang that have been mass-produced, and the Fuzhou production line under construction, BOE will have five AMOLED production lines in the future. Combined with the recent Korean media broke the news, BOE has set up an "Apple Line" for Apple. "BOE's ambition in the OLED field is evident.
At the same time, BOE is also consolidating its advantages in the field of large-size LCDs, spending 6.5 billion yuan to acquire a 24.06% stake in Wuhan BOE Optoelectronics. After the market has experienced the longest price increase cycle in history, the LCD panel business has gotten rid of its loss and has become the "sweet cake" in the hands of panel manufacturers. Wuhan BOE Optoelectronics, as a company with a 10.5-generation line, acquired shares of the company. Undoubtedly, it can greatly improve its own profitability.
It is worth mentioning that this time BOE will also focus on Micro LED technology.
According to the company's data, Yunnan Chuangshijie was established in 2017, and BOE holds 82.77% of the shares. At present, the company's silicon-based OLED display devices have begun to ship, and the 12-inch silicon-based OLED project invested and constructed by BOE is just preparing for the future silicon-based Micro LED industry.
From an industrial point of view, BOE’s use of funds raised this time can be described as far-reaching considerations, including LCD business, which is sometimes at a high price, OLED business that has been focused in recent years, and Micro LED business that represents future display technology.
However, such a multi-line layout is destined to make BOE bear considerable cost pressure. In this context, can BOE's model really be replicated? Or, relying on such a model can really break through the Korean factory in the OLED field Is it blocked?
03. The old model under the new industry
In 2007, under the endorsement of the Beijing Municipal Government, BOE obtained the bank's promise to extend the loan repayment period for five years. At the same time, it obtained a loan of 2.8 billion yuan through the Beijing Industrial Investment Company under the SASAC, and under the proposal of BOE The loan was transferred to shares of BOE.
Since then, BOE has continued this model, allowing projects in Chengdu, Hefei, Chongqing, Fuzhou and other places to be launched one after another, which has attracted other domestic panel manufacturers to follow suit.
In a certain sense, the domestic display panel industry can transform from a state of poor and white to the second largest display panel producer in the world, and it is inseparable from BOE's creation of this model.
However, whether this model can be replicated in the OLED field remains to be discussed.
The fundamental reason is that when China's panel manufacturers entered the LCD field in large scale, the development of this field has been quite mature, and there are almost no too many technical barriers.
Taking Huike as an example, Huike has almost copied BOE's model in the development process. Its Liuyang 8.6 generation line project has a total investment of 32 billion yuan, of which Hunan Jinyang Investment Co., Ltd., which is controlled by the Liuyang Municipal People's Government, accounts for up to 90%.
After the production line is put into production, Huike can recruit a large number of experts and technicians from Japan and South Korea to increase the production line's production capacity and yield. On the other hand, it can sell panels at a lower price through its own terminal factory. "Small profits but quick turnover" strategy to seize the market.
But this strategy is difficult to apply in the OLED field, and the first thing to bear is the yield problem. According to DSCC data, BOE's AMOLED panel yield rate in the first quarter of 2019 was only 30%, and the yield rate of AMOLED panels was only 30% in the third quarter of 2020. The cost of other domestic manufacturers such as Visionox, Shenzhen Tianma, and Hehui Optoelectronics is also Basically maintain around 60%-70%.
In contrast, Samsung's AMOLED yield has exceeded 90% in 2019, and the cost advantage is self-evident.
In addition, in the LCD era, Chinese panel manufacturers can hire Japanese and South Korean experts and technicians through high salaries, but in the AMOLED field, due to Samsung's dominance, Chinese panel manufacturers have basically faced the status quo of "no one can dig".
The most important thing is the huge cost pressure needed to build AMOLED production lines. Take the BOE Chongqing AMOLED production line as an example. This production line with a total investment of 46.5 billion yuan is calculated according to BOE's 7-year production line depreciation period. Without considering the net residual value, the annual depreciation cost of this production line will reach 6 billion.
In contrast, most of the AMOLED production lines of Samsung Display and LGD were built in 2009-2013, and the depreciation of some production lines will be completed in the past two years. This unexpectedly increases the profit margin of the two companies by about 15%. China has more competitive advantages.
The competitive landscape of the panel industry has always been winners and losers, and backward production capacity is destined to be washed out, such as Japan in the early years, or Korea in the LCD field now, in the OLED field, BOE, which continues the past model, is the elimination. ?Or the eliminated?
