I. Overview of events
Recently, Huaying Science and Technology issued an announcement: 1) the company signed the "Fujian Putian High-tech Panel Project Investment Cooperation contract" with Putian Municipal people's Government and Fujian Electronic Information (Group) Co., Ltd.; 2) subsidiary Huaying Optoelectronics plans to transfer 13.4615% equity of Fuzhou Huaying Video Co., Ltd to 11.82 million yuan. 3) the holding subsidiaries Fujian Huaying display Technology Co., Ltd. (hereinafter referred to as "Fujian Huaxian") and Huaying Video (Wujiang) Co., Ltd. (hereinafter referred to as "Huaying Wujiang") plan to transform and upgrade the module production line.
II. Analysis and judgment
The LCD panel project is strongly supported by the government, the production progress will be accelerated, and the project subsidy will have a positive impact on the company's future performance.
1. Huajiacai, a subsidiary, has built a sixth-generation TFT-LCD panel production line in Putian City, with a total investment of about 12 billion yuan and a design capacity of 30,000 pieces per month, which is mainly used for the production of high-end smart phone displays, flat panel displays and car displays. After the project reaches production, the company expects the turnover to be about 10.5 billion yuan (excluding the market price drop) and the enterprise income tax to be about 190 million yuan. The trial production of this project was lit up in March 2017 and is expected to be put into production in June 2017.
2. According to the announcement, this contract involves a subsidy of 2.64 billion yuan for the project, which is provided to Huajia Lottery Company within six years after the project is put into production, with an average of 440 million yuan per year. According to the contract, the company issued 10 billion yuan of additional shares, of which the registered capital of Huajiacai Company was 8.4 billion yuan, and Putian Municipal people's Government and Fujian Electronic Information (Group) Co., Ltd. jointly subscribed for 5 billion yuan, accounting for 59.5% of the registered capital of Huajiacai Co., Ltd. The difference between the total investment of the project and the registered capital of Huajiacai (about 3.6 billion yuan) will be completed through syndicated loans.
3. We believe that the strong support given by the government in terms of land supporting conditions, energy supply, project subsidies and the introduction of talents will accelerate the smooth commissioning of the Huajia color liquid crystal panel project and provide a solid guarantee foundation for the promotion of the project. after the project is put into production, it will become a new profit growth point for the company. The huge amount of subsidy for the project will have a positive impact on the company's future performance.
The subsidiary is transferred to Huaying Video, which will integrate the upper reaches of the module industry chain.
1. Fuzhou Video is mainly engaged in backlight module production, which is one of the key links in the LCD panel industry chain. after this acquisition, subsidiary Huaying Optoelectronics will hold 75.1923% of Fuzhou Video. Fuzhou Video achieved revenue of 368 million yuan and net profit of 2.0715 million yuan in 2016.
2. We believe that this transaction meets the needs of the company to expand and strengthen the LCD industry, and will help the company to further integrate the upstream and downstream of the module industry and enhance the management and control ability of its subsidiaries.
Upgrade and transform the module production line to meet the needs of major customers and enhance the competitiveness and profitability of the production line
1. Fujian Huaxian plans to add new equipment such as baking and plasma cleaning machines at the request of customers, with an investment budget of 1.652 million yuan and an estimated payback period of about 3 years. Huaying Wujiang plans to add a new offset line, at the same time transform a small and medium-sized offset line into a large-size offset line, the investment budget does not exceed 7.2 million yuan, the planned production capacity is increased from 140,000 pieces / month to 320,000 pieces / month, and the new revenue is expected to be 1300 million yuan / year. The expected payback period is about 10 months. The above two investment projects are funded by their own funds.
2. We believe that through the transformation and upgrading of the existing module production line, the holding subsidiary will be able to meet the needs of major customers to improve the production capacity and quality of contract manufacturing, and help the company to establish a deep cooperative relationship with major customers. enhance the company's profitability and the competitiveness of the production line.
