Huicheng Co., Ltd. announced in the evening today that it has released the financial report for the third quarter of 2024 in the Science and Technology Innovation Board Daily on October 23rd.

The announcement shows that it achieved revenue of 1.07 billion yuan in the first three quarters of this year, a year-on-year increase of 19.52%; the net income attributable to the parent company was 0.1 billion yuan, a year-on-year decrease of 29.02%.

Looking at a single quarter, Huicheng Co., Ltd.'s Q3 revenue was 0.396 billion yuan, a year-on-year increase of 17.23%; the net income attributable to the parent company was 41.1647 million yuan, a year-on-year decrease of 32.43%. The company has achieved consecutive quarter-on-quarter growth, with revenue and net income in Q3 increasing by 10.62% and 23.44% respectively compared to the second quarter.

Regarding the reasons for the change in net income attributable to the parent company in the first three quarters, Huicheng Co., Ltd. stated that it was mainly due to the company's continuous advancement of convertible bond investment projects, continuous capacity expansion, increased related expenses such as depreciation of fixed assets, resulting in a year-on-year decrease in gross margin; the financial expenses and exchange losses also increased in the first three quarters of this year.

Huicheng Co., Ltd. issued convertible corporate bonds to unspecified parties on August 7 this year, raising actual funds of 1.143 billion yuan. It is understood that since June 2023, the company has been investing in convertible bond investment projects with its own or self-raised funds.

Among them, the 12-inch advanced process new display driver chip wafer bump manufacturing and wafer testing capacity expansion project plans to carry out new display driver chip wafer bump manufacturing and wafer testing services on the basis of Huicheng Co., Ltd.'s existing business, and will enhance the scale of its OLED and other new display driver chip packaging and testing services after completion. The prospectus for the convertible bond issuance shows that after the project reaches production, it will add an annual production capacity of 0.24 million pieces for wafer bump manufacturing and 0.054 million pieces for wafer testing.

In addition, the wafer test and wafer-level packaging expansion project of the 12-inch advanced process new display driver chip in the raised funds project can increase the production capacity by 0.0684 million wafers/year for wafer testing, 0.204 billion COG/year, and 0.096 billion COF/year.

In recent years, the OLED display market penetration rate has been rapidly increasing. According to Frost & Sullivan data, it is estimated that by 2025, the global shipment of OLED display driver chips will reach 2.45 billion units, with a market share of 10.5%.

It is understood that Royole, Ruideng, Ellipsiz, Yunyinggu, and Jichuang Beifang are among the OLED customers of Huicheng shares. In recent years, they have been continuously expanding the number of customers, with Korean clients being introduced.

During a institutional research visit in September this year, Huicheng shares indicated that currently the company's OLED display driver chip shipments are mainly for mobile phones. In the first half of this year, the proportion of OLED products remained stable. With the peak of brand new phone stocking and the continued growth of the aftermarket, it is expected that the revenue share of OLED products will further increase from the third quarter.

In terms of capacity utilization and production capacity, Huicheng shares stated that both have been further improved in Q3, which is expected to drive continuous improvement in gross margin; in terms of pricing, due to price adjustments made to some customers and products in the first half of the year, overall stability is expected in the second half of the year.