BOE VARITRONIX(00710)2024-04-24 09:22Financial Performance - Revenue for 2023 reached HKD 10.76 billion, a 0.4% increase compared to HKD 10.72 billion in 2022[7][9] - EBITDA for 2023 was HKD 771 million, an 8% decrease from HKD 841 million in 2022[7][9] - Net profit attributable to shareholders in 2023 was HKD 475.3 million, an 18% decline from HKD 582.5 million in 2022[7][9] - Cash and term deposits balance as of December 31, 2023, stood at HKD 3.501 billion, up from HKD 2.881 billion at the end of 2022[7][9] - Bank loans decreased by 7% to HKD 620 million in 2023, with HKD 383 million being long-term loans primarily for capital expenditures[9] - Net profit attributable to shareholders decreased by HKD 107.2 million, down 18% year-on-year, primarily due to price adjustments and additional costs from new production facilities[12] - EBITDA decreased by 8% to HKD 771 million, with an EBITDA margin of 7.2%, influenced by depreciation and higher marginal costs[12] - Revenue for the fiscal year ending December 31, 2023, increased by 0.4% to HKD 10,760,000,000, driven by increased production capacity at the new facility in Chengdu and higher sales of TFT and touchscreen display modules[38] - Operating profit for 2023 decreased by 15% to HKD 570,000,000, primarily due to price adjustments, additional costs from the new facility, and higher marginal costs during the optimization phase[39] - Net profit attributable to shareholders decreased to HKD 475,000,000 in 2023 from HKD 582,000,000 in 2022, with basic earnings per share dropping to 60.4 HK cents from 78.4 HK cents[41] - The company proposed a final dividend of 19.0 HK cents per share, totaling HKD 150,000,000 for the year[41] - Cash and cash equivalents increased to HKD 3,501,000,000 in 2023 from HKD 2,819,000,000 in 2022, with significant holdings in RMB and USD[44][45] - The company's debt-to-equity ratio decreased to 14.1% in 2023 from 16.2% in 2022, reflecting efforts to reduce operational risks[42] - Cash flow from operating activities rose to HKD 1,307,000,000 in 2023 from HKD 834,000,000 in 2022, driven by optimized working capital management[43] - Net cash used in investing activities was HKD 224,000,000 in 2023, down from HKD 1,170,000,000 in 2022, with HKD 502,000,000 spent on property, plant, and equipment[43] - The company completed the use of HKD 798,800,000 raised from share placements and shareholder subscriptions, allocated to factory construction, equipment procurement, and working capital[46][47] - The company's bank loans decreased to HKD 620,000,000 in 2023 from HKD 667,000,000 in 2022, with a mix of fixed and floating interest rates[48] - Bank loans of HKD 171,044,000 were secured by land, buildings, plant, machinery, and equipment of a subsidiary, with the pledge agreement expected to take effect in 2024 after registration[49] - The group's outstanding capital commitments not provided in the financial statements amounted to HKD 346,000,000 as of December 31, 2023, down from HKD 905,000,000 in 2022[50] - Total assets increased to HKD 10,034,000,000 in 2023, up from HKD 8,283,000,000 in 2022, driven by new factory completion and higher cash and fixed deposits[40] - Inventory rose by 24% to HKD 1,947,000,000 in 2023, compared to HKD 1,568,000,000 in 2022, due to increased production capacity from the new factory[40] - The Board of Directors proposed a final dividend of 19.0 HK cents per share for 2023, with a total annual dividend of 19.0 HK cents per share, down from 23.0 HK cents in 2022[184] - The company maintains a stable dividend policy with a payout ratio of no less than 30%, subject to review and based on profits, cash flow, financial condition, and capital requirements[184] Market Position and Business Strategy - The company maintains a leading global market share in automotive TFT display products and medium-to-large display modules[3] - The company celebrated its 45th anniversary, highlighting a history of innovation and growth in the automotive and industrial display sectors[3] - The company aims to become a leading provider of automotive smart cockpit display assembly solutions[3] - The company is part of the BOE Group, focusing on automotive and industrial display solutions, and is the only automotive display and system operation platform within the group[3] - The company's vision includes expanding its impact and delivering more value to customers and communities[3] - Group revenue growth driven by increased TFT and touch panel display module production capacity, with TFT and touch panel display modules accounting for 91% of total revenue[12] - Automotive display business revenue increased by 1% to HKD 9.71 billion, accounting for 90% of total group revenue[17] - Industrial display business revenue decreased by 8% to HKD 1.05 billion, representing 10% of total group revenue[18] - New production facility in Chengdu increased capacity by over five times in 2023, enhancing production efficiency and supply capabilities[18] - Global automotive display module market expected to grow at a CAGR of 4.40% for total shipments, 8.35% for large and medium-sized displays, and 18.16% for oxide and LTPS technologies over the next three years[19] - The global automotive display system market is expected to reach nearly HKD 100 billion in China by 2026, with the global smart cockpit and smart mobility market projected to reach several hundred billion HKD by the same year[20] - The company maintained its leading market share in global automotive display deliveries, particularly for displays of 8 inches and larger, and received multiple awards from major automakers[20] - China's new energy vehicle (NEV) sales are expected to grow by approximately 21% in 2024, with NEV sales accounting for about 33% of total vehicle sales in 2023, up from 2022[20] - China's NEV sales accounted for approximately 60% of the global market share in 2023, driven by the world's largest NEV charging network[20] - The company anticipates significant growth opportunities in Europe due to the EU's ban on new petrol and diesel cars from 2035, which will drive demand for NEVs and related products[21] - The company's "HERO" project focuses on developing smart cockpit applications for health, entertainment, leisure, and office scenarios, targeting the evolving "third space" concept in vehicles[21] - The company expects China's leading NEV manufacturers to increase their market share globally, with the company already holding a significant portion of the Chinese NEV market[22] - The company is developing innovative products such as large-sized automotive displays, curved displays, and advanced systems like OLED and PHUD (Panoramic Head-Up Display) to enhance competitiveness[22] - The company's PHUD technology is expected to see significant growth, with global shipments projected to reach 500,000 units by 2025 and 7 million units by 2030[22] - The company is expanding its display module applications to various vehicle types, including agricultural vehicles, trucks, and other motor vehicles, to capture new business opportunities[23] - The company continues to develop new technologies to meet market demands, focusing on multi-screen, large-size, high-quality displays, and improved HMI for automotive manufacturers[24] - The company is expanding its automotive system business and emerging businesses like CMS, PHUD, AR-HUD, seat armrest screens, side door screens, rear flip screens, and co-pilot screens[24] - The company is collaborating with leading new energy vehicle manufacturers in China and expanding its system display solutions business overseas[24] - The company is optimizing supply chain management by shifting to lower-cost IC chip suppliers and implementing dual sourcing to maintain quality and cost efficiency[24] - The new factory, operational since 2022, is in the early production phase with higher costs and is focusing on increasing production, improving equipment utilization, enhancing product quality, and reducing production losses[24] - The company aims to improve supply chain management, strengthen product innovation, optimize production efficiency, and enhance product quality in 2024[25] - The company has secured orders for new energy vehicles and is promoting TFT display products to industrial instrument and high-end home appliance customers to expand its industrial display business[26] - The company's products are installed in various high-profile vehicles, including Geely, Aston Martin, and NIO, with advanced display technologies like AMOLED and Mini LED[27] - The company maintains a leading market share as a comprehensive automotive smart cockpit display solution provider, reaching major OEMs and new energy vehicle manufacturers[28] - The company adheres to international quality standards like ISO 9001 and IATF 16949 to meet the demands of both domestic and overseas customers[28] - The company has established competitive advantages in high-quality products, stable supply, cost-effective offerings, and excellent after-sales service[29] - The company is focusing on expanding its automotive display business, maintaining its leading position, and implementing a "three-step development strategy" to explore automotive display systems and smart cockpit solutions[29] - The company launched the "HERO" project in 2023, aiming to create intelligent cockpit experiences in health, entertainment, relaxation, and office scenarios[29] - The company has set ESG goals for 2025, including reducing carbon emissions, energy and water consumption, and hazardous waste[29] - The company has globally launched a 14.6-inch QHD Oxide display product, which is already in mass production, and showcased a 45-inch 9K ultra-large Oxide cockpit screen at CES 2024[30] - The company is developing Tandem OLED technology, which combines high efficiency and long lifespan, and has multiple car-mounted f-OLED displays in mass production[30] - The company has successfully developed a ~5K ultra-high-definition naked-eye 3D display and integrated it into driver monitoring systems for immersive 3D interfaces[30] - The company is advancing ADS-Pro technology, incorporating Mini LED, BD Cell, high refresh rates, high resolution, and wide color gamut for superior display performance[30] - The company has secured multiple projects with renowned automakers for BD Cell and Mini LED displays, demonstrating customer recognition[30] - The company is researching real-time 3D reverse imaging systems with zero latency and exploring multi-viewpoint 3D displays to eliminate eye-tracking systems[30] - The company completed the development of a smart surface material that passed vehicle-grade reliability testing and is now focusing on developing more surface materials with Mini-LED backlighting[31] - The switchable privacy display (POD) technology received positive feedback from Tier-1 clients in 2023, with further improvements planned for 2024, targeting completion in Q4 2024[32] - The company developed a pressure-sensitive touch technology to reduce false touches in outdoor and marine applications, particularly suitable for motorcycle dashboards and marine use[33] - A new knob-touch semi-system for cost-effective solutions like motorcycle dashboards and home appliances completed reliability testing in Q2 2023 and entered the sampling phase in Q4 2023[34] - The company completed the design of a next-generation TFT solution for AR-HUD systems and developed LCoS-based AR-HUD technology, filing 34 patents[35] - The company achieved a milestone by becoming the first in China to pass the GB15084 national standard test for a CMS system, obtaining 3C certification[36] - The company secured a core client for a 17.3-inch rear entertainment ceiling screen and completed the development of a high-performance cockpit domain controller based on the SiEngine platform[36] - The company has a strong presence in the smart cockpit industry, showcasing leading smart cockpit display technology and innovative "HERO" cockpit interactive application scenarios[177] - The company has received multiple awards, including the Harman Best Technology Award, Schneider 2023 Quality Supplier Award, and Zero Run Auto Global Partner Conference Innovation Award[178] - BOE Varitronix Limited participated in various exhibitions and forums, such as CES and the International Automotive Display Summit, promoting new AR-HUD solutions and smart cockpit technologies[179] - The company has strategic collaborations with major automotive companies like Great Wall Motors, Changan Qiyuan, and BYD, focusing on smart cockpit and display innovations[180] ESG and Sustainability - The company has set ESG goals for 2025, including reducing carbon emissions, energy and water consumption, and hazardous waste[29] - The company has committed to achieving carbon neutrality by 2050, with a specific reduction of 2,812.7014 tCO2e in 2023[65] - The company updated and optimized its environmental and social indicator reporting system in 2023 to ensure accurate data collection and reporting[62] - The company conducted a greenhouse gas emissions inventory within its operational control scope and explored pathways to achieve carbon neutrality[65] - The company implemented energy-saving projects and utilized green energy, including the construction of a rooftop photovoltaic power generation project[65] - The company's ESG report for 2023 complies with the "importance," "quantification," "balance," and "consistency" reporting principles[63] - The company's Board of Directors oversees ESG strategy and reporting, with regular reviews of ESG performance and targets[64] - The company held a new regulation training session in June 2023, covering auditor training, new standards, and operational-level consultations[64] - The company's ESG governance and management mechanisms are integrated into its operations to achieve long-term environmental, social, and corporate value[64] - The company's ESG report covers operations in China (including Heyuan and Chengdu) and Hong Kong, which are its core operational locations[59] - The company's Board of Directors conducts at least two ESG communication meetings annually to review and approve ESG strategies and performance[60] - The company has established an ESG risk management team composed of senior management and the finance department, which meets regularly to ensure proper management of ESG risks[66] - The company maintains regular communication with stakeholders through various channels to understand the impact of its activities and their demands[67] - Key stakeholder communication channels include shareholder meetings, annual reports, direct communication, and investor conferences for shareholders/investors, while customers are engaged through direct communication, site visits, and the company website[68] - The company has identified highly important ESG issues, including recruitment and promotion, health and safety, and greenhouse gas emissions, among others[70] - The company emphasizes environmental protection, with emissions and waste treatment policies fully compliant with local regulations and ISO 14001 certification obtained since 2005[75] - The company generated 881.35 units of non-hazardous solid waste, with a recycling rate of 81.91%[76] - The company has a robust risk management and internal control framework based on the "three lines of defense" model, overseen by the board of directors and the audit committee[72] - The company maintains a zero-tolerance policy towards corruption, with strict compliance with anti-corruption laws and regular employee training on ethical behavior[73] - The company ensures all related-party transactions are conducted fairly and transparently, with strict internal controls and regular monitoring to safeguard shareholder interests[74] - The Chengdu factory, covering 151,000 square meters, began mass production in October 2022 and completed environmental protection acceptance in February 2023[77] - The Chengdu factory achieved ISO14001:2015 environmental management system certification in June 2023[77] - Total greenhouse gas emissions at the Heyuan factory decreased from 60,154.81 tons in 2022 to 54,726.43 tons in 2023, a reduction of 9%[78] - Direct CO2 equivalent emissions at the Chengdu factory were 34,652.42 tons in 2023, compared to no data available for 2022[78] - Non-methane total hydrocarbon emissions at the Heyuan factory decreased by 5% from 1.115 tons in 2022 to 1.060 tons in 2023[79] - The Chengdu factory's waste gas collection rate exceeds 90%, with organic waste gas emissions being less than 10% of Sichuan's local emission limits[79] - The Heyuan factory has been using bio-alcohol oil as fuel since December 2018, effectively reducing emissions[79] - Wastewater discharge at the Heyuan factory decreased from 863,197 tons in 2022 to 694,554 tons in 2023, a reduction of 19.5%[78] - Hazardous solid waste at the Chengdu factory was 48.48 tons in 2023, compared to no data available for 2022[78] - The Chengdu factory's natural gas vacuum hot water boiler uses low-nitrogen combustion technology, keeping pollutant concentrations below Chengdu's emission limits[79] - Direct CO2 emissions (Scope 1) from the Heyuan plant increased by 343.95 tons in 2023, reaching 448.75 tons, a 374.66% increase per unit of product compared to 2022[80] - Indirect CO2 emissions (Scope 2) from purchased electricity at the Heyuan plant amounted to 54,277.68 tons in 2023[80] - Total greenhouse gas emissions (Scope 1 and 2) for the Heyuan plant in 2023 were approximately 54,726.43 tons[80] - The Chengdu plant's total greenhouse gas emissions (Scope 1 and 2) in 2023 were approximately 18,483.92 tons, with Scope 1 emissions at 347.64 tons and Scope 2 emissions at 18,136.28 tons[80] - The company plans to purchase 6 million kWh of green electricity in 2024 to promote low-carbon energy[81] - Wastewater discharge at the Heyuan plant decreased by 19.5% in 2023 compared to 2022, totaling approximately 168,600 tons[83] - The Heyuan plant's wastewater treatment facility has a maximum daily treatment capacity of 4,000 m³, with current daily treatment at approximately 2,000 m³[83] - The Chengdu plant does not have an industrial wastewater treatment station as it does not involve toxic or harmful wastewater discharge[83] - The company is implementing ISO 50001 energy management system construction and certification to promote energy conservation and carbon reduction[