京东方精电(00710) - 2021 - 中期财报

Company Overview and Financial Summary Financial Summary The Group achieved strong financial performance in H1 2021, with revenue growing 69% to HKD 3.2 billion and profit attributable to shareholders soaring 423% to HKD 95.1 million, demonstrating enhanced profitability and a robust cash position 2021 Interim Financial Summary (Million HKD) | Metric | H1 2021 | H1 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 3,200 | 1,898 | +69% | | EBITDA | 174 | 90 | +93% | | Profit Attributable to Shareholders | 95.1 | 18.2 | +423% | | Basic and Diluted EPS | 12.9 HK cents | 2.5 HK cents | +416% | | Cash and Time Deposits Balance | 1,601 | 1,502 | +6.6% | - As of June 30, 2021, the Group had no bank loans, maintaining a healthy cash position[4] Management Discussion and Analysis Chairman's Report The Chairman's Report highlights the Group's recovery from COVID-19, achieving significant H1 2021 revenue and profit growth driven by China's automotive market and display module sales, with a strategic focus on smart cockpit display systems - The Group's business recovered from the COVID-19 pandemic, achieving substantial growth in revenue and profit attributable to shareholders in H1 2021, primarily due to the rapid recovery of China's automotive market and the commencement of mass production for new projects[4] - Sales of TFT modules and touch display modules accounted for 81% of total revenue, serving as the primary growth driver[4] - The profit attributable to shareholders ratio increased from 1% to 3%, indicating improved profitability driven by sales growth and economies of scale[6] - The Board resolved not to declare an interim dividend for the six months ended June 30, 2021[7] Business Review In H1 2021, both core businesses grew, with automotive display revenue surging 86% to account for 81% of total revenue, driven by China's market and product mix optimization, while industrial display revenue also grew 21% due to increased orders in education and high-end home appliances Automotive Display Business Automotive display revenue grew 86% year-on-year to HKD 2.578 billion, comprising 81% of total Group revenue, driven by China's rapidly recovering automotive market, significant growth in new energy vehicle displays, and a shift towards higher-value touch display modules and larger TFTs Automotive Display Business Revenue | Period | Revenue (HKD) | | :--- | :--- | | H1 2021 | 2,578,000,000 | | H1 2020 | 1,386,000,000 | - China's new energy vehicle display business recorded substantial revenue growth due to increased customer orders[9] - Revenue from European, Korean, Japanese, and American markets also recorded considerable growth compared to a lower base in the same period last year[9] Industrial Display Business Industrial display revenue grew 21% year-on-year to HKD 622 million, accounting for 19% of total Group revenue, driven by increased sales of TFT display modules for education applications in China and orders from a renowned high-end home appliance brand Industrial Display Business Revenue | Period | Revenue (HKD) | | :--- | :--- | | H1 2021 | 622,000,000 | | H1 2020 | 512,000,000 | Business Outlook The Group anticipates continued growth in H2 2021, with further increases in revenue and profit driven by China's TFT and touch display module orders, while mitigating global electronic component shortages through measures like price adjustments to ensure smooth production and delivery - Revenue and profit are expected to further increase in H2 2021, primarily driven by orders for TFT and touch display modules from traditional and new energy vehicles in China[11] - Global electronic component shortages remain a business uncertainty, and the Group has increased product prices to cope with rising raw material costs, with these adjustments to be reflected in H2 2021[11] - Mass production of large-sized AMOLED displays for a renowned Chinese new energy vehicle manufacturer is scheduled to commence in 2022[13] Development Strategy and R&D The Group's strategy focuses on becoming a total solution provider for automotive smart cockpit display systems, considering capacity expansion with BOE Group and investing in advanced HMI technologies like AR-HUD and curved displays, with R&D emphasizing intelligent cockpits, MiniLED, BD cell, and securing mass production projects for AR-HUD and CMS Development Strategy The Group aims to increase market share by strengthening client relationships and expanding into new energy vehicle markets like Europe, considering a joint venture with BOE Group to expand TFT and touch display module manufacturing in China, with a strategic goal to become a total solution provider for automotive smart cockpit display systems and invest in HMI technologies like AR-HUD - The Group aims to become a total solution provider for automotive smart cockpit display systems, seizing future trends[14] - Considering a joint venture with BOE Group to expand TFT and touch display module manufacturing facilities in China to meet the growing demand in the automotive market[14] - Increased investment in Shenzhen Jiangcheng Technology Co., Ltd. to support AR-HUD R&D, with plans for mass production of an AR-HUD project for a Chinese automaker in 2022[14] R&D Development R&D focuses on intelligent automotive cockpits, developing large-sized, high-pixel, immersive display products, including LED local dimming, MiniLED, and BD cell technologies, achieving breakthroughs in curved displays, naked-eye 3D, AR-HUD, and CMS, securing multiple projects from renowned automakers, with some commencing mass production in H2 2021 - Committed to developing LED local dimming, MiniLED, high dynamic range display, and BD cell technologies to enhance display image quality[16] - Achieved phased results in automotive curved displays and secured the first in-vehicle integrated touch irregular curved display project from a renowned automaker[17] - AR-HUD products have secured customized project nominations from leading Chinese automotive clients; WHUD (Windshield HUD) also secured multi-model project nominations from another major client[17] - Secured project nominations from new and new energy vehicle manufacturers in China, Europe, and America, including instrument display systems, multi-screen display assemblies, and electronic rearview mirror display systems, with some projects commencing mass production in H2 this year[19] Condensed Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2021, the Group reported revenue of HKD 3.2 billion, up 69% year-on-year, operating profit of HKD 95.57 million, up 379%, and profit attributable to shareholders of HKD 95.11 million, up 423%, with basic and diluted EPS at 12.9 HK cents Consolidated Statement of Profit or Loss Summary (Thousand HKD) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Revenue | 3,200,005 | 1,898,299 | | Operating Profit | 95,569 | 19,936 | | Profit Before Tax | 94,862 | 18,784 | | Profit for the Period | 88,980 | 18,182 | | Profit Attributable to Shareholders of the Company | 95,105 | 18,182 | | Basic Earnings Per Share | 12.9 HK cents | 2.5 HK cents | Consolidated Statement of Financial Position As of June 30, 2021, the Group's total assets were HKD 4.236 billion, total liabilities HKD 1.408 billion, and net assets HKD 2.828 billion, with net current assets of HKD 2.272 billion and cash and cash equivalents of HKD 1.6 billion, indicating a robust financial position Consolidated Statement of Financial Position Summary (Thousand HKD) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Non-current assets | 578,783 | 522,832 | | Current assets | 3,656,928 | 3,307,006 | | Total assets | 4,235,711 | 3,829,838 | | Liabilities and Equity | | | | Current liabilities | 1,385,108 | 1,037,232 | | Non-current liabilities | 22,889 | 25,452 | | Total liabilities | 1,408,000 | 1,062,684 | | Total equity | 2,827,714 | 2,767,154 | Condensed Consolidated Statement of Cash Flows In H1 2021, net cash from operating activities was a HKD 60.36 million inflow, a significant improvement from a HKD 6.51 million outflow in the prior period, while net cash used in investing activities was HKD 65.50 million and in financing activities HKD 28.46 million, with period-end cash and cash equivalents at HKD 1.6 billion Condensed Consolidated Statement of Cash Flows Summary (Thousand HKD) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Net cash from / (used in) operating activities | 60,360 | (6,513) | | Net cash used in investing activities | (65,499) | (23,091) | | Net cash used in financing activities | (28,461) | (3,715) | | Net decrease in cash and cash equivalents | (33,600) | (33,319) | | Cash and cash equivalents at beginning of period | 1,627,531 | 1,538,328 | | Cash and cash equivalents at end of period | 1,600,920 | 1,493,954 | Notes to the Financial Statements Significant Accounting Policies and Segment Reporting This interim financial report, prepared under HKAS 34 and reviewed by KPMG, manages the Group's business as a single operating segment: the design, manufacture, and sale of LCDs and related products, with China being the largest revenue source, accounting for 63% of total revenue - The Group manages its business as a single unit, with the design, manufacture, and sale of liquid crystal displays and related products as the sole reportable segment[38] Revenue from External Customers by Geographical Region (Thousand HKD) | Region | H1 2021 | H1 2020 | | :--- | :--- | :--- | | China (Location of operation) | 2,009,215 | 1,003,751 | | Europe | 669,249 | 545,956 | | Korea | 168,091 | 106,985 | | Americas | 155,309 | 78,227 | | Others | 198,141 | 163,380 | | Total | 3,200,005 | 1,898,299 | Acquisition of a Subsidiary On February 8, 2021, the Group acquired control of Hefei Jiangcheng Technology Co., Ltd., increasing its stake from 22.5% to 57.375%, aiming to strengthen its AR-HUD R&D capabilities and support its strategic goal of becoming a smart cockpit display system solution provider - The Group acquired a 34.875% stake in Hefei Jiangcheng Technology Co., Ltd., increasing its total shareholding to 57.375% and gaining control[68] - This acquisition is expected to support the Group's strategy by further strengthening its R&D capabilities in Augmented Reality Head-Up Displays (AR-HUD)[68] Other Information Liquidity and Financial Resources As of June 30, 2021, the Group maintained a robust financial position with a current ratio of 2.64, cash and time deposits of HKD 1.601 billion, zero bank borrowings, and improved inventory turnover and accounts receivable collection efficiency Key Financial Ratios | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Current Ratio | 2.64 | 3.19 | | Gearing Ratio | 0% | 0% | | Inventory Turnover Ratio (Annualized) | 10.1 times | 7.8 times | | Trade Receivables Turnover Days | 72 days | 84 days | - At period-end, the Group held cash and time deposits balance of HKD 1.601 billion, with no bank borrowings[83] Directors' and Shareholders' Interests The report discloses directors' and major shareholders' equity interests, with BOE Technology Group Co., Ltd. as the controlling shareholder holding 54.38% of shares, and several directors holding shares or share incentives in both the Company and its associate, BOE - BOE Technology Group Co., Ltd. is the major shareholder, holding 400 million shares, representing 54.38% of the issued share capital[96] Share Incentive Schemes The Company operates share option and share award schemes to incentivize and retain talent, granting 6.31 million award shares to directors and employees during the period, with some options exercised, aligning employee interests with company development - On March 29, 2021, the Company granted a total of 6,310,000 award shares to 72 selected participants (including 5 directors and 67 employees) under the Share Award Scheme[102] - As of June 30, 2021, 3,450,000 share options remained unexercised under the Fourth Share Option Scheme[100] - During the period, the trustee of the Share Award Scheme purchased a total of 5,856,000 Company shares in the market for a total consideration of approximately HKD 23.183 million[105] Corporate Governance The Company complied with the Corporate Governance Code during the reporting period, establishing Audit, Remuneration, and Nomination Committees, each with a majority of independent non-executive directors to ensure governance independence and effectiveness, with the interim financial report reviewed by the Audit Committee and KPMG - The Company has complied with the code provisions of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules[106] - The Audit Committee, comprising 3 independent non-executive directors, has reviewed these interim results[107] - Independent non-executive directors constitute a majority of the members of both the Remuneration Committee and the Nomination Committee[109][110]