京东方精电(00710) - 2025 - 中期业绩

Chairman's Report Financial Highlights For H1 2025, BOE Varitronix reported HK$6.671 billion revenue (up 8%), HK$180.5 million profit (up 5%), and HK$4.748 billion cash resources (up 15%) 2025 First Half Key Financial Data | Indicator | As of June 30, 2025 (million HKD) | As of June 30, 2024 (million HKD) | | :--- | :--- | :--- | | Revenue | 6,671 | 6,157 | | EBITDA | 338 | 315 | | Profit attributable to shareholders | 180.5 | 172.1 | | Basic earnings per share | 22.9 HK cents | 21.9 HK cents | | Diluted earnings per share | 22.8 HK cents | 21.8 HK cents | | Operating cash inflow | 533 | 795 | | Indicator | As of June 30, 2025 (million HKD) | As of December 31, 2024 (million HKD) | | :--- | :--- | :--- | | Cash resources | 4,748 | 4,122 | | Cash and time deposit balances | 3,772 | 3,544 | - The Group recorded revenue of HK$6.671 billion, an increase of approximately 8% compared to the same period in 2024[4] - Profit attributable to shareholders was HK$180.5 million, an increase of approximately 5% compared to 2024[4] - As of June 30, 2025, the Group's total cash resources amounted to HK$4.748 billion, an increase of approximately 15% from the end of 2024[5] Business Review Revenue growth was driven by TFT, touchscreen, and in-vehicle system sales, with automotive displays contributing 94% of total revenue, achieving profit growth despite margin pressure via strategic investments and operational optimization - The Group's revenue growth was primarily driven by increased sales of Thin-Film Transistor ("TFT") products, touchscreen display modules, and in-vehicle system products[5] - The Group's TFT module business and touchscreen display module business accounted for approximately 94% of the Group's revenue, with the automotive display business also accounting for 94%[5] - Gross margin was affected by price adjustments and product mix changes, but overall profit attributable to shareholders improved through enhanced profitability of other businesses, such as net interest income, government subsidies, and equity investment income[6] - EBITDA increased by approximately 7% to HK$338 million, with an EBITDA margin of approximately 5.1% of the Group's revenue[7] - The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025[8] Automotive Display Business Automotive display revenue grew 9% to HK$6.245 billion, comprising 94% of total revenue, driven by system business growth and leading global market share in in-vehicle displays, with significant sales expansion in China's new energy vehicle sector - Revenue from the automotive display business was HK$6.245 billion, an increase of approximately 9% compared to the same period in 2024[9] - This business accounted for approximately 94% of the Group's total revenue, with the system business becoming a new growth engine[9] - The Group maintained the number one market share globally in in-vehicle display shipments and area, especially for displays 8 inches and above[9] - In China, sales significantly increased, and the customer base expanded to include the top 20 Chinese automakers and most new energy vehicle manufacturers[9][10] - Overseas business faced challenges from geopolitical tensions, energy shortages, and high interest rates, but revenue in Europe achieved growth[10] - Chengdu factory operations significantly improved efficiency, and system business revenue is expected to grow significantly in 2025[11] - Quality was significantly improved, quality costs were reduced, and numerous supplier awards were received from leading new energy vehicle manufacturers[12] Industrial Display Business Industrial display revenue grew 5% to HK$426 million, accounting for 6% of total revenue, primarily driven by consumer electronics demand, with continued product promotion for new applications and emerging markets - The industrial display business recorded revenue of HK$426 million, an increase of approximately 5% compared to the same period in 2024[13] - This business accounted for approximately 6% of the Group's total revenue, with the increase primarily driven by growth in demand for consumer electronics products[13] Industry Review H1 2025 saw strong global new energy vehicle growth despite economic challenges, led by China's over 40% production and sales increase (44.3% of total sales) and robust exports, while Europe grew 26%, and North America and Japan experienced slower growth - The global new energy vehicle industry maintained strong and rapid growth, accelerating technological innovation and intensifying market competition[14] - The Chinese market continued to be the main growth driver for the new energy vehicle industry, with the government introducing multiple supportive policies[14] - In the first half of 2025, China's new energy vehicle production and sales reached 6.9 million units each, increasing by 41.4% and 40.3% year-on-year respectively, accounting for 44.3% of total vehicle sales during the same period[15] - China's new energy vehicle exports performed outstandingly, with passenger vehicle exports increasing by 71.3% and commercial vehicle exports by 230% year-on-year in the first half of 2025[16] - The European market saw new energy vehicle sales grow by 26%, and the European Commission will invest EUR 852 million to support electric vehicle battery manufacturing projects[16] - New energy vehicle sales growth in North America slowed to 3%, affected by shifts in US government policy and Canadian policy reviews[17] - The Japanese market for new energy vehicles remained weak, primarily focusing on hybrid vehicles, with lagging policy and infrastructure development[17] - The South Korean government set a target to increase the number of electric vehicles to 2 million by 2030 and plans to accelerate the construction of charging stations[17] Business Outlook The Group targets automotive and industrial displays as key growth drivers, projecting the automotive market to reach HK$400 billion by 2030, and plans to expand globally, optimize operations, and enhance quality to mitigate risks and boost profitability amid intense competition - The automotive display sector and industrial display business will be the Group's two main growth drivers[19] - Escalating global geopolitical tensions may lead to tariffs on new energy vehicles manufactured in China, adversely affecting the Group[19] - The global automotive display equipment market is projected to reach HK$400 billion by 2030, with a Compound Annual Growth Rate (CAGR) of 9.93% from 2024 to 2030[20] - The Group will collaborate with suppliers and leverage BOE Group's new 8.6-generation OLED production line in Chengdu to enhance competitiveness[20] - Automotive display systems have evolved from traditional dashboards into interactive centers integrating information, control, and entertainment functions[21] - Facing intense market competition, the Group will enhance risk awareness, focus on leading customers, continuously improve product quality and technical capabilities[22] - The Group will expand its supplier sourcing, explore expanding existing factories, overseas mergers and acquisitions, and establishing overseas production bases to meet market demand[23] - Proactive measures to address geopolitical conflicts include cost transfer, establishing overseas factories, and collaborating with overseas partners[23] Automotive Display Business The automotive display market is expected to grow strongly, with LCD remaining the primary solution, but demand for high-quality displays will drive advanced technology adoption; the Group will leverage BOE Group's OLED production lines to enhance competitiveness and focus on innovative technologies like smart cockpits, multi-screen, and large-screen displays to meet market competition and customer needs - The global automotive display equipment market size is projected to reach HK$400 billion by 2030, with a compound annual growth rate of 9.93%[20] - LCD technology remains the primary solution due to cost competitiveness, but demand for higher quality displays will drive the application of advanced technologies[20] - Automotive display systems have evolved from traditional dashboards into interactive centers integrating information, control, and entertainment functions[21] - The Group will enhance risk awareness, focus on leading customers, continuously improve product quality and technical capabilities, and optimize factory operational efficiency and services[22] - The Group will expand its supplier sourcing, explore expanding existing factories, overseas mergers and acquisitions, and establishing overseas production bases[23] Industrial and Other Display Business The industrial and other display market is projected to exceed HK$60 billion by 2030, with a compound annual growth rate of 6.7%, characterized by long product cycles and stable demand, where the Group will focus on developing high-end, high-tech, and high-profit products, while strengthening customer service and marketing strategies to drive business growth - The global industrial display market size is projected to exceed HK$60 billion by 2030, with a compound annual growth rate of 6.7% from 2025 to 2030[24] - This sector features long product cycles and stable demand, and the Group has established a strong customer base and partnerships in the industrial and other display markets[24] - The Group will strengthen customer service and marketing strategies to foster closer communication with customers and provide optimal solutions[24] Development Strategy The Group maintains an asset-light model, leveraging BOE's R&D to lead in high-end automotive displays, with a core strategy to expand overseas markets for a 50/50 sales split, consolidate leadership, enhance system market share, seize smart cockpit opportunities, and promote a dual-engine business model - The Group maintains an asset-light model, leveraging BOE Group's existing production and R&D capabilities to maintain a leading position in high-end and large-size products[25] - Expanding overseas markets is a core strategic focus, aiming to achieve an equal split between domestic and overseas sales in recent years[25] - The Group continues to execute its "three-step development strategy": consolidating its leading position in automotive display equipment, increasing market share in automotive display systems, and seizing opportunities in system and smart cockpit solutions[26] - "HERO" (Health, Entertainment, Recreation, Office) application scenarios and AI-enabled smart cockpit solutions have been launched in the Chinese market[26] - The Group will leverage existing resources to explore opportunities in the industrial and other display sectors, promoting the rapid growth of a "dual-engine driven" business model[26] - Digital management systems will be strengthened, utilizing AI to improve operational and management efficiency[27] - The Group is committed to sustainable development, targeting carbon neutrality by 2050[27] Research and Development Adhering to the 'V+' strategy, the Group deepens its in-vehicle presence via a 'component-system-smart cockpit' path, building a new display ecosystem with nearly HK$900 million R&D investment, 464 R&D staff, covering OLED, smart interaction, and AI integration for HERO smart cockpit scenarios - In-vehicle display, as a core business, adheres to the "V+" operating strategy and "Vehicle" concept, following a "component-system-smart cockpit" three-step development path[28] - AI, multi-modal interaction, and other cutting-edge technologies are fully integrated into the overall smart cockpit solution, with the "HERO" smart cockpit concept gaining high market recognition[28] - Cumulative R&D investment over the past three years reached nearly HK$900 million, and the R&D team expanded to 464 employees[30] - Technology layout covers automotive-grade OLED devices, irregular structures, smart interaction, transparent imaging, HUD, and other core directions, promoting deep integration of AI with in-vehicle displays[30] Panoramic Head-Up Display (PHUD) PHUD is an advanced in-vehicle head-up display technology that projects key information onto the windshield, reducing driver's eyes-off-road time and providing a seamless experience, with multiple projects secured from various automakers and a 44.8-inch panoramic head-up display showcased at SID 2025 - PHUD utilizes optical technology to project key information such as navigation and vehicle speed onto the windshield in front of the driver's line of sight, reducing the time drivers take their eyes off the road[31] - PHUD has secured multiple projects with various automakers and showcased a 44.8-inch panoramic head-up display at SID 2025[31] UB Cell (ADS-Pro) UB Cell is a high-end TV display solution integrating ADS Pro advanced LCD technology, offering ultra-high color gamut, full-angle color neutrality, high contrast, and low reflectivity, comparable to OLED picture quality, with a vehicle-grade UB Cell display prototype first demonstrated at SID 2025 achieving a contrast ratio of 2,300:1 and targeting 3,000:1 - UB Cell integrates ADS Pro advanced LCD technology, featuring ultra-high color gamut, full-angle color neutrality, 1400:1 ultra-high ambient light contrast ratio, and 0.7% ultra-low panel reflectivity[32] - A vehicle-grade UB Cell display prototype was first demonstrated at SID 2025, achieving a contrast ratio of up to 2,300:1, with a target of 3,000:1[32] f-OLED f-OLED represents high-end flexible organic light-emitting diode technology, offering vibrant colors, versatile forms, and high integration, with multiple in-vehicle f-OLED displays already in mass production, and ongoing development of panel-integrated light control technology and active privacy features to enhance driving safety and privacy - f-OLED boasts industry-leading advantages such as vibrant colors, versatile forms, and high integration, with multiple in-vehicle f-OLED displays already entering mass production[33][34] - Panel-integrated light control technology is under development to avoid windshield projection, significantly enhancing driving safety[34] - Panel-integrated active privacy features are being developed to support free switching between shared and privacy modes, ensuring co-driver entertainment content does not distract the driver[34] Far-field Light Field Display Far-field light field display utilizes light field folding technology to achieve large-screen, long-distance imaging within the limited space of a vehicle, providing a broad view for rear-seat passengers, reducing visual fatigue, and delivering a mobile cinema experience, with a prototype developed and exhibited at SID in the first half of 2025, and continuous upgrades and expansion into new industrial product scenarios like learning, education, and gaming planned for the second half - Utilizing light field folding technology, it achieves large-screen, long-distance imaging within the limited space of a vehicle, reducing visual fatigue and dizziness[35] - A prototype was completed in the first half of 2025, attracting customer attention at the SID exhibition, with continuous upgrades and expansion into new industrial product scenarios planned for the second half[35] Dual-View Dual-Touch Display Technology Dual-view dual-touch display technology enables two different perspectives on the same screen, facilitating multi-user interaction and simplifying in-car space, with a successful proof-of-concept prototype developed in the first half of 2025 garnering significant customer interest, and active promotion and testing on in-vehicle platforms planned for the second half to achieve mass production soon - Dual-view display technology can show two different perspectives on the same screen, enabling multi-user interaction, applicable in aviation, high-speed rail, in-vehicle, medical, and educational training fields[36] - In the first half of 2025, dual-view dual-touch display functionality was successfully achieved, producing a POC prototype that garnered significant customer attention[37] - Active promotion to clients and joint testing on in-vehicle platforms are planned for the second half, aiming for early mass production[37] Privacy On Demand Display Technology (POD) Privacy On Demand Display Technology (POD) samples are being developed with Tier-1 clients in Europe, South Korea, and the US, with mass production expected to commence in 2026, representing another growth point for the in-vehicle market, and further improvements in POD development for better, thinner, and more flexible solutions are anticipated in Q4 2025 to maintain BOEVX's leadership in switchable privacy technology - Privacy On Demand Display Technology (POD) samples are being developed with Tier-1 clients in Europe, South Korea, and the US, with mass production expected to commence in 2026[38] - This value-added technology will be another growth point for the in-vehicle market, with further improvements in developing better, thinner, and more flexible POD anticipated in the fourth quarter of 2025[38] Smart Cockpit Display System The Group is advancing smart cockpit display system technology by enhancing existing product lines and exploring new solutions, participating in industry standard-setting, and developing a dual-axis parallel intelligent control swing screen that overcomes multi-motor high-precision collaborative control challenges, improving driver concentration and driving safety, thereby redefining human-screen interaction paradigms - The Group participated in the formulation of national standards such as "Technical Requirements and Test Methods for In-vehicle Display Terminals" led by the China Automotive Research Center[39] - A dual-axis parallel intelligent control swing screen was developed, overcoming the challenge of high-precision collaborative control for multiple motors, achieving multi-degree-of-freedom compound motion with dual dynamic coupling[39] - This dual-axis parallel intelligent control solution can increase driver concentration by 20% and driving safety by 30%[39] Adaptive Far-field Headrest Display Through independently developed eye-tracking algorithms, the Group achieves monocular measurement of viewing distance and angle, combined with stepless rotation of electric mechanisms, addressing the limitations of viewing distance and height for far-field screens, projecting a 3-meter distant 50-inch image from a minimal headrest volume, reducing ciliary muscle adjustment by over 90%, and providing an immersive cinema-grade experience - Through independently developed eye-tracking algorithms, it achieves monocular measurement of viewing distance and angle, with centimeter-level recognition accuracy[40] - It projects a 3-meter distant 50-inch image from a minimal headrest volume, reducing ciliary muscle adjustment by over 90%, leading to more relaxed viewing[40] - Equipped with rich interface options such as HDMI, USB3.0, Type-C, and wireless screen mirroring, it creates an ultimate comfortable and immersive cinema-grade experience[40] OLED Under-Display Fingerprint Smart Steering Wheel 2.0 The OLED Under-Display Fingerprint Smart Steering Wheel 2.0, a technological highlight, was first applied in the OLED health smart cockpit and debuted at SID 2025, featuring in-vehicle under-display fingerprint recognition, an ECG & HOD system for high-sensitivity early warnings, and memory interaction between different ID users' OLED under-display fingerprints and smart seats - First applied in the OLED health smart cockpit and made a stunning debut at SID 2025[41] - Achieves in-vehicle under-display fingerprint recognition, equipped with an ECG & HOD system for high-sensitivity early warnings[41] - Enables memory interaction between different ID users' OLED under-display fingerprints and smart seats[41] AI In-vehicle Digital Amplifier Audio System The first self-developed acoustic product, leveraging AI to empower an immersive in-vehicle acoustic experience, pioneered in-vehicle original sound quality restoration technology, AIGC model deployment on constrained edge devices, and a multi-modal noise reduction technology architecture, significantly enhancing amplifier noise reduction capabilities and sound quality, with basic functional research and development initially completed and a plan to exhibit at BOE IPC in 2025 - The first self-developed acoustic product, leveraging AI to empower an immersive in-vehicle acoustic experience[42] - Pioneered in-vehicle original sound quality restoration technology, AIGC model deployment on constrained edge devices, and a multi-modal noise reduction technology architecture, significantly enhancing amplifier noise reduction capabilities and sound quality[42] - Basic functional research and development have been initially completed, with a plan to exhibit at BOE IPC in 2025[42] Significant Events After June 30, 2025 As of the date of this announcement, the Group has no significant events after June 30, 2025, that require disclosure - As of the date of this announcement, the Group has no significant events requiring disclosure[43] Appreciation The Chairman expresses gratitude to business partners, clients, management, employees, shareholders, investors, and business partners for their support, stating that the Group will continue to capitalize on automotive industry trends and strive to become a leading integrated smart cockpit display system solution provider - The Group achieved higher revenue growth and a recovery in profitability through relentless efforts[44] - The Group will continue to seize upcoming trends in the automotive industry and implement its strategy to become a leading integrated smart cockpit display system solution provider[44] Management Discussion and Analysis Asset Structure As of June 30, 2025, the Group's total assets reached HK$11.834 billion, primarily due to improved working capital, with cash resources increasing to HK$4.748 billion, inventory rising by approximately 4% to HK$1.854 billion, and trade receivables decreasing due to strict aging monitoring - As of June 30, 2025, the Group's total assets reached HK$11.834 billion, primarily due to improved working capital[46] - For the six months ended June 30, 2025, the Group's cash resources amounted to HK$4.748 billion, attributed to strict control over working capital[46] - Inventory at period-end increased by approximately 4% to HK$1.854 billion, mainly for strategic capacity allocation[46] - Trade receivables decreased due to the implementation of stricter aging monitoring[46] Liquidity and Financial Resources As of June 30, 2025, the Group's total equity was HK$4.717 billion, with a current ratio of 1.42, cash resources increasing to HK$4.748 billion (including HK$3.772 billion in cash and time deposits and HK$730 million in other financial assets), and bank loans rising to HK$434 million, resulting in a slight increase in the debt-to-asset ratio to 9.2%, reflecting additional borrowing for long-term growth - As of June 30, 2025, the Group's total equity was HK$4.717 billion[48] - The Group's current ratio was 1.42 as of June 30, 2025[48] Cash Resources Composition | Item | As of June 30, 2025 (million HKD) | As of December 31, 2024 (million HKD) | | :--- | :--- | :--- | | Cash resources | 4,748 | 4,122 | | Cash and time deposit balances | 3,772 | 3,544 | | Other financial assets | 730 | 390 | | Restricted bank deposits | 246 | 188 | - The Group's bank loans amounted to HK$434 million, of which HK$176 million were long-term loans, primarily used to facilitate capital expenditures[49] - The debt-to-asset ratio was approximately 9.2%, a slight increase reflecting additional borrowing for long-term growth[49] - Inventory turnover days were 54 days, and trade receivables turnover days were 63 days, with the increase in receivables turnover days due to an expanded customer base from new businesses[50] Cash Flow During the review period, net cash inflow from operating activities was HK$533 million, primarily driven by a decrease in trade and other receivables, while net cash outflow from investing activities was HK$469 million, mainly for the purchase of property, plant and equipment, time deposits, and other financial assets, and net cash inflow from financing activities was HK$33 million, primarily from increased net bank loan inflows - Net cash from operating activities reached HK$533 million (2024: HK$795 million)[51] - Net cash outflow used in investing activities reached HK$469 million (2024: HK$1.177 billion), primarily for the purchase of property, plant and equipment totaling HK$84 million, a net increase of HK$40 million in time deposits over three months, and a net increase of HK$318 million in other financial assets[51] - Net cash inflow from financing activities reached HK$33 million (2024: outflow of HK$29 million), mainly due to an increase in net bank loan inflows[52] Capital Structure The Group's long-term capital combines shareholders' equity and liabilities, primarily comprising share capital, reserves, and bank loans, with no significant changes in capital structure during the period, bank loans increasing to HK$434 million, and cash resources totaling HK$4.748 billion, including HK$2.889 billion in cash and cash equivalents - The Group's long-term capital combines shareholders' equity and liabilities, primarily comprising share capital, reserves, and bank loans, with no significant changes in capital structure during the period[53] - As of June 30, 2025, bank loans increased to HK$434 million[53] - As of June 30, 2025, the Group's cash resources amounted to HK$4.748 billion, of which cash and cash equivalents were HK$2.889 billion[53] Cash and Cash Equivalents by Currency | Original Currency | As of June 30, 2025 (million HKD) | As of December 31, 2024 (million HKD) | | :--- | :--- | :--- | | RMB | 1,236 | 1,286 | | USD | 1,590 | 1,297 | | HKD | 9 | 13 | | Other currencies | 54 | 104 | | Total | 2,889 | 2,700 | Foreign Exchange and Interest Rate Risk The Group's foreign exchange risk primarily arises from sales and purchases denominated in non-functional currencies, mainly USD, EUR, JPY, and RMB, which it primarily hedges through operations and monitors interest rate changes, with bank loans comprising both fixed and floating rates - The Group's foreign exchange risk primarily arises from sales and purchases denominated in currencies other than the functional currency of the relevant business, mainly USD, EUR, JPY, and RMB[55] - The Group primarily hedges foreign exchange risk through operations and does not use any financial instruments for hedging purposes[56] - As of June 30, 2025, the Group's bank loans comprised HK$77 million at fixed rates and HK$357 million at floating rates[56] Financial Guarantees and Pledged Assets As of June 30, 2025, bank loans of HK$195 million were secured by certain land, buildings, plant, machinery, and equipment of a Group subsidiary to support its long-term development, with no other financial guarantees or pledged assets during the period - As of June 30, 2025, bank loans of HK$195 million were secured by certain land, buildings, plant, machinery, and equipment of a Group subsidiary[57] - Other than as disclosed above, the Group had no other financial guarantees or pledged assets during the period[57] Commitments As of June 30, 2025, outstanding capital commitments not provided in the Group's financial statements amounted to approximately HK$214 million, primarily for the purchase of plant, machinery, tools, and equipment, to be funded by internal resources and/or external financing - As of June 30, 2025, outstanding capital commitments not provided in the Group's financial statements amounted to approximately HK$214 million[58] - These are primarily for the purchase of plant, machinery, tools, and equipment, to be funded by the Group's internal resources and/or external financing[58] Other Investments As of June 30, 2025, the Group held a diversified investment portfolio, including equity investments in securities related to the automotive industry, with the results of these investments appropriately reflected in the financial statements - As of June 30, 2025, the Group held a diversified investment portfolio, including equity investments in securities related to the automotive industry[59] Contingent Liabilities As of June 30, 2025, the Company had no significant contingent liabilities - As of June 30, 2025, the Company had no significant contingent liabilities[60] Operating Review The Group's operating review is segmented by customer purchasing decision location, with China market revenue growing 21% to HK$4.448 billion, accounting for 67% of total revenue, driven by new energy vehicle policy support and supply chain optimization; European market revenue increased 9% to HK$1.209 billion; Americas market revenue decreased 17% to HK$325 million due to geopolitical and policy impacts; Japan market revenue decreased 34% to HK$413 million due to economic weakness and HEV dominance; and South Korea market revenue decreased 20% to HK$160 million, though government policies indicate future growth potential - The Group changed its presentation of geographical revenue information from "revenue by place of delivery" to "revenue by location of customer purchasing decision" starting from the preparation of the 2024 annual report[83] China The China market recorded revenue of HK$4.448 billion, an approximate 21% year-on-year increase, accounting for about 67% of the Group's total revenue, primarily from the automotive display business, driven by new energy vehicle policy support, supply chain optimization, improved quality management, and enhanced efficiency at the Chengdu factory, with the Group establishing strategic partnerships with leading enterprises and successfully increasing TFT and touchscreen display module revenue, while the system business also made significant progress - Revenue in China reached HK$4.448 billion, an increase of approximately 21% compared to the same period in 2024, accounting for approximately 67% of the Group's total revenue[61] - This was primarily from the automotive display business, benefiting from new energy vehicle policy support[61] - Through comprehensive optimization of supply chain, quality, production, and sales processes, the Group continuously gained customer trust, solidifying its leading position in the Chinese market[61] - Revenue from various TFT and touchscreen display modules was successfully increased, and in-vehicle displays were launched in collaboration with several automakers[62] - The system business made significant progress in China, boasting a more diversified and robust Tier-1 customer base[62] - The new TFT and touch panel factory in Chengdu enhanced production capacity and strengthened its workforce, technology, and quality systems[63] Europe The European market recorded revenue of HK$1.209 billion, an approximate 9% year-on-year increase, accounting for about 18% of the Group's total revenue, primarily due to the delivery of TFT display module orders secured from multiple automotive clients in previous years commencing in 2025, and successfully winning orders from several renowned European automakers, laying a foundation for sustained growth in the coming years - Revenue in Europe reached HK$1.209 billion, an increase of approximately 9% compared to the same period in 2024, accounting for approximately 18% of the Group's total revenue[64] - The growth was primarily due to the delivery of TFT display module orders secured from multiple automotive clients in previous years commencing in 2025[64] - The Group successfully won orders from several renowned European automakers, laying a foundation for sustained order supply in the coming years[64] Americas The Americas market recorded revenue of HK$325 million, an approximate 17% year-on-year decrease, accounting for about 5% of the Group's total revenue, primarily due to escalating geopolitical conflicts, slower-than-expected interest rate declines, and government cancellation of new energy vehicle incentives; the Group remains committed to capitalizing on new energy vehicle trends, promoting TFT display modules and semi-system products, and plans to increase local sales team headcount and explore overseas M&A to meet customer demand - Revenue in the Americas reached HK$325 million, accounting for approximately 5% of the Group's total revenue, a decrease of approximately 17% compared to last year[65] - The decrease was primarily affected by escalating geopolitical conflicts, slower-than-expected interest rate declines, and government cancellation of new energy vehicle incentives[65] - The Group remains committed to capitalizing on new energy vehicle trends, promoting products to existing and new customers, and participating in international consumer electronics shows[65] - Potential revenue growth in the US market is anticipated with customers launching new car models and increased demand for higher-priced semi-system products[65] - The Group plans to increase the headcount of its local sales team in Central and South America to enhance responsiveness to customer needs[66] Japan The Japan market recorded revenue of HK$413 million, an approximate 34% year-on-year decrease, accounting for about 6% of the Group's revenue, primarily due to inflation, weak economic growth, and traditional automakers' focus on hybrid vehicles leading to soft new energy vehicle demand; the Group has expanded its local sales and technical teams in the Nagoya office to enhance customer service capabilities, anticipating significant future revenue growth potential - Revenue in Japan reached HK$413 million, a decrease of approximately 34% compared to last year, accounting for approximately 6% of the Group's revenue[67] - The decrease was primarily due to inflation and weak economic growth, as well as traditional automakers' primary focus on hybrid vehicles, leading to soft demand for new energy vehicles[67] - The new office in Nagoya commenced operations in 2024, equipped with an expanded local sales force and technical team, with significant potential for revenue growth from Japanese customers anticipated[67][68] South Korea The South Korea market recorded revenue of HK$160 million, an approximate 20% year-on-year decrease, accounting for about 2% of the Group's revenue, primarily due to weak new energy vehicle demand; despite this, South Korea remains an important market, with the government setting a target to increase electric vehicle numbers to 2 million by 2030 and offering purchase subsidies and tax incentives, signaling an optimistic outlook for future new energy vehicle adoption - Revenue in South Korea reached HK$160 million, a decrease of approximately 20% compared to the same period last year, accounting for approximately 2% of the Group's revenue[69] - The decrease in revenue was primarily due to weak demand for new energy vehicles[69] - The South Korean government has set a target to increase the number of electric vehicles to 2 million by 2030 and plans to accelerate the construction of charging stations, offering purchase subsidies and tax incentives[69] Consolidated Financial Statements Consolidated Income Statement For the six months ended June 30, 2025, the Group's revenue was HK$6.671 billion, operating profit was HK$201 million, and profit before tax was HK$196 million, with profit for the period at HK$170 million, of which HK$180 million was attributable to shareholders, and basic earnings per share at 22.9 HK cents Consolidated Income Statement Summary (For the 6 months ended June 30) | Indicator | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Revenue | 6,670,596 | 6,157,319 | | Other operating income, net | 168,557 | 94,770 | | Operating profit | 201,253 | 193,651 | | Finance costs | (5,567) | (8,540) | | Profit before tax | 195,686 | 185,111 | | Income tax | (26,140) | (9,734) | | Profit for the period | 169,546 | 175,377 | | Profit attributable to shareholders | 180,476 | 172,100 | | Basic earnings per share | 22.9 HK cents | 21.9 HK cents | | Diluted earnings per share | 22.8 HK cents | 21.8 HK cents | Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, profit for the period was HK$170 million, with other comprehensive income primarily including a net change in exchange reserves from overseas currency translation adjustments of HK$75.7 million, resulting in a total comprehensive income for the period of HK$245 million, of which HK$255 million was attributable to shareholders Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary (For the 6 months ended June 30) | Indicator | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Profit for the period | 169,546 | 175,377 | | Overseas currency translation adjustment: net change in exchange reserves | 75,745 | (23,776) | | Total comprehensive income for the period | 245,291 | 151,601 | | Total comprehensive income attributable to shareholders | 255,274 | 148,324 | | Total comprehensive income attributable to non-controlling interests | (9,983) | 3,277 | Consolidated Statement of Financial Position As of June 30, 2025, the Group's total non-current assets were HK$2.221 billion, total current assets were HK$9.613 billion, and total current liabilities were HK$6.754 billion, resulting in net assets of HK$4.717 billion, of which HK$4.662 billion was attributable to shareholders Consolidated Statement of Financial Position Summary (As of June 30) | Indicator | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Assets | | | | Non-current assets | 2,220,727 | 2,269,640 | | Current assets | 9,612,893 | 9,195,302 | | Liabilities | | | | Current liabilities | 6,753,785 | 6,499,601 | | Non-current liabilities | 362,723 | 364,846 | | Equity | | | | Net assets | 4,717,112 | 4,600,495 | | Equity attributable to shareholders | 4,661,886 | 4,535,286 | | Non-controlling interests | 55,226 | 65,209 | | Total equity | 4,717,112 | 4,600,495 | Notes to the Financial Statements General Information The Company is incorporated in Bermuda, listed on the Hong Kong Stock Exchange, with its ultimate controlling party being BOE Technology Group Co., Ltd., primarily engaged in investment holding, and the Group mainly operates in the automotive and industrial display businesses, possessing monochrome display manufacturing capacity and TFT module assembly capacity - The Company is incorporated in Bermuda, with its shares listed on The Stock Exchange of Hong Kong Limited[74] - The Group's ultimate controlling party is BOE Technology Group Co., Ltd., incorporated in the People's Republic of China[74] - The Group is primarily engaged in the automotive and industrial display businesses, possessing monochrome display manufacturing capacity and TFT module assembly capacity[75] Independent Review This interim financial report is unaudited but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410 and by the Company's Audit Committee - This interim financial report is unaudited but has been reviewed by KPMG in accordance with Hong Kong Standard on Review Engagements 2410[76] - This interim financial report has been reviewed by the Company's Audit Committee[76] Basis of Preparation This interim financial report is prepared in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 issued by the Hong Kong Institute of Certified Public Accountants, approved for issue on August 25, 2025, with accounting policies consistent with the 2024 annual financial statements, except for necessary changes to reflect accounting policy updates - This interim financial report is prepared in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 issued by the Hong Kong Institute of Certified Public Accountants[77] - The accounting policies adopted in the preparation of this interim financial report are consistent with those applied in the preparation of the 2024 annual financial statements[77] Changes in Accounting Policies and Their Application The Group has applied the amendments to Hong Kong Accounting Standard 21 "The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability" issued by the Hong Kong Institute of Certified Public Accountants to this interim financial report, which had no significant impact, and has not early adopted any new standards or interpretations not yet effective - The Group has applied the amendments to Hong Kong Accounting Standard 21 "The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability" issued by the Hong Kong Institute of Certified Public Accountants to this interim financial report, but it had no significant impact on this interim financial report[78] - The Group has not early adopted any new standards or interpretations that are not yet effective for this accounting period[79] Revenue and Segment Reporting The Group's primary business is the design, manufacture, and sale of liquid crystal displays and related products, classified as a single operating segment; to enhance reporting clarity, the presentation of geographical revenue information has been changed from "revenue by place of delivery" to "revenue by location of customer purchasing decision," with comparative figures for the prior reporting period restated, and the China region accounts for the highest proportion of revenue, reaching 67% - The Group's primary business is the design, manufacture, and sale of liquid crystal displays and related products, constituting the sole reportable segment[80][81] - To enhance the clarity of reported figures, the Group changed its presentation of geographical revenue information from "revenue by place of delivery" to "revenue by location of customer purchasing decision" starting from the preparation of the 2024 annual report[83] Operating Segment Results The Group manages its business as a single unit, thus the design, manufacture, and sale of liquid crystal displays and related products constitute the sole reportable segment, with all revenue and operating profit derived from this business segment, and the Board of Directors, as the chief operating decision-maker, reviews internal reports to assess performance and allocate resources - The Group manages its business as a single unit; therefore, the design, manufacture, and sale of liquid crystal displays and related products constitute the sole reportable segment[81] - The chief operating decision-maker is the Board of Directors, which reviews the Group's internal reports to assess performance and allocate resources[81] Geographical Information The Group has changed the presentation of geographical revenue information from "revenue by place of delivery" to "revenue by location of customer purchasing decision" to better reflect customer relationships and market influence, restating comparative figures for the prior reporting period, with the China region contributing the majority of the Group's revenue and designated non-current assets - To enhance the clarity of reported figures, the Group changed its presentation of geographical revenue information from "revenue by place of delivery" to "revenue by location of customer purchasing decision" starting from the preparation of the 2024 annual report[83] - The China region contributed the majority of the Group's revenue (HK$4.448 billion in 2025) and designated non-current assets (HK$2.068 billion in 2025)[84][85] The Group's Revenue from External Customers (by location of customer purchasing decision) | Region | 2025 (thousand HKD) | 2024 (thousand HKD) (Restated) | | :--- | :--- | :--- | | China | 4,448,176 | 3,687,551 | | Europe | 1,208,630 | 1,105,916 | | Americas | 325,251 | 391,682 | | Japan | 412,530 | 622,591 | | South Korea | 159,576 | 198,655 | | Other | 116,433 | 150,924 | | Consolidated Revenue | 6,670,596 | 6,157,319 | The Group's Designated Non-Current Assets (by physical location of assets) | Region | As of June 30, 2025 (thousand HKD) | As of December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | China | 2,068,373 | 2,074,262 | | Other | 13,891 | 15,551 | | Total | 2,082,264 | 2,089,813 | Other Operating Income, Net For the six months ended June 30, 2025, other operating income, net, was HK$169 million, a significant increase from HK$94.8 million in the prior year, primarily driven by government subsidies (HK$59.66 million), net gains from current other financial assets measured at fair value through profit or loss (HK$31.84 million), and proceeds from the sale of financial assets at fair value through profit or loss (HK$5.75 million) Other Operating Income, Net (For the 6 months ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Government subsidies | 59,658 | 16,328 | | Interest income from financial assets measured at amortized cost | 52,005 | 58,067 | | Net gains from current other financial assets measured at fair value through profit or loss | 31,835 | 1,833 | | Net exchange gains | 9,244 | 13,513 | | Proceeds from sale of financial assets at fair value through profit or loss | 5,751 | - | | Net gains on disposal of property, plant and equipment | 1,455 | 353 | | Other income | 8,609 | 4,652 | | Total | 168,557 | 94,770 | - Government subsidies include HK$2.831 million for R&D and other subsidies for high-tech manufacturing, HK$11.963 million for amortization of government grants for equipment purchases, HK$43.762 million for production-related incentives, and HK$1.102 million for employee retention incentives[86] Profit Before Tax For the six months ended June 30, 2025, profit before tax was net of finance costs of HK$5.57 million (primarily HK$4.82 million in bank loan interest) and other operating expenses of HK$362 million, with a significant increase in expected credit losses for trade receivables to HK$44.65 million and sales, marketing, commission, and quality assurance expenses at HK$63.63 million Profit Before Tax Deductions (For the 6 months ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | (a) Finance costs | | | | Interest on lease liabilities | 743 | 655 | | Bank loan interest | 4,824 | 7,885 | | Total | 5,567 | 8,540 | | (b) Other items | | | | Cost of inventories | 6,100,343 | 5,454,644 | | (c) Other operating expenses | | | | Amortization of intangible assets | 2,412 | 1,929 | | Auditor's remuneration | 2,202 | 2,108 | | Bank charges | 5,392 | 2,800 | | Property management fees | 4,481 | 4,227 | | Factory consumables, cleaning and security service fees | 24,162 | 17,774 | | Freight charges | 49,376 | 47,641 | | Insurance expenses | 3,937 | 2,868 | | Legal and professional fees | 6,716 | 4,164 | | Office expenses | 6,014 | 6,670 | | Other taxes, surcharges and duties | 18,414 | 15,594 | | Expected credit losses for trade receivables | 44,646 | 4,719 | | Repair and maintenance | 15,910 | 22,674 | | Sales, marketing, commission and quality assurance expenses | 63,626 | 52,289 | | Subcontracting fees | 32,989 | 28,264 | | Trademark license fees | 12,353 | 13,294 | | Travel and entertainment expenses | 18,802 | 14,883 | | Utilities expenses | 41,104 | 42,428 | | Miscellaneous expenses | 9,216 | 9,714 | | Total | 361,752 | 294,040 | - Expected credit losses for trade receivables significantly increased to HK$44.646 million (2024: HK$4.719 million)[87] Income Tax in Consolidated Income Statement For the six months ended June 30, 2025, total income tax was HK$26.14 million, with Hong Kong profits tax calculated at 16.5%, China income tax at a standard rate of 25%, but certain subsidiaries (e.g., Varitronix Heyuan, Ruihe, Varitronix Huizhou, Chengdu Automotive) enjoying a preferential tax rate of 15% due to high-tech enterprise status or Western Development policy, and Pillar Two income tax of HK$5.5 million recognized for the first time in this period Income Tax in Consolidated Income Statement (For the 6 months ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Current tax – Hong Kong profits tax | 9,262 | 15,441 | | Pillar Two income tax | 5,500 | - | | Current tax – China income tax | 10,779 | 28,103 | | Current tax – Jurisdictions outside Hong Kong and China | 729 | (3,173) | | Deferred tax | (130) | (30,637) | | Total | 26,140 | 9,734 | - Hong Kong profits tax is calculated at a rate of 16.5%, and the standard corporate income tax rate for Chinese enterprises is 25%[88] - Varitronix Heyuan, Ruihe, Varitronix Huizhou, and Chengdu Automotive are eligible for a reduced income tax rate of 15%[89] - Effective January 1, 2025, the Group's profits in the Hong Kong Special Administrative Region and certain other jurisdictions are subject to Pillar Two income tax, with HK$5.5 million recognized in this period[90] Dividends The Board of Directors resolved not to recommend an interim dividend for the six months ended June 30, 2025, while the final dividend of HK$134 million (17.0 HK cents per share) for the previous financial year was approved and recognized as dividends payable in this interim period - The Board of Directors resolved not to recommend an interim dividend for the six months ended June 30, 2025[91] Dividends Payable to Shareholders Approved | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Final dividend for the previous financial year of 17.0 HK cents per share (2024: 19.0 HK cents) | 134,095 | 149,660 | - The final dividend was recognized as dividends payable in the consolidated statement of financial position as of June 30, 2025[93] Earnings Per Share For the six months ended June 30, 2025, basic earnings per share were 22.9 HK cents and diluted earnings per share were 22.8 HK cents, calculated based on the consolidated profit attributable to shareholders of HK$180 million and the weighted average number of shares outstanding during the period - Basic earnings per share are calculated based on the consolidated profit attributable to ordinary shareholders of the Company of HK$180 million for the period and the weighted average of 788 million ordinary shares outstanding during the interim period, amounting to 22.9 HK cents[94] - Diluted earnings per share are calculated based on the consolidated profit attributable to ordinary shareholders of the Company of HK$180 million for the period and the weighted average of 790 million ordinary shares, amounting to 22.8 HK cents[95] Trade and Other Receivables, Deposits and Prepayments and Other Contract Costs As of June 30, 2025, total trade and bills receivables amounted to HK$2.601 billion, net of a loss allowance of HK$101 million, with the majority (HK$1.711 billion) due within 60 days from the invoice date, and trade and bills receivables generally due within 60 to 90 days after the invoice date Aging Analysis of Trade and Bills Receivables (Net of loss allowance) | Aging | As of June 30, 2025 (thousand HKD) | As of December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Within 60 days from invoice date | 1,711,256 | 2,140,687 | | 61 to 90 days after invoice date | 451,995 | 435,973 | | 91 to 120 days after invoice date | 304,539 | 183,870 | | Over 120 days but less than 12 months after invoice date | 133,114 | 135,036 | | Total | 2,600,904 | 2,895,566 | - Loss allowance was HK$101 million (December 31, 2024: HK$54.955 million)[96] - Trade and bills receivables are generally due within 60 to 90 days after the invoice date[96] Other Financial Assets As of June 30, 2025, non-current other financial assets were HK$1.73 million (primarily unlisted equity securities outside Hong Kong), and current other financial assets were HK$785 million (primarily structured deposit products issued by financial institutions outside Hong Kong) Other Financial Assets (As of June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Non-current portion | | | | Financial assets measured at fair value through profit or loss - Unlisted equity securities outside Hong Kong | 1,726 | 1,700 | | Current portion | | | | Financial assets measured at fair value through profit or loss - Listed equity securities within Hong Kong | 54,935 | - | | Financial assets measured at fair value through profit or loss - Issued by financial institutions outside Hong Kong | 729,623 | 389,759 | | Total | 786,284 | 429,945 | - The balance of current other financial assets as of June 30, 2025, represents investments in structured deposit products with guaranteed principal and floating returns[97] Trade and Other Payables As of June 30, 2025, total trade and bills payables amounted to HK$5.430 billion, with the majority (HK$4.700 billion) due within 60 days from the supplier's invoice date Aging Analysis of Trade and Bills Payables (As of reporting date) | Aging | As of June 30, 2025 (thousand HKD) | As of December 31, 2024 (thousand HKD) | | :--- | :--- | :--- | | Within 60 days from supplier's invoice date | 4,700,365 | 4,386,214 | | 61 to 120 days after supplier's invoice date | 586,483 | 477,513 | | Over 120 days but less than 12 months after supplier's invoice date | 110,541 | 297,842 | | Over 12 months after supplier's invoice date | 32,549 | 205,657 | | Total | 5,429,938 | 5,367,226 | Commitments As of June 30, 2025, contracted but unfulfilled capital commitments not provided in the financial information amounted to approximately HK$214 million, primarily for the purchase of plant, machinery, tools, and equipment - As of the reporting date, contracted but unfulfilled capital commitments not provided in the financial information amounted to approximately HK$214 million[99] - These are primarily for the purchase of plant, machinery, tools, and equipment[58] Other Information Interim Dividend The Group's dividend policy remains unchanged, and the Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025 - The Group's dividend policy remains unchanged[100] - The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2025[100] Employees As of June 30, 2025, the Group employed a total of 7,562 staff globally, with the majority located in China, and adopts a performance-based remuneration policy, offering training and development programs to attract, motivate, and retain talented employees - As of June 30, 2025, the Group employed a total of 7,562 staff globally, with 7,365 based in China[101] - The Group adopts a performance-based remuneration policy, where salary reviews and performance bonuses are determined by work performance[101] - Various training and development programs are provided to attract, motivate, and retain talented employees[101] Purchase, Sale or Redemption of the Company's Listed Securities During the period ended June 30, 2025, the trustee of the share award scheme purchased 1.106 million shares for a total consideration of approximately HK$5.576 million, and the Board granted 3.339 million award shares to selected participants under the scheme, with no other purchases, sales, or redemptions of any listed securities by the Company or its subsidiaries - The trustee of the share award scheme purchased 1.106 million shares on the Stock Exchange in the first half of 2025, for a total consideration of approximately HK$5.576 million[102] - The Board granted a total of 3.339 million award shares to certain selected participants under the share award scheme[102] - Other than the above, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period ended June 30, 2025[104] Corporate Governance The Directors believe that the Company has complied with the Corporate Governance Code set out in Appendix C1 of the Listing Rules for the period ended June 30, 2025, except for one independent non-executive Director who was unable to attend the Annual General Meeting due to other business arrangements - The Directors believe that the Company has complied with the Corporate Governance Code set out in Appendix C1 of the Listing Rules for the period ended June 30, 2025[106] - Mr. Zhu Hehua, an independent non-executive Director, was unable to attend the Company's Annual General Meeting held on June 25, 2025, due to other business arrangements[107] [Standard Code for Securities Transactions by Directors](index=40&type=section&id=Standard%20Code%20for%20Securities%20Transactions%20by%20Direct