MTC(SZ:002429)2024-07-11 15:11Summary of Conference Call Notes Company and Industry Overview - The conference call pertains to Zhaochi Co., a company operating in the LED and television manufacturing industry, focusing on various segments including multimedia audio-visual products, chips, packaging, and backlight modules [1][2]. Key Points and Arguments Performance Highlights - In the first half of the year, multimedia audio-visual products, particularly televisions, accounted for approximately 70% of the company's revenue, while the LED segment is expected to contribute over 50% of total profits in the second half [2][2]. - The chip business generated over 25% of profits, showing continuous improvement compared to the previous year [2][2]. - The average selling price of chips increased from approximately 200 yuan per unit to nearly 250 yuan per unit, indicating significant potential for value enhancement [2][2]. Television Business Operations - The television business showed steady growth in the first half, with a year-on-year increase in shipment volume despite initial challenges from overseas factors and shipping logistics [3][3]. - Approximately 540,000 televisions were shipped in the first half, reflecting a 4% increase year-on-year, with a notable acceleration in growth during the second quarter [14][14]. Strategic Adjustments - The company shifted focus to producing 1.5mm pitch products to attract customers initially interested in 1.8mm or higher pitch products, aiming to drive growth in the indoor small pitch market [4][4]. - To mitigate the impact of rising shipping costs, the company has implemented a localized supply chain strategy, including assembling components in North America to avoid tariff risks [5][5]. Shipping and Trade Challenges - The shipping cost increase primarily affected exports to North America, leading to a temporary delay in orders. However, as shipping costs normalized, customer willingness to place orders improved [5][5]. - The company has been proactive in preparing for potential changes in international trade policies, including increasing production capacity in Vietnam to enhance resilience against market fluctuations [7][7]. LED Industry Insights - The LED chip sector remains competitive, with a focus on cost-effectiveness due to rapid technological innovation and high levels of product homogeneity [10][10]. - The company has established a vertically integrated production model in Nanchang, enhancing production efficiency and expanding into high-end chip markets through partnerships, such as with Samsung [11][12]. Future Outlook - The backlight business has grown from 10% to over 15% of total revenue, with expectations to reach 20% as global television production is projected to hit around 200 million units [18][18]. - The company aims to align the target gross margin of the backlight segment with that of its premium business, potentially exceeding 30% [18][18]. Market Strategy and Production Capacity - The company plans to focus on new market launches for products with a pitch of 1.56mm and above, adjusting pricing strategies to optimize order volumes [16][16]. - Production capacity is set to increase significantly, with the addition of 100 new production lines expected to enhance daily output to 20,000 square meters by September [15][15]. Brand and Supply Chain Management - The company will continue to collaborate closely with clients for brand building while maintaining a focus on market demand and price adjustments in high-margin segments [18][18]. - The production strategy involves pre-manufacturing standardized products to ensure high operational efficiency, with plans to manage inventory effectively [18][18].