Recently, Truly International announced that for the three months ended March 31, 2019, the company's revenue was HK$4.58 billion, a year-on-year increase of 12.5%. Profit attributable to owners of the company. HK$102 million, a year-on-year increase of 71.6%.
Sili International is an investment holding company of the Sino Group, whose main business is manufacturing and sales of liquid crystal displays and electronic consumer products. Including computers, pagers, MP3 players and electronic components. Its customers include Samsung, LG, Huawei, ZTE, OPPO, Gionee, etc. According to the 2018 annual report, the liquid crystal display device achieved a revenue of 12.1 billion Hong Kong dollars, accounting for 61% of revenue, and consumer electronics revenues of 7.7 billion, accounting for 38% of revenue.
The business has a competitive advantage in the same category. From the perspective of industry status, the vehicle display accounts for 8% of the global automotive TFT-LCD shipments.Leading the field; mobile phone LCD module sales share of 19%, ranking first in the country; camera module global shipment share of about 4.5%, the domestic ranking fourth. However, the performance of Truly International has gradually slowed down since 2013, especially the growth rate of non-net profit has been a year-on-year decline for five consecutive years.
This also caused its stock price to drop from the highest price of 4.18 yuan in the previous period to a minimum of 0.85 yuan, with an overall decline of 77.24%.
The reason why the performance of Truly International has been particularly severe in these years is inseparable from the fact that the industry in which it is located is in a period of saturation.According to a report released by the China Information and Communication Research Institute, the domestic market shipped 491 million units in 2017, down 12.3% year-on-year. The rigid wave of equipment upgrades due to the 4G mobile phone upgrade wave retreat and performance improvement has weakened, resulting in the growth of domestic market shipments over the past two years. Especially in the fourth quarter of 2017, shipments fell by more than 20%. By 2018, the industry situation has not changed much. According to the authoritative report of China Telecomtsu Institute on February 26, the domestic mobile phone market shipments in 2010 were 414 million units, a sharp drop of 15.6% from 2017.
The main reason for the industry downturn is that domestic smartphones are basically saturated, and with the increase in the quality of smartphones, the frequency of consumers' replacement is reduced. For most people, it usually takes 2 years to change a mobile phone.
So this is a factor in the sluggish performance of Truly International in recent years. After all, the competition is fierce under the industry saturation, and the domestic first-line suppliers are Not for yourself, for a simple example, in the largest revenue business, Truly International faces competition from many participants such as LG, BOE, Huaxing Optoelectronics, and Tianma Microelectronics.
Another point is the loss of its own accounts receivable. The first three quarters of the report released in 2017 showed its first loss since its listing. The net profit was a loss of HK$9 million, which was in the same period last year. This figure is a profit of 566 million Hong Kong dollars.
The reason is that the company was in arrears of 554 million Hong Kong dollars in payment, and was eventually fully accrued.Approximately HK$554 million and a claim of approximately HK$140 million from the credit insurance company, the impact of a one-time full provision for bad and doubtful debts was approximately HK$414 million. Another point is that the associate company Xinli (Huizhou) Intelligent Display Co., Ltd. started production in the fourth quarter of 2016 and began to accrue depreciation. The profit rate and yield rate are in the climbing period and cause major operating losses.
And the net profit of the first quarter increased by 7 times. Is it because the company is not very good, or is it back?
The main reasons for this increase in profit expectations are as follows:
Administrative expenses Down, due to strict cost control, this period decreased by approximately HK$28 million compared with the same period in 2018;
Government allowance increased compared with the same period in 2018 During the period, it increased by approximately HK$45 million.
You can see that the first is its own cost control, and the other is the annual government subsidy. It can be said that its business performance is not reflected in this growth. among. From the perspective of the financial structure and business of Truly International, it is not so optimistic.
From a financial perspective, Truly International’s total current liabilities as of 2018 amounted to HK$15.8 billion and the debt ratio was 63%.
In terms of accounts receivable that have suffered losses, there are 8 billion receivables. From the past, in the past, from 2014 to 2018, the receivables increased from 5.7 billion to about 8.5 billion, and the net added value was 1.8 billion. In 2017, the problem of receivables due to LeTV problems occurred. Therefore, there is a risk issue here. This is the question of whether there will still be problems with LeTV in the receivables of more than 50 billion in the year. This is a matter of caution.
The latest production line has not been fully released. In July 2017, Truly International invested in the 5th generation of thin film transistors in Renshou. > Liquid crystal display (TFT-LCD) project and the 6th generation AMoled semiconductor display device production line construction project, with a total investment of 40.4 billion yuan, is the 5th generation TFT car display production line with the world's largest production capacity. It is expected to be put into production at the end of 2019 and mass production in 2021.
It can be noted that this is the capacity line for non-mobile phone business,In the case of a sluggish business of its own mobile phone business, according to the latest data, taking AMOLED panels as an example, Digitimes Research estimates that the annual production capacity of Chinese manufacturers for small and medium-sized AMOLED panels is expected to 76% compound annual growth rate, reaching 11.31 million square meters in 2022, accounting for 33.4% of the world's total capacity, second only to South Korea. Therefore, Truly International also seized this opportunity to expand its production capacity line. However, this capacity line has not yet been fully released and it is necessary to pay attention to how much performance release capability can be brought. But its own financial pressure can be seen, especially debt pressure.