BOE SVA LCD suffer profit landslide investment boom is not reduced

Main business income of 4 billion 300 million yuan, down 30.68%; the main business profit of -2.7 billion yuan, down 125.79%; net profit of -9.88 billion yuan, down 289.71%. In August 26th, the BOE (000725.SZ) Jukui Interim Report 2005 officially released.

In fact, as early as two weeks ago, the national development and Reform Commission published data have shown that the annual turnover of 45 billion 100 million yuan ranked second in the "2005 China electronic information hundred TFT-LCD (LCD) enterprises, this year 1-5 month loss of 515 million yuan, profit fell 181%. The NDRC announced the loss of enterprises as well as the Shanghai SVA (Group) Co., Ltd. (hereinafter referred to as SVA), the total profit of only 16 million 640 thousand yuan, down 97.52%. The company with annual sales of 34 billion yuan in the top fifth, one of its important venture, SVA NEC and LCD panel manufacturers.

Price trough

In the second half of last year, the global TFT-LCD industry began to face a sharp decline in market prices, the deterioration of the business environment, has continued to date, the company's operations are facing severe challenges." The report released in the afternoon, BOE chairman and CEO Wang Dongsheng admitted to investors.

For the specific circumstances of the loss, the BOE financial director Wang Yanjun explained for four reasons: first, the South Korean subsidiary BOE Hydis TFT - LCD Technology Corporation due to low market prices and adjust the product structure, the company's consolidated financial statements for the effect of the number of -90280 million yuan; second, North Beijing jingdongfang Photoelectric Technology Co. Ltd. TFT-IED fifth generation production line for in the early stage of production and low market prices, the company's consolidated financial statements for the effect of the number of -7219 million yuan; third, affiliates of Hyundai LCD Corporation - operating losses, on the impact of the company's financial statements and the number of investment income of -5455 million; fourth, increased financial costs, the company's consolidated financial statements of the number -17072 million.

In order to cheer investors, BOE management tried to throw some good news. Wang Dongsheng said, since the building is located in Beijing Yizhuang BOE investment TFT-LCD fifth generation production line has been the most difficult time in the whole industry, not only the fastest in the industry to achieve mass production in May this year, also created the fastest industry TFT-LCD fifth generation production line yield increase, the yield level of the third quarter maintain in 90% above, under normal circumstances only 80%.

The current cycle of liquid crystal price decline has basically bottomed out, the company's mainstream products have more than 10% of the price recovery." Wang Dongsheng said that the BOE can take advantage of the opportunity to pick up the market, the rapid expansion of the amount of production, expand market share, in the new round of global competition to seek a relatively favorable competitive position.

"Yizhuang's fifth generation production line, we expect to start in October to achieve the same month earnings." BOE executive vice president and Secretary of the board of directors Chen Yanshun said that the five generation line capacity will be extended from 60 thousand to 85 thousand pieces per month, the first half of next year can reach an annual output of 13 million pieces (equivalent to 17 inch LCD screen), output is expected to about 13 billion -150 billion yuan.

Chen Yanshun also stressed that although the LCD cycle has been a significant rebound trend, but in the future TFT-LCD price trend is irreversible. He also told reporters that the BOE in order to profitability, to take the 3020 action, that is to enhance the value of the product 30%, reduce costs by 20%".

Analysys International President Yang analysis, since the beginning of July 2004, the global LCD panel prices fell for the first time, after all the way down more than 50%, the results of almost all the liquid crystal industry. As for the BOE, the end of the five generation line is also an important reason for the loss.

Yu Yang also believes that this year under the LCD market in the half year there will be signs of improvement, and South Korean subsidiary BOE HYDIS mainly from the loss of the 3.5 generation line, the second half of the company will speed up the adjustment of product structure, to the small screen panel production of notebook computer, tablet computer, mobile products, is expected in the third quarter compared to the first half of BOE is greatly improved, the fourth quarter may be profitable.

SVA NEC company deputy general manager Yang Ronghua also acknowledged the company's losses in the first half, he said, since the second half of last year, South Korea, Japan and China's Taiwan LCD panel makers of the five generation line capacity to release, causing the entire LCD industry emerged in 2004 5% overcapacity in 2005, this figure is likely to reach 15%. "Domestic enterprises just sit on the capacity on the release, but the profits continued to decline in the" big slide. "."

But Yang Ronghua on the situation in the future is optimistic: "Chinese market has huge internal demand, currently only, CRT monitors a year about 34 million yield, if all converted to the LCD screen, tremendous business opportunities. In addition, with the global production base for various types of digital products are generally moving to China, the market demand for the nearest procurement panel is also very promising."

Can not stop the investment fever"

BOE, SVA NEC this suffering due north and south two to five generation line in the industry downturn, investment upsurge of LCD is unabated. The news in Jiangsu, Kunshan, dragon five generation LCD panel production line a total investment of about $6 billion has been launched in Shandong, Dongying,; six generation LCD panel production line project with a total investment of about $3 billion - has been launched; 4.5 generation production line of Shenzhen Tianma a total investment of more than 7 billion yuan is also approval.

Even in the difficult period of the BOE, on the Canton