BOE reported huge loss of nearly 1 billion high debt looming financial crisis

South Korean subsidiary losses of more than 900 million, the company's financial expenses rose 470%

The cyclical industry downturn, huge investment makes the industry for the domestic LCD giants semi annual Yukui have prepared, however, the semi annual report of nearly 1 billion yuan of the huge loss, unexpectedly still.

Yesterday, the BOE (000725, 200725) announced the 2005 semi annual report, the company net profit loss of $989 million, down by 289.71%; earnings per share of -0.68 yuan, down by 288.89%.

Semi annual report shows that from January to June, the company's main business income of 4 billion 321 million 710 thousand yuan, down 30.68% compared to the same period last year; realize the main business profit of -27505.5 million yuan, down 125.79% compared to the same period last year; net profit of -98874.58 million yuan, down 289.71% compared to the same period last year; earnings per share from $0.36 in the same period last year decreased to -0.68 yuan; net assets yield -24.68%, also decreased by -347.29%.

The three major causes huge loss

Semi annual report released the same day, the BOE in Shenzhen Wuzhou Hotel held 2005 performance promotion conference, company executives believe the three major reasons leading to huge loss company.

The first reason is: cyclical decline in the industry has a greater impact on the company's business." BOE believes that due to the TFT-LCD industry has not yet bottomed out, the profitability of the same industry is not optimistic. The BOE in Taiwan as an example to explain the panel giant cyclical industry downturn, Taiwan area Chinese five TFT-LCD manufacturers, AUO total after tax loss in the first half of NT $1 billion 659 million, net loss per share of approximately NT $0.3. The first half of the cumulative loss after tax CMO was NT $3 billion 653 million, net loss per share of 0.95 yuan NT; CPT in the first half of the cumulative pre tax losses still reached 7 billion 300 million NT, which TFT sector losses of NT $6 billion 910 million; color crystal in the first half of the cumulative loss of up to NT $7 billion 408 million after tax.

The second reason is that can also be seen from the financial statements, South Korea subsidiary BOE-Hydis BOE purchased in 2003 on the company's consolidated financial statements for the effect of the number of -90280 million yuan; the BOE's explanation is that the speed of product transformation of South Korean subsidiary than expected to slow, before the BOE five generation line without full production, maintenance large size products customer relationship; the third reason is that the small size mobile phone screen development progress slower than expected, but with the five generation line in full production, the company will mainly concentrate on the development of small size product research and development. BOE said its five generation line in Beijing, Yizhuang is still in the climbing period.

Two questions have not yet been solved

However, for executives of this argument, investors do not agree. A securities company responsible person in an interview with reporters after the annual report of the BOE raised two questions, one is the South Korean subsidiary BOE-Hydis why so many losses, according to South Korean subsidiary BOE-Hydis losses of up to 9 million, accounted for about 90% of the huge loss of 1 billion yuan boe. Two is to question the company's financial costs rose too fast. Semi annual report shows that the current financial expenses reached 170724742 yuan, an increase of more than the same period last year by 470%.

There is no doubt that the panel industry is facing a global decline in profits, the investment payback period is lengthened the plight of four listed companies in China have not been spared, Shanghai radio and television electronics (600602.SH) issued Yukui announcement, said the first half of 2005 business will be 130 million yuan loss -1.4 billion, compared with the same period last year fell more than 250%. And the other two in the 3.5 generation main line of the Shen Saige (000058.SZ) loss of 5 million yuan, rainbow shares (600607.SH) Yukui 35 million yuan. Compared with the highest loss of 140 million yuan in the industry, while the loss of nearly a quarter of the real estate industry in the wake of the loss of nearly 1 billion.

High debt looming financial crisis

BOE's financial predicament has been the industry knows things. How to cope with this funding dilemma? BOE approach is: high debt, capital market financing. It is understood that the balance of the assets and liabilities of the BOE were: 2005 reported in the first quarter of 80.975%, the first quarter is 72.293%, the annual report is 69.42%, the three quarter of 2004 is 66.327% in the year of 2005. BOE's gearing ratio is rising. Wang Yanjun, director of corporate finance at the performance promotion also admits that, in general, the industry's mature company's asset liability ratio is about 50%, the company's assets and liabilities ratio of 80.975% is relatively high.

Insiders said that in recent years, BOE will also be on Ma Xin's production line, which may have a higher generation of the 6 generation line, but where the money comes from, which is the BOE has to face the direct problem. On the other hand, relying on the existing 5 generation line, the BOE can go far, which is another suspense boe.

The next report: BOE third quarter is still losing

Although the global TFT-LCD market environment is becoming more stable, but the price of TFT-LCD products involved in the decline is too large, the BOE forecast the cumulative net profit of the beginning of the next reporting period is still a loss. Although there are many uncertainties in the market environment, the company is currently unable to accurately estimate the amount of loss, but with the market's recovery and the implementation of the measures taken by the company, the loss will gradually decline.

At the same time BOE is expected in the second half of the industry for the better, the price will rise significantly. For investors concerned about the problems of equity division, the management of the company said, as a A + B company, the company will try to consider the support of shareholders of the company's shares, but due to the limitation of related policy restrictions, the company share reform program has not been introduced, but chairman Wang Dongsheng said the company will try to implement as soon as possible share