On March 22nd, BOE announced that in order to meet customer demand and enhance the competitiveness of the industry, Wuhan BOE intends to combine the favorable conditions that 25000 glass substrates / month factory space has been reserved at the beginning of construction, using self-raised funds of 3.775 billion yuan to expand production capacity in the existing Wuhan BOE plant.
It is understood that Wuhan BOE is a shareholding subsidiary of the BOE Group, which currently holds 23.08% of the shares of Wuhan BOE. The other two shareholders are Hubei Changbai Industrial Investment Fund Partnership (Limited Partnership) and Wuhan Lingang Economic and technological Development Zone Industrial Development Investment Group Co., Ltd., with a shareholding ratio of 30.77% and 46.15% respectively. In 2019 and 2020, the company achieved operating income of 130 million yuan and 1.775 billion yuan, and the corresponding net profit was-13 million yuan and-156 million yuan respectively.
BOE believes that with the arrival of new technologies such as 5G, Internet of things and big data, the next five years will be the golden period for the development of 4K/8K ultra-high-definition display technology, and technology upgrading will promote the continuous transfer of display consumer products to high-end and medium-sized products. In addition, due to the impact of the epidemic, online education, video conferencing and other new applications showed explosive growth, corresponding to show that product demand will continue to be strong, resulting in global small and medium-sized generation production lines have to adjust the product structure, increase the proportion of IT panel production capacity, TV and other medium and large panel production capacity is relatively reduced, the supply continues to be out of balance. It is expected that the demand for large-size panels will continue to grow in the next 5 years, and the demand for 65-inch and 75-inch products as the economic cutting size of the 10.5 generation production line will grow significantly. In order to meet the incremental needs of customers, lay a solid foundation for long-term and in-depth cooperation with customers of various brands, and further seize the incremental market of zhong large-size panels, it is necessary for Wuhan BOE to implement the production line expansion project to expand the production capacity of the corresponding medium and large panels to ensure competitive advantage.
Wuhan BOE is the second 10.5 generation production line of BOE Group, which is a key step for the company to realize the large screen display strategy. Under the guidance of the company's large screen display strategic planning, Wuhan BOE has carried out this capacity expansion project through full evaluation and demonstration of process technology, plant and equipment specifications. Wuhan BOE reserved plant space of 25000 substrates per month at the initial stage of its construction. By expanding production capacity, the existing plant space can be fully utilized and the space can be avoided to be idle. At the same time, the project not only buys new equipment, but also fully considers the capacity potential of existing equipment, and formulates a series of plans to maximize equipment production capacity to maximize the operational efficiency of existing equipment. Based on the utilization of the existing plant and tapping the potential capacity of the equipment, the amount of investment required for the new capacity of the expansion unit is far lower than that of the new plant, and the completion of the project will significantly enhance the profitability and competitive advantage of Wuhan BOE.
BOE said that from the perspective of market demand and competitive advantage, the incremental demand for products in the future is far greater than the production capacity of Wuhan BOE after production expansion; and when the market goes down, Wuhan JD.com can make use of the ultimate cost and technological advantages after production expansion to grab share and maximize revenue.
