Reporter Chen Jialan reports from Guangzhou.
Two and a half years ago, Wingtech Technology (600745SH) spent 2.4 billion yuan to acquire OFILM (002456).SZ) two assets, into the Apple ** chain. Nowadays, the project of Wingtech Technology to take over the camera module business of OFILM has been variable.
On the evening of December 1, Wingtech Technology announced that based on the latest business progress of specific customers, combined with changes in the market environment and the company's business planning, it was decided to stop producing optical module products for specific customers. The one-time impairment treatment of assets involving specific customers in the optical module business is expected to reduce the company's total annual net profit in 2023 by approximately 73.3 billion yuan.
When a reporter from China Business News called the Investor Relations Department of Wingtech Technology as an investor, the staff of the department said: "It is the company's own decision to stop production and cooperate with specific customers. In addition, the optical business continues to advance. ”
The reporter also sent an interview email to Wingtech Technology, but did not receive a reply as of press time.
As of December 6**, Wingtech Technology's share price has fallen for three consecutive days.
Stop a specific customer from provoking a market reaction
On December 1, Wingtech Technology issued the "Announcement on the Business Progress of Delta", disclosing that Zhuhai Delta Technology, the parent company of Guangzhou Delta Imaging Technology Co., Ltd., hereinafter referred to as "Delta"), held a board meeting and decided to stop the production of optical module products for specific customers based on the latest business progress with specific customers and combined with changes in the market environment and the company's business plan.
Although Wingtech Technology did not disclose the specific name of the "specific customer", it is widely believed to be Apple.
The reporter also noticed that the optical module business segment, which was stopped this time, was purchased by Wingtech Technology from OFILM in 2021. At that time, OFILM was removed from the ** chain by Apple, and the related assets were taken over by Wingtech Technology. Delta, formerly a subsidiary of OFILM, is one of the world's leading manufacturers in the field of optical modules and the largest supplier in Apple's camera module business.
On March 29, 2021, Wingtech Technology signed a relevant agreement with OFILM and its subsidiaries to purchase 100% of the equity of Delta and related equipment owned by Jiangxi Jingrun Optics in cash, with a total transaction price of 24200 million yuan.
Wingtech Technology said that after the optical module business project of specific customers entered the stage of formal mass production and normalized batch shipment, the operation was stable, and the production and operation of Delta were carried out normally. On November 30, 2023, the products shipped by Delta's optical module business to specific overseas customers have completed the production of existing orders, and no new orders have been obtained so far. In this regard, the board of directors held a meeting and decided to stop the production of optical module products for specific customers based on the latest business progress with specific customers, changes in the market environment and the company's business plan.
The company's one-time impairment treatment of assets involving specific customers in the optical module business is expected to reduce annual net profit by approximately 73.3 billion yuan.
Wingtech Technology's net profit in 2022 is 14600 million yuan. In other words, the cessation of cooperation with specific customers will have a greater impact on the company's net profit.
The announcement of Wingtech Technology's cessation of specific customer business has also caused a lot of reaction in the capital market. On December 4, Wingtech Technology opened lower, falling more than 9% intraday, and the stock price fell 659%。Wingtech Technology also held a first-class meeting to answer the relevant doubts of institutional investors.
After the completion of the acquisition, through the company's hard work, the optical module business has grown from a monthly loss of tens of millions of yuan to a breakeven. At the end of November this year, we have completed the production of existing orders for optical module products from specific customers, and have not obtained new orders so far. Wingtech Technology once again emphasized that there are no product quality problems, factory technical problems or production capacity problems in the company's specific customer optical module products, and the management of the optical module business evaluates the future plan and thinks about the transformation of the optical module business in the current market environment or continues to take new orders from specific customers.
When the reporter called the investor relations department of Wingtech Technology as an investor, the other party also said: "The order production is over, and there are no other orders from specific customers for the time being, so the company decided to suspend production cooperation with specific customers." ”
The reporter learned that at present, the leading manufacturers of Apple's iPhone mobile phone camera modules include LG LNNOTEK, Sharp, Gao Wei Electronics, Hon Hai, Sunny Optics, etc.
A person in the mobile phone camera industry reminded reporters that Apple itself is deliberately delocalizing. In addition, the competitiveness of Wingtech Technology's module products is not strong.
Previously, some people from the upstream industry chain also analyzed to reporters: "Usually when you make orders for Apple, the boss will make money, the second will almost break even, and the third will generally lose money." In this regard, it can be analyzed that it is not surprising that Wingtech Technology's optical module products are not profitable due to the lack of scale.
According to Wingtech Technology's annual report data, its optical module business will lose 3 percent in 2021, 2022, and the first three quarters of 20233.5 billion yuan, 33.5 billion yuan, 03.8 billion yuan, with a cumulative net loss of 70.8 billion yuan. Overall, the optical module business is still a money-losing business.
However, the optical module business of specific customers has also gone from a monthly loss of tens of millions of yuan to a basic breakeven at the quarterly level, but Wingtech Technology finally decided to give up.
From a financial point of view, in the cooperation with Apple, Apple has a special asset requirement for the first business, which means that the first chamber of commerce has a lot of proprietary equipment and proprietary patents, so once the cooperation is stopped, it means that the original production line cannot be used for the production of other customers' products, which also causes the large-scale asset impairment of Wingtech Technology. The fixed assets and intangible assets (i.e., patents) are expected to be provided for by 4Impairment charges of $600 million and $38 million. At present, the remaining fixed assets and intangible assets are mainly factory buildings and land use rights.
In terms of revenue, the optical module business contributes less than 5% to the overall revenue of the listed companyIn terms of profit, the optical module business was basically in a breakeven state in the first three quarters of this year. Wingtech Technology emphasized that the cessation of the production of optical module products for specific customers will have little impact on the company's revenue and profits.
It is worth noting that when Wingtech Technology's optical business continued to lose money earlier, the outside world speculated that the role of Wingtech Technology's acquisition of Delta business was to help the company cut into Apple's ** chain, and the strategic significance was greater than the actual contribution of the business itself. After successfully leveraging the optical module business to enter the Apple ** chain and pass the Apple factory audit certification, Wingtech Technology has successively won orders in the fields of Apple MAC and smart home.
Orders for notebooks and semiconductors are the new highlights
The reporter learned that Wingtech Technology entered the optical field through the acquisition of Delta Tower, a subsidiary of OFILM, at that time Delta only made Apple orders, and after the acquisition of Wingtech Technology, the foundation of Apple customers in the field of optics and Apple customers also opened up customers in the fields of automobiles and Android. After stopping the cooperation with specific customers, what will be the next plan for the optical business of Wingtech Technology?
The previous business planning of the optical module business mainly developed in three directions: one is the production of specific customer products, the second is the coordinated development with the company's ODM (original design manufacturer) business, and the third is the upgrade from consumer electronics cameras to the automotive electronics field. Wingtech Technology said that although the production of optical module products for specific customers has been stopped, it will not affect the business planning of ODM customer business and automotive electronics, and the company will prudently evaluate the clear development path of optical module business in the future.
Wingtech Technology's main business involves product integration, semiconductor and optical module business.
For the future of the optical business segment in the three major business segments, Wingtech Technology mentioned that the company will still look for a new direction in the optical business, prudently plan, and believe that this part of the business in the future will not be a big drag on the company.
According to Wingtech Technology, there are two directions of planning in business development: first, there are other ODM customers in the optical module business, such as vehicle cameras, which are not affected;Second, the company's cooperation with Apple is diversified, laptops and smart homes are also supplied by Wingtech Technology, and smart home products are exclusively supplied by the company, with a yield rate of 99%, and the yield rate of notebook projects is also above 99%.
Wingtech Technology also said that the cooperation of notebook computers has been the core non-mobile phone business of the product integration business segment, and benefiting from the further improvement of the landing of new products and the overall expectations of the industry, new orders for notebook products have landed, and there will be rapid growth next year.
On December 5, Canalys announced** that global PC shipments are expected to recover after seven consecutive quarters**. The market is expected to grow by 5% in the fourth quarter of 2023, driven by the holiday season and macroeconomic improvements. Looking ahead, full-year 2024 shipments are expected to reach 26.7 billion units, an increase of 8% from 2023.
*Next year's PC market**, because the market demand has bottomed out and is slowly improving and the replacement demand brought by AI functions. Xu Ying, an analyst at Canalys China, told reporters that by 2024, the total shipments of personal computers with AI functions will achieve a market share of about 19%. This includes all M-series Mac products, as well as new products expected to be launched in the Windows ecosystem, and AI PCs will be rapidly growing and gaining popularity.
The staff of the investor relations department of Wingtech Technology said: "The company's notebook business prospect is mainly based on the company's existing business orders. ”
In the field of semiconductors, Wingtech Technology just announced in early November that it would stop its investment plan in the British wafer factory Newport Wafer Fab (NWF). However, the semiconductor business performed well. According to the third quarterly report disclosed by Wingtech Technology, the semiconductor business achieved revenue of 39 in the third quarter9.9 billion yuan, with a gross profit margin of 3770%, achieving a net profit of 6$8.3 billion.
Wingtech Technology mentioned that the semiconductor business has experienced a downward cycle for more than a year, and the outside world has questioned it from the beginning to later discovered the resilience of Nexperia. In particular, automotive semiconductor companies account for more than 60% of automotive customers, and have a very good resource advantage for automotive customers. In terms of profit, it also remained stable, with a single quarter of 670 million yuan in the first three quarters. If the consumer electronics industry can recover next year, the revenue scale of Wingtech Technology's original consumer electronics industry will recover.