Qinshang Optoelectronics signed a agreement with Ji Cai Company to cancel the LED display project

Qinshang Optoelectronics (002638) announced that due to the slow progress of the “Xinhua Frequency Media LED Display Project”, the company signed a cancellation agreement with Guangzhou Ji Cai Culture Communication Co., Ltd. (hereinafter referred to as “Ji Cai Company”). This means that Qinshang Optoelectronics has a large-scale contract of 1.5 billion yuan for five years, and it has ended with the completion of 4.667 million yuan.

In 2012, it only performed about 4.667 million yuan.

According to the LED display purchase agreement signed by Qinshang Optoelectronics on December 21, 2011 and Ji Cai Company, the total purchase amount will reach 1.5 billion yuan, with a term of five years, and the annual purchase amount is estimated to be 300 million yuan.

"However, due to the market's failure to effectively release the LED display, the LED display business competition has intensified, and the government's approval for the application for screen construction is more strict and cautious." Weishang Optoelectronics Secretary Wei Li said that each LED display All need to apply for approval separately, and LED displays installed in different places are managed by different regulatory authorities. Therefore, in these actual application processes, the rigor of the government approval process and the uncertainty of the approval results have led to a fairly slow progress. In addition, Ji Cai will carry out investment in other display projects in other cities in China, resulting in substantial changes in the plans and conditions of the original agreement. From a prudent point of view, Qinshang Optoelectronics decided to negotiate with Ji Cai Company to cancel the original agreement.

The announcement shows that the original agreement was implemented from January 1, 2012, but in 2012, only the actual purchase contract was 4.667 million yuan, and the screen area totaled 256.38 square meters.

Wei Li said that although the original agreement was lifted, Qinshang Optoelectronics and Ji Cai Company still kept in touch. The display unit projects of Fangcun and Zhongshan Second Hospital signed by the two parties on the basis of the original agreement are still in accordance with the above projects. The signed contract is executed. “Ji Cai Company promised that its follow-up LED display projects invested or participated in construction in Guangdong Province and other regions will still use Qinshang Optoelectronics as the first partner, and choose to purchase the LED display of Qinshang Optoelectronics.”

Temporarily lost opportunities to expand profit growth

According to the announcement, Qinshang Optoelectronics did not include any business that did not occur under the original agreement for the third, fourth quarter and 2012 full-year 2012 results. Therefore, the agreement to terminate the original agreement has no impact on the company's 2012 annual results forecast and amendments.

Wei Li said that the business of Qinshang Optoelectronics is mainly LED lighting business. In 2012, the LED display business contributed less than 5% of the main business, while the LED lighting business accounted for more than 90%. Wei Li also stressed that Ji Cai Company is not a big customer of Qin Optoelectronics, and the company does not rely on its sales contribution.

Despite this, the cancellation of the LED display procurement contract will have a greater impact on the future growth prospects of Qinshang Optoelectronics. In 2011, Qinshang Optoelectronics' total operating income was 769 million yuan, of which the display and other business revenues were 2,216,300 yuan; in the first half of 2012, the company's total operating income was 364 million yuan, and the display and other business contributed revenue was 1,254,650 yuan. If the original agreement, the LED display business in the next few years can bring in more than 300 million yuan in revenue, for Qinshang Optoelectronics, it is undoubtedly expanding a good new profit growth point.

LED display layout is facing adjustment

According to the High-tech LED Industry Research Institute (GLII), the LED display market grew by about 10% year-on-year in 2012, reaching 24.1 billion yuan. Among them, the market size of full-color LED display increased by 15% to 20%, and shipments increased by more than 30%. Even so, the current LED display industry is still in an oversupply situation, and fierce competition has forced manufacturers to aggressively cut prices to compete for orders.

According to industry insiders, the price of LED display in 2012 was about 15% to 20%. In this process, large manufacturers with strength hope to eliminate some small and medium-sized manufacturers through price wars, but the price war has greatly affected the revenue performance of LED display manufacturers. It is expected that at least 30% of manufacturers' revenues will appear in 2012. fall back.

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