A Taste of Q&A
While companies in the US and other regions face Q&A from analysts and investors on quarterly conference calls and investor presentations, individual Q&A from same tends to be via e-mail or a phone call that rarely is made public, especially given the disclosure rules that could force a public disclosure ‘event’ if non-public information is accidentally disclosed by a company and further disclosed by the analyst. Chinese companies, at least some, disclose contact with brokers and analysts but also have ‘public’ forums where investors can ask questions ad hoc, directly to company managements. In most cases questions are focused on technical points such as current shareholder count or details of some complex share transaction, but companies do get asked more specific questions about business details which are sometimes both highly specific and quite direct.
Company spokespersons are careful to keep competitive information close to the vest however at times company enthusiasm can seep through with details about a particular topic or product, while similarly when things are difficult to answer company’s refer back to a number of platitudes or explanations that are far from answers. Here’s an example that is part of a Q&A between investors and BOE (200725.CH), China’s largest display panel producer:
Q What is the progress of the company’s acquisition of minority shares in Wuhan B17? And is there any acquisition plan and timetable for the minority stake in Hefei B9? Thanks.
A Hello! For the financial data, please pay attention to the company’s regular reports. Please pay attention to company announcements for major issues. Thanks!
The question, which was getting at trying to gauge whether BOE is progressing with a plan to buy out smaller shareholders in a particular company LCD fab, which would put BOE just behind the government as the 2nd largest shareholder, was not answered, with a very typical generic response, however another question, which was of more value from a publicity perspective was answered with considerably more detail:
Q Chengdu BOE Electronics CO. Ltd., in which the company has a shareholding, was established on August 26. Is it to support cooperation with Changan Automobile (000625.CH) and Cherry Group (pvt) in automotive smart cockpit display and vehicle applications? What is the company’s shareholding ratio?
A Hello! According to the announcement of the company’s holding subsidiary BOE Seiki Co., Ltd. (BOE Seiki, 0710.HK), the company and the company’s holding subsidiary BOE Seiki’s wholly-owned subsidiary Hefei BOE Automotive Display Technology Co., Ltd. (Hefei BOE) and Chengdu BOE Automotive Electronics Co., Ltd. was established as a joint venture by Canada Investment Co., Ltd. (Annual Canada). The investment ratio of the joint venture company is 40% of the company, and Hefei BOE 40%, with an annual increase of 20%. The establishment of the joint venture company will be able to strengthen the BOE Group's layout in smart car display devices. Thanks!
This was obviously something that the company wants shared, and was willing to be more specific about details, especially as BOE has been promoting its stature in the automotive display market for some time, but when another question touched on a topic that was a bit more sensitive to the fact that BOE is the largest producer of TV panels globally, the Q&A took a more defensive tone.
Q Hello, not only did the TV screen drop sharply in August, but in September, according to third-party media surveys, there will also be a sharp drop. The 43-inch price is even more likely to return to January. May I ask the company once said the industry’s weak cycle, why can’t it be reflected at all? ,thanks
A Hello! In the past year or so, the prices of TV and IT LCD products have risen sharply. At present, product prices have gradually begun to differentiate, and prices of basic products have begun to loosen, but the prices of tight-selling and high value-added products will remain high. At present, the prices of IT LCD products, which account for a higher proportion of the company’s revenue, remain high, and the prices of some products are still rising. The price of TV LCD products has dropped to a certain extent, and the price of relatively larger and higher-end products has fallen slightly. There are large differences between different products, but due to the continued tight supply of upstream raw materials, the overall effective capacity increase is relatively limited, and the profitability of products, especially the profitability of high value-added products, is still expected to remain at a good level. Thanks!
It is quite obvious from the company’s response that this is a topic that was very carefully considered before an answer was given and crafted to maintain a sense that the company has things well under control and has planned for such an eventuality, which is usually not the case. In reality, panel producers tend to be reactive rather than proactive, making decisions based on relatively short-term prospects and Chinese panel producers tend to be more so inclined, and while there are many considerations that go into capacity expansion decisions, an underlying goal for China’s display space has been to gain a dominant position at almost any cost. This desire for ‘share bragging rights’ and the state, provincial, and city government’s desire to fund this aspiration has certainly given China the dominant position in the LCD panel space, and for the last year, been a source of profitability for almost all Chinese panel producers.
That said, even if there has been a shift away from LCD TV panel production from Chinese panel producers, there is little escaping the effects of the rapid drop in TV panel prices seen this month. There are some offsets, such as a bit of an increase in IT panel prices or the lesser impact of the TV panel price decline on the very large TV panel segment, but the panel industry is so obviously cyclical that no matter what language company’s use to explain how they have morphed into non-cyclical entities, it is difficult for us to believe that such rhetoric will change the eventual outcome. China will continue to dominate the large panel LCD space over the coming years, but whether that will sustain profitability over the next few years is a less likely scenario.
Company spokespersons are careful to keep competitive information close to the vest however at times company enthusiasm can seep through with details about a particular topic or product, while similarly when things are difficult to answer company’s refer back to a number of platitudes or explanations that are far from answers. Here’s an example that is part of a Q&A between investors and BOE (200725.CH), China’s largest display panel producer:
Q What is the progress of the company’s acquisition of minority shares in Wuhan B17? And is there any acquisition plan and timetable for the minority stake in Hefei B9? Thanks.
A Hello! For the financial data, please pay attention to the company’s regular reports. Please pay attention to company announcements for major issues. Thanks!
The question, which was getting at trying to gauge whether BOE is progressing with a plan to buy out smaller shareholders in a particular company LCD fab, which would put BOE just behind the government as the 2nd largest shareholder, was not answered, with a very typical generic response, however another question, which was of more value from a publicity perspective was answered with considerably more detail:
Q Chengdu BOE Electronics CO. Ltd., in which the company has a shareholding, was established on August 26. Is it to support cooperation with Changan Automobile (000625.CH) and Cherry Group (pvt) in automotive smart cockpit display and vehicle applications? What is the company’s shareholding ratio?
A Hello! According to the announcement of the company’s holding subsidiary BOE Seiki Co., Ltd. (BOE Seiki, 0710.HK), the company and the company’s holding subsidiary BOE Seiki’s wholly-owned subsidiary Hefei BOE Automotive Display Technology Co., Ltd. (Hefei BOE) and Chengdu BOE Automotive Electronics Co., Ltd. was established as a joint venture by Canada Investment Co., Ltd. (Annual Canada). The investment ratio of the joint venture company is 40% of the company, and Hefei BOE 40%, with an annual increase of 20%. The establishment of the joint venture company will be able to strengthen the BOE Group's layout in smart car display devices. Thanks!
This was obviously something that the company wants shared, and was willing to be more specific about details, especially as BOE has been promoting its stature in the automotive display market for some time, but when another question touched on a topic that was a bit more sensitive to the fact that BOE is the largest producer of TV panels globally, the Q&A took a more defensive tone.
Q Hello, not only did the TV screen drop sharply in August, but in September, according to third-party media surveys, there will also be a sharp drop. The 43-inch price is even more likely to return to January. May I ask the company once said the industry’s weak cycle, why can’t it be reflected at all? ,thanks
A Hello! In the past year or so, the prices of TV and IT LCD products have risen sharply. At present, product prices have gradually begun to differentiate, and prices of basic products have begun to loosen, but the prices of tight-selling and high value-added products will remain high. At present, the prices of IT LCD products, which account for a higher proportion of the company’s revenue, remain high, and the prices of some products are still rising. The price of TV LCD products has dropped to a certain extent, and the price of relatively larger and higher-end products has fallen slightly. There are large differences between different products, but due to the continued tight supply of upstream raw materials, the overall effective capacity increase is relatively limited, and the profitability of products, especially the profitability of high value-added products, is still expected to remain at a good level. Thanks!
It is quite obvious from the company’s response that this is a topic that was very carefully considered before an answer was given and crafted to maintain a sense that the company has things well under control and has planned for such an eventuality, which is usually not the case. In reality, panel producers tend to be reactive rather than proactive, making decisions based on relatively short-term prospects and Chinese panel producers tend to be more so inclined, and while there are many considerations that go into capacity expansion decisions, an underlying goal for China’s display space has been to gain a dominant position at almost any cost. This desire for ‘share bragging rights’ and the state, provincial, and city government’s desire to fund this aspiration has certainly given China the dominant position in the LCD panel space, and for the last year, been a source of profitability for almost all Chinese panel producers.
That said, even if there has been a shift away from LCD TV panel production from Chinese panel producers, there is little escaping the effects of the rapid drop in TV panel prices seen this month. There are some offsets, such as a bit of an increase in IT panel prices or the lesser impact of the TV panel price decline on the very large TV panel segment, but the panel industry is so obviously cyclical that no matter what language company’s use to explain how they have morphed into non-cyclical entities, it is difficult for us to believe that such rhetoric will change the eventual outcome. China will continue to dominate the large panel LCD space over the coming years, but whether that will sustain profitability over the next few years is a less likely scenario.
Aggregate Panel Price Rate of Change - 2019 - 2021 YTD - Source: SCMR LLC, IHS, Trendforce, OMDIA, Company Data
32" Aggregate Panel Pricing - 10 Years - Source: SCMR LLC, Displaysearch, IHS, Witsview, Company Data
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