PlayNitride Getting Close to Listing
In our 02/17/22 note we indicated that Taiwan-based PlayNitride (pvt) was expected to apply for listing on the Taiwan Innovation Board, a subset of the Taiwan Stock Exchange that is designed to help small companies or start-ups obtain capital. With investors such as Samsung, Lite-On (2301.TT), Applied Materials (AMAT), and AU Optronics (2409.TT), the company gets considerable press concerning its focus on Micro-LED and its participation in Apple’s (AAPL) ‘secret’ Mini/Micro-LED lab in Taiwan. In order to be listed on the Innovation Board a company must have sales of NT$150m ($5.0m US), the bord must have 5 or more members, and the company and major investors are subject to a 25% progressive share sale restriction every 6 months following the initial listing. Since the restrictions also includes 6 months of ‘advisory guidance’ from the underwriters, we would expect the listing in August or September, which is ahead of original expectations of before the end of the year.
At a recent investor conference PlayNitride management indicated that they expect to break even on a monthly basis by the end of 2023 and generate ‘handsom’ operating profit in 2024. This will be accomplished by reducing production costs for Micro-LED elements by 95% by 2025, based on 2020 production costs. While PlayNitride produces much of its own production equipment, and has its own 6” production line (1,000 6” units/month), there has been talk that the company might outsource some parts of the Micro-LED production process to reduce investment costs as it scales up production to 1,500 and eventually 3,000 units/ month. This is particularly relevant as the company admits there are as many as ten different methods used to transfer Micro-LEDs to final substrates, with the decision on which to use based on the requirements of each customer.
PlayNitride has raised ~$52m from corporate investors and VCs, but is expected to issue 6.305m new shares upon listing (price unknown) and will license its 683 patents to outside parties in order to generate additional revenue going forward. While we have not seen the paperwork concerning the IPO financials yet, the company shows an operating revenue of $1.328m for May of this year and $271,000 for the month last year with a share capital of $57.1m based on the potential success of the IPO. PlayNitride generates 63% of its revenue from Micro-LED TV applications, 17% from wearables, 12% from automotive displays, and 8% from Ar devices. It will be interesting to see how the company progresses, particularly given Taiwan’s more detailed reporting requirements, although we expect with the red chip investors the company already has, we expect the IPO will fare well if pricing remains reasonable.
At a recent investor conference PlayNitride management indicated that they expect to break even on a monthly basis by the end of 2023 and generate ‘handsom’ operating profit in 2024. This will be accomplished by reducing production costs for Micro-LED elements by 95% by 2025, based on 2020 production costs. While PlayNitride produces much of its own production equipment, and has its own 6” production line (1,000 6” units/month), there has been talk that the company might outsource some parts of the Micro-LED production process to reduce investment costs as it scales up production to 1,500 and eventually 3,000 units/ month. This is particularly relevant as the company admits there are as many as ten different methods used to transfer Micro-LEDs to final substrates, with the decision on which to use based on the requirements of each customer.
PlayNitride has raised ~$52m from corporate investors and VCs, but is expected to issue 6.305m new shares upon listing (price unknown) and will license its 683 patents to outside parties in order to generate additional revenue going forward. While we have not seen the paperwork concerning the IPO financials yet, the company shows an operating revenue of $1.328m for May of this year and $271,000 for the month last year with a share capital of $57.1m based on the potential success of the IPO. PlayNitride generates 63% of its revenue from Micro-LED TV applications, 17% from wearables, 12% from automotive displays, and 8% from Ar devices. It will be interesting to see how the company progresses, particularly given Taiwan’s more detailed reporting requirements, although we expect with the red chip investors the company already has, we expect the IPO will fare well if pricing remains reasonable.
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