Visionox Postpones Share Transfer
In early March Visionox (002387.CH) indicated that the company was notified by its largest shareholder, Tibet Zhihe Capital Management (pvt) that it would be transferring its shares to Visionox’s 2nd largest shareholder, the Kunshan Economic & Technological Development Zone, a city run management company that administers the special economic zone in Kunshan. At the time the Chinese trade press (in usual fashion) spun the transaction, which moves control of the company to a state-owned entity, as a positive event that brings together ‘the resources of Hefei and Kunshan…to further increase the production capacity and market share…leading to a win-win situation and the state-owned institutions.’
That transaction, which has been questioned by shareholders due to a potentially discounted transaction price, has been progressing at a snail’s pace, especially given the relatively poor performance Visionox shares have shown since the announcement (down from 11.52 RMB at the beginning of the year to 8.65 RMB currently and the increased state ownership that the transfer would accomplish. It seems now that Visionox has put the transaction on hold ‘based on general market conditions’, although the announcement seems to have made little difference to the stock or shareholders. While Visionox has a number of consequential OLED customers, they have been vague about the utilization rates at their three production fabs, using ‘ramping’ rather than specifics to answer capacity questions, but it is still a toss up as to whether the deal postponement is a positive or a negative.
From the glass half full perspective, one could make the case that the company is doing well enough they no longer see the need for help form local or provincial governments, and from the glass half empty perspective, the company’s performance and prospects are not strong enough to warrant any further investment by the state. When 3Q results are released we expect it will be easier to see which is the case.
That transaction, which has been questioned by shareholders due to a potentially discounted transaction price, has been progressing at a snail’s pace, especially given the relatively poor performance Visionox shares have shown since the announcement (down from 11.52 RMB at the beginning of the year to 8.65 RMB currently and the increased state ownership that the transfer would accomplish. It seems now that Visionox has put the transaction on hold ‘based on general market conditions’, although the announcement seems to have made little difference to the stock or shareholders. While Visionox has a number of consequential OLED customers, they have been vague about the utilization rates at their three production fabs, using ‘ramping’ rather than specifics to answer capacity questions, but it is still a toss up as to whether the deal postponement is a positive or a negative.
From the glass half full perspective, one could make the case that the company is doing well enough they no longer see the need for help form local or provincial governments, and from the glass half empty perspective, the company’s performance and prospects are not strong enough to warrant any further investment by the state. When 3Q results are released we expect it will be easier to see which is the case.
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