Visionox Spins off PM OLED Business
After yesterday’s note about the potential change in Visionox’s (002387.CH) controlling shareholders, it seems the company has also decided to spin off its PM OLED (Passive Matrix) business as a separate company, Qingyue (pvt). Visionox has been producing PM OLEDs since late 2008 and is among the top producers of such displays, and as such, Kunshan Visionox Display, the former name of Qingyue has two PMOLED production lines that generally operate on an OEM basis, and are capable of producing about 2,400 m2/month. This is a relatively small amount relative to the company’s AMOLEDl production level, which we estimate to be ~61,000 m2/month currently.
As we noted yesterday, the company’s largest shareholder is an entrepreneur who has been working toward monetizing his original investment in Visionox and has been continuing the company’s pattern of spinning off various parts of the display business over the years. We can envision a scenario where Visionox lists these spin-offs to use public capital, rather than looking to private investors who could have other liquidity issues, as we suspect yesterday’s announcement alludes to.
All in Visionox is a relatively small Chinese OLED producer, and at some point the local government, who looks to be the largest shareholder, will have to decide how to fix the company and make it profitable without subsidies. As local governments are not usually well versed in the management of display assets, in a normal environment, we would expect Visionox to struggle against much larger competitors in China and elsewhere, however if panel prices continue to rise this year, the company could get some respite from their issues, although those fortunes could change quickly as the global display environment changes.
As we noted yesterday, the company’s largest shareholder is an entrepreneur who has been working toward monetizing his original investment in Visionox and has been continuing the company’s pattern of spinning off various parts of the display business over the years. We can envision a scenario where Visionox lists these spin-offs to use public capital, rather than looking to private investors who could have other liquidity issues, as we suspect yesterday’s announcement alludes to.
All in Visionox is a relatively small Chinese OLED producer, and at some point the local government, who looks to be the largest shareholder, will have to decide how to fix the company and make it profitable without subsidies. As local governments are not usually well versed in the management of display assets, in a normal environment, we would expect Visionox to struggle against much larger competitors in China and elsewhere, however if panel prices continue to rise this year, the company could get some respite from their issues, although those fortunes could change quickly as the global display environment changes.
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