Appotronics passed the review of the Science and Technology Innovation Board: What is the prospect of laser TV?

Recently, Shenzhen Appotronics Co., Ltd. ("Appotronics") has submitted its registration application on the Science and Technology Innovation Board. It plans to issue no more than 68 million shares to the public and raise RMB 1 billion. In addition to normal replenishment of working capital, the funds raised will also be invested in research and development, such as new-generation laser display products and projects at the Appotronics headquarters.

Appotronics is a global leading laser display technology company with original technology, core patents, and core device R&D and manufacturing capabilities. In 2007, it pioneered the ALPD laser display technology and registered the ALPD trademark for the technology. This technology is seen as the development direction of the next generation of laser display, enabling my country to occupy an international leading position in the field of laser display.

Unlike the R&D teams of other companies, the chairman of Appotronic Technology is a technical staff member, and all the main directors are highly educated, forming a R&D team with the company's founder and chairman Li Yi as the core.

Founder Li Yi received a bachelor's degree from Tsinghua University, a master's degree and a doctorate from the University of Rochester in the United States, and conducted research directly at the National Laser Laboratory of the University of Rochester, a world-renowned laser research laboratory. Later, Li Yi returned to China in 2006 and founded Appotronics.

Because Li Yi focuses on innovative research and development, he led his team to develop ALPD technology one year after the company was founded. This is the world's first fluorescent laser display technology. It has now been upgraded to the fourth generation and has obtained 792 authorized patents, ranking first in the global fluorescent laser display field.

Last year, TCL's president Lianming Bo left the company where he had worked for 18 years and joined Appotronics. One of Appotronics' three major products is the application of core laser display components in the television industry. It can be speculated that Lianming Bo's joining will bring surprises to Appotronics in the field of color TVs.

Appotronics combines core laser components with display scenarios such as film, television, education, and exhibitions, and has developed numerous laser display products and system solutions. It is the focus on using light to change the human cognitive world that has attracted everyone's attention to Appotronics this year.

This year, laser shows were held at the CCTV Spring Festival Gala Shenzhen venue and the Forbidden City's "Lantern Festival Night", using laser projection technology to light up the Taihe Gate, Zhaode Gate and Zhendu Gate. In terms of movies, the giant screen projection of "The Wandering Earth" was also done by Appotronics.

In the film industry, laser light sources have advantages over traditional xenon light sources in terms of brightness, life, light attenuation, contrast, etc., and the maintenance cost is relatively low. Although theaters that already have movie projectors will not buy them, the company's leasing method has been recognized. Domestic Evergrande Cinemas, Hengdian Film and Television, China Film International and Dadi Cinemas have all cooperated with the company.

According to data from the China Film Distribution and Exhibition Association, at the end of 2018, the total number of movie theaters in my country was 60,079, with 23,431 laser film projection equipment installed, accounting for 39%; the company's laser film projector light sources have been deployed in 14,018 sets across the country, with a market share of approximately 60%, ranking first in the industry.

However, precisely because they already have a 60% share, major cinema companies such as Hengdian Film and Television have almost no room for transformation, and may need to focus on small and medium-sized cinema customers in the future.

Overseas, this year we jointly invested in Zhongguang Barco with partners such as Barco. Although the Shanghai Stock Exchange had previously questioned the situation of Barco being both a customer and a supplier, sales through the joint venture can better promote product commercialization.

In the TV industry, the company has cooperated with well-known companies such as Xiaomi and LG. It is also a supplier to Huole Technology, Baofeng Intelligence, etc., occupying 28% of the market share in the industry.

In the development of the TV industry, from LCD TV to the current laser TV, laser TV has the advantages of brighter colors and higher brightness, so domestic Hisense and Changhong, foreign LG, SONY and others have valued the prospects of laser TV. AVC predicts that in the future, the market sales of laser TVs in my country will reach 735,000 units in 2021, with a three-year compound growth rate of about 64.87%.

Appotronics first developed its own brand "WEMAX" series of laser TVs through its holding subsidiary Fengmi Technology, and then cooperated with Xiaomi. Xiaomi's "Mijia" brand laser TVs are all equipped with Appotronics' laser TV optical engines. In addition, it has also launched laser home theaters with LG.

From a financial perspective, from 2016 to 2018, the company's operating income was RMB 355 million, RMB 806 million, and RMB 1.386 billion, respectively, and its net profit was RMB 18.015 million, RMB 113 million, and RMB 212 million, respectively. The net profit in January-March this year decreased by 26.31% compared with the same period in 2018.

In addition, the company's net cash flow from operating activities was negative in 2016 and 2017, and the difference with net profit in the past three years was -60.7793 million yuan, -228.05 million yuan, and -93.7778 million yuan, respectively.

Although the company explained that the net cash flow from operating activities was negative in 2016 and 2017 due to the rapid development period, the expansion of procurement scale and the delay in receiving cash from important customers of Xiaomi Communications for providing services, the financial problems caused by the exchange losses caused by the depreciation of the US dollar exchange rate, the investment loss in Barco and the decline in the gross profit margin of laser projection products this year will continue for some time and may have a certain impact in the future.