With its stock price continuing to fall, has OFILM become Apple's "abandoned child"?

Over the past six months, the share price of OFILM has continued to fall. In July 2020, the share price of OFILM rose to 23.62 yuan, but in January 2021, the share price of OFILM was only 11.88 yuan, and the share price was cut in half in less than half a year. Recently, it was also rumored that it would sell its South China factory, which accounts for most of its revenue, to Luxshare Precision, and the share price fell again.

According to reports, OFILM's main businesses are optical imaging core business and microelectronics business. The company's main business products include imaging modules, optical lenses, microelectronics and touch products, which are widely used in consumer electronics and smart car fields represented by smart phones, tablets, smart cars, etc.

Becoming Apple's "abandoned child"?

As one of the leading domestic optical cameras, OFILM has had many outstanding performances. For example, during the period of continuous adjustment of technology stocks from 2015 to 2017, its stock price rose instead of falling, soaring 306% in two years; and from July 2019 to July 2020, its stock price soared 228% in just one year.

However, with the saturation of the mobile phone industry, the mobile phone industry chain has gradually moved towards "high-end, precise and specialized" enterprises, and OFILM has become the object abandoned by the industry chain.

In September 2020, there were rumors that OFILM was going to be kicked out of Apple's industrial chain, and all its orders would be taken over by Lens Technology; then in 2021, it was rumored that it could not provide cameras for new Apple models and could only produce OEM products for old Apple phones; and recently, it was rumored that its important factory, the South China Factory, would be sold to Luxshare Precision, and OFILM has completely become the "abandoned child" of Apple's industrial chain.

Under the influence of a series of negative news, OFILM's stock price began to fall sharply in July 2020, especially after it was reported in September that it was kicked out of the industrial chain, its stock price began to accelerate downward. By January 22, 2021, OFILM's stock price was only 11.88 yuan, which was halved compared to the high point in July 2020.

It seems that after being abandoned by Apple, OFILM has had a hard time.

Have all the big funds run away?

In addition to being abandoned by Apple and its stock price plummeting, OFILM has also seen a significant reduction in holdings by large funds in the past six months.

According to statistics, as of the 2020 semi-annual report, the number of OFILM fund holdings reached 316, with a total shareholding of 253 million shares, accounting for 9.42% of the total share capital, including well-known institutions such as Gaoyi Asset.

However, in the second half of the year, under the pressure of a series of negative factors, funds fled.

According to statistics, in the 2020 annual report, the number of funds holding shares in OFILM was only 4, which was only a fraction of the number in the semi-annual report, and the number of shares held also dropped sharply to 42.32 million shares. Compared with the data in the semi-annual report, in just 6 months, OFILM had its holdings reduced by more than 200 million shares by funds, and all the big funds ran away.

In addition, other institutions that held as many as 879 million shares in the semi-annual report also disappeared in the annual report. With so much capital fleeing in half a year, it is no wonder that OFILM's stock price fell sharply.

Looking at the 50 fund holdings of Lens Technology and the 783 fund holdings of Luxshare Precision, OFILM's situation can be said to be very difficult.

Why was OFILM "abandoned"?

In just half a year, OFILM went from being sought after by big money to being spurned by big money, and its stock price fell from 23.62 yuan to 11.88 yuan. What caused such a huge change in OFILM? Is it because Apple kicked it out of the industrial chain?

I think this is just the superficial reason. The deeper reason is the lack of core competitiveness.

In fact, as a member of the industrial chain, the initiative of whether it will be abandoned does not lie in the hands of OFILM, but in the hands of upstream mobile phone manufacturers. Therefore, the only way to prevent being abandoned is to have core competitiveness so that you will not be abandoned.

But what OFILM lacks is core competitiveness.

Although it is a technology stock, in terms of gross profit margin, OFILM's gross profit margin is only 10.65%, far lower than that of Lens Technology, which also has optical cameras as its main business. From this point of view alone, OFILM is more like cheap labor, a "worker" in the industrial chain that can be replaced at any time.

In addition, OFILM's R&D investment is not high. In 2019, when the total operating costs reached 51 billion, OFILM's R&D expenses were only 1.735 billion, accounting for only 3.4% of the total operating costs.

As a technology company, if it does not attach importance to the most important scientific research, then its decline is understandable.

Nowadays, in the context of economic globalization, the industrial chain can be replaced at any time. Once a company lags behind, it is likely to be eliminated at any time. OFILM is just an amplified example. OFILM has sounded the alarm for all listed companies in China. Core competitiveness is the key to corporate development!

Strategic Realignment

据悉，欧菲光在日前2020年度业绩预告中透露，“2020年公司光学影像业务保持快速增长，光学镜头产能和出货持续提升”，净利润同比增幅较大的主要原因包括：1、公司光学影像业务保持快速增长，光学镜头产能和出货持续提升；2、受益于部分大客户订单增加和平板电脑销量增长及安卓触控业务独立发展，触控业务结构持续优化，盈利能力显著改善。

The performance forecast revealed a trend that OFILM's independent development strategy for Android touch screen business has begun to show results, and Android product terminal manufacturers are mainly concentrated in China and South Korea in the East, which can hedge the losses of leaving Apple's supply chain.