Crystal Optech: Benefiting from 3D cameras and AR displays, the optical market has broad prospects

Recently, Zhejiang Crystal-Optech Technology Co., Ltd. (abbreviated as: Crystal-Optech) held an investor relations event, and the company's deputy general manager and board secretary Xiong Bo participated in the exchange and Q&A.

1. Question: What is the progress of Crystal-Optech's factory establishment in Vietnam? Has it been affected by the epidemic in Vietnam?

Answer: The epidemic situation in the park where the Vietnam factory is located is under good control. The company has commissioned a local construction team to carry out the interior decoration of the factory, which is currently progressing smoothly according to the original plan.

2. Question: What kind of project cooperation does Crystal-Optech have with major North American customers?

A: The company has maintained a good cooperative relationship with major North American customers. The growth space of the single-machine value mainly comes from the following aspects: 1. The growth of narrow-band filters used for biometrics; 2. DOE and Diffuser products used in future 3D cameras; 3. As the number of cameras increases, the number of infrared cutoff filters increases; 4. The application of thin-film optical panels in more position structures. In the future, the company will also cooperate with major customers to continuously promote product research and development layout and open up space for the company's performance growth.

3. Question: In what form are Crystal Optech's DOE and Diffuser products supplied?

Answer: The company's cooperation with chip manufacturers will take various forms. The company may participate in the chip manufacturers' product manufacturing process, or the chip manufacturers may participate in the company's product manufacturing process. The specific method will be adjusted according to customer needs.

4. Question: Crystal Optech’s AR-HUD product is currently only used in one mass-produced car model. When will there be new business cooperation?

A: The vehicle market is different from the smartphone market, especially since our AR-HUD is a pre-installed product. To enter new models, we must first obtain R&D orders from vehicle manufacturers, develop and debug products in accordance with the customer's vehicle model solutions, and then undergo product testing by customers to determine the display effect and solution before we can obtain mass production orders. At present, our company is cooperating with potential customers in product development to strive for a higher market share.

5. Question: Will exchange rate fluctuations have an impact on Crystal Optech’s operating income?

Answer: About 50% of the company's business is export. Exchange rate fluctuations will indeed have a certain impact on operating performance, but the company's foreign exchange income mainly comes from the Japanese yen and the US dollar. The Japanese yen is a relatively stable currency. At the same time, the company will also adopt hedging, forward foreign exchange settlement and sales and other methods to lock in the exchange rate and reduce the risk of exchange rate fluctuations.

6. Question: Does Crystal Optech have any expectations for its 2021 performance?

A: The company's performance target for 2021 is a 20-50% increase in operating income. In the second quarter, due to the global chip shortage, the shipments of mobile terminal manufacturers were affected, which indirectly affected the company's product shipments, but this is a normal market fluctuation. The company is still optimistic about the overall development of the optical market and maintains the overall target of 20%-50% growth in operating income. The epidemic in Vietnam and India has not yet subsided, and some supply chains have a tendency to shift to China. This is an opportunity for the company. The company will continue to pay attention to the global epidemic and industry development trends and make good business reserves.

7. Question: The stock pledge level of the major shareholder has always been relatively high. Is the cash flow of the major shareholder tight? Will it have an impact on the company's production, operation and operating performance?

A: The controlling shareholder of the company is currently undergoing internal restructuring, and the financial situation is also improving. Although Xingxing Group is the controlling shareholder of the company, it has not participated in the company's production and operation since its establishment. The company is independent of the controlling shareholder in terms of business, personnel, assets, institutions, and finances, and the company's continued operation is managed independently by the company's management team.

8. Question: Currently, a number of optical product processing companies have emerged in the capital market. Are there any market competition between their products and those of Crystal Optech? What are the company's industry advantages?

A: The market prospects of the optical industry are broad, and the continuous entry of new industry competitors is in line with market rules. Optics is a very large field, and in the future there will be not only competition but also cooperation in the industry. The company expects and welcomes more practitioners to enter the optical industry and jointly promote the development and progress of industry technology.

Since its listing in 2008, Crystal Optech has made full use of the funds raised in the capital market and its own accumulation over the years, and has invested in the industrialization of scientific research results for a long time and with high intensity. The company has long been tested by the quality certification system of major international and domestic customers, which has strengthened the company's lean management capabilities and maintained the company's first-mover advantage in the industry. The technology, talents, customer groups, lean management experience, and global resource allocation that the company has accumulated over the years will support the company's continuous development and growth.

9. Question: Does Crystal Optech have any other plans for automotive-related products besides AR-HUD?

Answer: Crystal Optech's optical components business, biometrics business, and thin-film optical panel business all have products used in vehicle-related products. For example, vehicle-mounted cameras use filters and window sheets, and lidar uses biometric products such as diffusers. LiDAR covers are one of the company's thin-film optical panel products. These products are distributed throughout the various business layouts and are not separately included in the automotive electronics sector.

10. Q: What are the main products of Prism business? Who are its downstream customers?

A: The company focuses on the following applications for micro-prismatic modules: 1. Prismatic products used in AR-related products; 2. Prismatic products used in periscope cameras; 3. Prismatic products used in other cameras of smartphones. The main customers of micro-prismatic modules are major mobile terminal manufacturers. With the continuous development of industry technology, consumers' demand for thinner and lighter mobile phones has gradually increased, and the market prospects of micro-prismatic module products are very broad.

11. Q: What processing technology does the optical film panel product company provide? What products are currently used in it?

A: The process of optical film panel products is relatively complicated, including coating, precision machining, semiconductor optics and other processes. The company's optical film panel products have been used in the watch cover of a certain overseas brand and the camera cover of a certain overseas smartphone.

12. Question: Crystal Optech’s private placement project has been approved by the China Securities Regulatory Commission. What is the current progress of the issuance?

A: At present, the company is communicating with some potential investors. The company will strive to issue shares at a suitable price at the right time.

Zhejiang Crystal-Optech Technology Co., Ltd. was established on August 2, 2002. The company was listed on the SME board of the Shenzhen Stock Exchange on September 19, 2008. It is a well-known optoelectronic component manufacturer in China that specializes in the research and development, production and sales of precision thin film optics and extended products. It is a high-tech enterprise in Zhejiang Province and a key high-tech enterprise in the National Torch Program.

The 2020 annual report shows that Crystal Optech's main businesses are the optical and optoelectronic industry and the reflective materials industry, accounting for 92.94% and 5.86% of revenue respectively.