LCD panel industry continues to lose money, *ST Dongke's net profit loss in the first three quarters exceeded 900 million yuan

On October 14, *ST Dongke released its performance forecast, stating that the company expects the net profit attributable to shareholders of the listed company to be a loss of 900 million yuan to 994.5 million yuan in the first three quarters of 2020, compared with a loss of 1797.0732 million yuan in the same period last year.

Among them, the net profit attributable to shareholders of the listed company in the third quarter (July-September) is expected to be a loss of 122.15 million yuan to 216.65 million yuan, compared with a loss of 840.1022 million yuan in the same period last year.

*ST Dongke stated that with the adjustment of the company's LCD panel product structure, the proportion of medium-sized LCD panel products has increased, and the operating gross profit has increased significantly. Affected by the new coronavirus pneumonia epidemic, the progress of the technical transformation project to adjust the product structure has been postponed to the third quarter. The third-quarter performance reduced losses year-on-year, and the performance of the shareholding company declined compared with the same period last year. It is expected that the net profit in the first three quarters of 2020 will still be a loss.

It is understood that the audited net profit attributable to shareholders of *ST Dongke in 2018 and 2019 was negative for two consecutive years. According to relevant regulations, the company's stock has been issued a delisting risk warning. If *ST Dongke's audited net profit in 2020 continues to be negative, the company's stock will be at risk of being suspended from trading after the announcement of the 2020 annual report.

In the case of continuous losses in the panel business, *ST Dongke is considering selling Panda Electronics to reduce losses. *ST Dongke plans to sell its 57.646% stake in Nanjing Panda Electronics and 11.429% stake in Chengdu Panda Electronics. At the same time, the company plans to pay cash to Huadian Corporation and Innolux Corporation to purchase their combined 51.00% stake in AOC Technology.

The shares of China Electronics Panda that it sold will be taken over by BOE. It is reported that BOE plans to acquire 80.831% of the shares of Nanjing China Electronics Panda and 51% of the shares of Chengdu China Electronics Panda, with a total transaction amount of approximately 12.12 billion yuan.

*ST Dongke said that through this transaction, the listed company will strategically withdraw from the LCD panel industry and position itself as an intelligent manufacturing enterprise focusing on the field of intelligent display terminals, with its main businesses including the research and development, production and sales of monitors and LCD TVs. After the transaction is completed, the listed company will no longer hold the equity of Nanjing Panda Electronics and Chengdu Panda Electronics, and AOC Technology will become a holding subsidiary of the listed company.