Three Parties Working Together to Save Hoplitech

On November 13, 2023, the display module industry ushered in an explosive small news, Heli Tai released the "Announcement on the termination of the change of control of the company", the content said that on November 12, 2023, the company received the controlling shareholder Fujian Electronic Information Group "Notice Letter on the termination of planning Heli Tai real control change matters", the main content is as follows: In view of Huishe's failure to perform the obligations stipulated in the signed agreement related to the share transfer, which constitutes a breach of contract, Fujian Electronic Information Group decides to rescind and terminate the Share Transfer Agreement and other rights and obligations related to the share transfer Agreement. The above termination shall not affect Fujian Electronic Information Group's exercise of its due rights in accordance with the Share Transfer Agreement signed by both parties and other agreements related to the share transfer.

The explosion of the news is that Heli Thai entities may really face the risk of completely losing control from now on, because Heli Thai is currently not only facing huge losses, that is, unable to pay suppliers for goods, but also unable to get funds from outside, and it is more troublesome when watching this control change hands and delayed customers who have not placed orders. Will no longer dare to hand the orders to Helitai.

It is a small news, is the truth of the joint Thai, everyone in the industry understands that as the downstream module industry of the display industry, once the funds break, unless someone takes the money to pocket, otherwise the time from profit to deficit is very short, if the speed of the funds in place is not the speed of internal operating losses, and the door is closed in minutes.

The display module industry is a special industry that can only survive in the market cycle, and it is a great test of the operational ability of the management team. However, the display module industry due to the huge capital occupancy rate in the supply chain, is indeed the most suitable industry to play supply chain financial leverage in the entire supply chain, so for the smart management team, this is a huge profit cleaning pool, can be the most easy to create profits in the industry to wash out real gold and silver; But for general operators with strong gambling, this is a hammer trading that can only eat along with the market, see who makes money after selling faster, slow almost all hit in it, even if listed companies have shareholders.

In fact, the industry in 2015, 2016 hyped "lack of core less screen" to attract capital while vigorously acquiring existing capacity, while building new capacity, less than a year and a half in the end of 2017 entered the state of excess capacity, and in the industry expansion and automation transformation of the inertia, the newly built capacity is still in a steady stream of new open out. In addition, the display industry has upgraded from LCD display to OLED display, and the large-frame security screen has upgraded to consumer full-screen, and many display modules with real premium parts have been taken over by the automation inhouse production line of the panel factory due to technical cooperation and quality control. Other module enterprises can only undertake ordinary safety screen product processing with low profits, custom display product processing, and after-sales repair screen product processing.

Then in 2018, the entire display module industry related listed companies were almost all involved in the crisis of the big explosion, a variety of mine removal methods were also used by a number of listed companies, and enterprises with the ability to operate their own business integration into their own original business, downplaying their own display module production capacity, more attention to their own solutions; Enterprises that have no ability to operate will return the original way of display module business to the original management team that is better at operating and actively quit; Some listed enterprises that heavy assets to expand production capacity bear the pain, reduce the capital of the loss-making entity to divest, the debt by the listed enterprises to set aside losses for shareholders and shareholders to pay, and the entity is transferred to stakeholders.

Helitai at that time was against the market, not only did not terminate its own expansion plan, but also chose to build a factory in India. As a result, when the industry entered the double market of product transformation and price war, Helitai's overall business continued to expand, and in 2019, due to a large number of orders from Huawei and Honor mobile phones, the annual revenue also stood on the peak of more than 18.6 billion. And to provide it with upstream LCD panels, Huaying Technology, the highest revenue in 2018 is only a little more than 4.5 billion.

However, with the crisis of Huawei Honor mobile phone in 2019, Helitai also quickly fell into the inventory impairment vortex of the display module industry. Helitai management team also made a quick response, choosing to use the epidemic policy, let state-owned assets rescue the market, hoping to use the resources of Fujian SASAC, together with the integration of panel, module, terminal foundry one-stop service, to provide solutions for the industry model to get out of trouble.

Then the development of things with the Helitai management team, Fujian state-owned assets and supply chain companies the expectations of the three parties have deviated, no one thought that Huawei and Honor mobile phone exit will be so fast, and the only remaining business are close to high-end models, as far as possible to extract their own brand value. The three stakeholders of Helitai, that is, did not actively participate in the glory of the supply chain restructuring, but also because of the positioning of Huying technology panel did not quickly transform and clear inventory to reduce losses, resulting in inventory impairment in 2020 into actual losses, and in the following two years, continue to repeat this process.

In the first half of this year, the transfer of control of Heli Thai can actually be said to be a self-rescue industry of the original management team, mainly to use the opportunity of Huawei and Honor orders to recover, so that Guizhou state-owned assets can quickly inject funds to revitalize Heli Thai's production capacity. This seemed to be a very feasible plan, but there were mistakes between customers and supply chain manufacturers, first of all, the credit line of Fujian state-owned assets background was zeroed, resulting in some supply chain manufacturers began to look at money delivery, while customers were worried about the risk of change of control, and also quickly transferred new orders, only maintaining some of the original existing orders with low profits to watch the development of events.

However, when Huawei mobile phones re-emerge, due to the reasons of chip and system adaptation, they can only focus on high-end flagship models for the time being, perhaps they did not see the real new orders, and Guizhou state-owned assets hesitated to control the production capacity of Helitai.

In this announcement, it is claimed that due to the termination of the Share Transfer Agreement, the "Delegation Agreement for Rescission of Voting Rights" signed by Fujian Electronic Information Group and Mr. Wen Kaifu is automatically rescind, and the "Delegation Agreement for voting Rights" continues to be valid. As of the disclosure date of this announcement, the control of the company has not changed, the controlling shareholder of the company is still Fujian Electronic Information Group, and the actual controller of the company is still Fujian State-owned Assets Supervision and Administration Commission.

The termination of the change of control by the controlling shareholder will not affect the company's governance structure and continuing operations, nor will it adversely affect the company's future development strategy, business planning, production and operation, etc. At the same time, the termination of the change of control will not harm the interests of the company and small and medium-sized investors. Fujian Electronic Information Group will actively fulfill the responsibilities and obligations of the controlling shareholders, and properly solve the debt and litigation and other related issues of listed companies. In the future, Fujian Electronic Information Group will do its best to coordinate various resources to support the development of the company and safeguard the legitimate rights and interests of listed companies and small and medium-sized investors.

Fujian state-owned assets are making a comeback, in addition to Guizhou state-owned assets have been slow to sell, but also because their other two listed companies have improved their performance because of Huawei and Honor's orders, and their stock prices have been repaired, one is the supply panel of Huaying technology, one is to provide the whole machine assembly of Fugri Electronics.

If the resources of Helitai are not quickly integrated at this time, and the credit endorsement of Helitai is given to the background of state-owned assets, the financing pressure of Helitai is reduced, the confidence of supply chain manufacturers and customers in the three listed enterprises of Fujianguo Capital is enhanced, and the benefits of Helitai's performance and share price financing premium are quickly obtained, which is obviously unfavorable to Fujian state-owned Assets.

The second half of the mobile phone market has recovered, Heli Thai main customers Huawei, Xiaomi, glory shipments have increased, it is Heli Thai can turn over a big opportunity, but at this time, it is also the test of Fujian state assets, Heli Thai management team, supply chain enterprises three real strength of the time, if missed this opportunity, the first three quarters have lost nearly 3.3 billion Heli Thai, It is really difficult to get rid of the vertical fall abyss similar to the rapid collapse of several display module companies in history.