Silan Micro and Absen's net profit decreased by 47% and 61% respectively in the first half of 2020

Silan Microelectronics: Net profit in the first half of 2020 was 30.63 million yuan, a year-on-year decrease of 47%

Silan Micro disclosed its 2020 semi-annual report. The company achieved total operating revenue of RMB 1.705 billion in the first half of 2020, a Year-on-year (YoY) increase of 18.37%; net profit attributable to shareholders of the Listed company was RMB 30.6306 million, a Year-on-year (YoY) decrease of 47.02%.

Silan Micro stated that in the first half of 2020, despite the pressures of the COVID-19 pandemic, intensified China-US trade friction, and a slowdown in global economic growth, the company's overall Revenue growth accelerated significantly. This demonstrates the positive results achieved through the company's sustained high-intensity R&D investment in recent years. The company has continued to make breakthroughs in specialized process platform construction, new product development, and strategic key account cooperation, with a明显 acceleration in the pace of product structure adjustment.

The decline in the company's operating profit in the first half of 2020 was mainly due to: (1) The 8-inch chip production line of the company's subsidiary, Silan Jixin, is still in the stage of building a specialized process platform. In the first half of 2020, continued increased investment in the R&D of high-end power devices, high-voltage integrated circuits, and MEMS sensors resulted in a certain degree of loss during the reporting period. (2) Affected by the COVID-19 pandemic, the company's subsidiaries, Silan Mingxin and Meikale Optoelectronics, experienced a significant decrease in customer orders received (with some customers delaying deliveries), leading to a substantial year-on-year decline in sales revenue for light-emitting diode products (mainly LED color display chips and finished products), further increasing losses.

In the first half of 2020, revenue from Light-emitting diode (LED) products was RMB 139 million, a year-on-year decrease of 33.08%. In response, Silan Mingxin accelerated the development of high-luminance LED white light chips and other products to speed up entry into the mid-to-high-end LED chip market. Meikale launched high-quality "4-in-1" products and intensified its efforts to expand in the domestic market. It is expected that the revenue of Silan Mingxin and Meikale will gradually recover in the second half of the year.

From the perspective of revenue structure, changes varied across product lines. During the reporting period, Silan Micro achieved revenue of RMB 921 million, RMB 538 million, RMB 139 million, and RMB 35 million in discrete devices, integrated circuits, Light-emitting diode (LED), and other products, representing Year-on-year (YoY) growth of 35.64%, 9.55%, -33.08%, and 27.36%, respectively.

The announcement shows that the main reason for the increase in integrated circuit revenue is the significantly accelerated shipment of various new circuit products from Silan Micro. The company expects that the revenue growth rate of its integrated circuits will further increase in the second half of the year.

In addition, Silan Micro stated that with the commissioning of the 8-inch chip production line project, and the accelerated construction of the compound semiconductor device production line project and the 12-inch chip specialty process chip production line project, it will continue to drive the rapid growth of Silan Microelectronics' overall Revenue.

Absen: Net profit decreased by 61.1% Year-on-year (YoY) in the first half of 2020

Absen disclosed its interim report: the company achieved total operating revenue of RMB 742 million in the first half of 2020, a Year-on-year (YoY) decrease of 18.07%; net profit attributable to shareholders of the listed company was RMB 32.5012 million, a Year-on-year (YoY) decrease of 61.11%.

The company's main business is the R&D, production, and sales of LED full-color displays. Absen stated that the pandemic has prompted the company to refocus on the Chinese market while continuing to advance its overseas operations, with a determination to bring the high standards and high-quality products and services it established in Europe, the United States, and Japan back to the Chinese market.

During the reporting period, the Company adjusted its global market strategy, vigorously developed the Chinese market, and increased investment in China. It enhanced product competitiveness and spared no effort to "secure orders, stabilize production, increase market share, and maintain cash flow." For the Chinese market, the Company launched a China dealer channel project, having basically established a dealer channel covering 337 prefecture-level cities nationwide.

For the international market, the company focuses on developing commercial display dealer/distributor channels, increases investment in online marketing campaigns, and supports overseas dealers/distributors in organizing and conducting local marketing activities.

In the first half of 2020, the company achieved total signed orders for displays of approximately RMB 640 million. The proportion of domestic display orders in the company's total display orders increased significantly compared to previous years.

The announcement stated that the company rapidly launched its China (Sales) channel project. Channel products are widely used in enterprises, government, transportation hubs, exhibition venues, education, and other fields. The company launched two channel product lines, KL and GS, which have been widely applied in sectors including enterprises, government, transportation hubs, exhibition venues, and education, with notable projects such as the multifunctional lecture hall of the Shaoyang Tobacco Bureau in Hunan, Lanzhou West High-Speed Railway Station, the exhibition hall of Chongqing Electric Power Company, the intelligent manufacturing workshop of SANY Heavy Industry in Hunan, the China Construction Science and Technology Museum, the auditorium of Zhongtian Beijing Primary School in Guiyang, and Tianhe Vanke Plaza in Guangzhou.

In the first half of 2020, the company's products with a pixel pitch below P2.5mm achieved signed orders of approximately RMB 270 million, and the proportion of signed orders for small-pitch products continued to grow.

The announcement stated that small-pitch products are widely used in various scenarios such as conference rooms and control rooms. With the rapid development of small-pitch LED displays and continuous cost reduction, the company's small-pitch products have been widely applied in scenarios including conference rooms, control rooms, studios, transportation, exhibition halls, hotels, banks, and schools, such as the conference room of the Shandong Provincial Big Data Bureau, Anhui Provincial Meteorological Bureau, Guizhou Provincial Geological Disaster Prevention and Control Command Platform, and Guangzhou Municipal Committee Lecture Hall.