Chinese display manufacturer BOE Technology Corp. (BOE) has released their 3Q13 financial report. Gross revenue for July-Sept. 2013 reached RMB 8.52 billion (US $1.4 billion) with a gross profit margin at RMB 499 million, doubling from last year. Furthermore, the company has profited for four straight quarters.

BOE estimates that if 4Q is able to maintain 3Q’s RMB 500 million gross profit margin levels, then annual profit is anticipated to surpass RMB 1.8 billion – 2 billion, around 6 times that of 2012. If the company reaches this target, 2013 will become the most profitable year for BOE.

BOE has begun to rise in the global scene and acquire an important spot. Having shipped 21.73 million displays in 2013, the company earned fifth place for global display shipment volumes. According to sources, LG display shipment volumes reached 44.35 million (25.3 percent market share) in 2Q13, and has occupied the top spot for 15 consecutive quarters. Ranking in second, Samsung  display shipment volumes reached 70.38 million for the first half of the year and took 20.7 percent market share. Following close behind are Innolux and AUO.

Gross profit margin doubled, yearly profit expected to reach RMB  2 billion

According to BOE’s 3Q financial report, July-Sept. gross revenue reached RMB 8.52 billion with shareholder gross profit at RMB 499 million, doubled from the year before with a yearly growth of 229.68 percent. In the first three quarters of this year, the company’s gross profit margin totaled RMB 1.36 billion.

This quarter is already BOE’s 4th consecutive profitable quarter. Before, the company had suffered loss for a number of years and greatly expanded finances causing investors to question their development strategy. Until 3Q12, stockholder gross profit margin was RMB 152 million, a yearly increase of 116.34 percent. Afterwards, BOE began to see profit every quarter.

With the  energy efficient household appliance subsidy extended from second half of 2012 till the end of May of this year, Chinese household appliance industry 32 inch LCD sale volume has increased exponentially directly leading to a dramatic demand increase in the household appliance industry for 32-inch LCD displays, said Vice Chairman Bai Weimin of the China Video Industry Association (CVIA). BOE taking the lead, Chinese panel industry production lines were able to take hold of the great business opportunity. Through years of development and accumulation, BOE was able to achieve mass production and high quality craftsmanship.

Increased earnings resulted from taking advantage of market trends and readjusting product structure

In reality, starting from second half of 2013 the global display market outlook has been negative. In the second half of this year, there was a clear decrease in BOE large sized display prices with smaller price fluctuations for small and mid sized displays. However, in order to guarantee profit, the company is turning its business focal point towards small and mid sized displays.

Therefore, BOE 3Q small and mid sized display production and delivery volume increased, leading to the company’s large size display to fall in price/volume, and continued strong earnings momentum.

BOE Vice Chairman Zhang Yuye pointed out that this year small and mid sized LCD demand volumes continued to increase. Although, LCD monitor volume increase was not particularly large, smartphone and tablet volumes soared, the company shipment volume doubled from last year.

In the first half of 2013, domestic smartphone delivery volume reached 214 million, a yearly increase of 120.5 percent. Local brands made up as much as 80 percent of the domestic cellphone market and have kept rapid growth. It is no surprise that China is the world’s largest cellphone market as well as the largest manufacturer.

Notebook computer production volume from Chongqing plant reached 60 million and 20 million for tablets. By 2015, volume is expected to surpass 150 million. Through investment in the 8.5 generation production line, the company is only capable of meeting 40 million unit demands, not enough to even meet local demands in Chongqing. Therefore, small and mid sized displays will stimulate display demands in the future market.

According to the financial report, currently, BOE 5th generation production line is completely devoted towards small and mid sized display production, Heifei 6th generation production line's mobile device products have surpassed 50 percent, and Beijing 8.5 generation line has started mass producing displays for tablets. BOE 3Q small and mid sized display production and shipment proportions have increased, leading to the company’s large sized display volume drops , while maintaining strong earning momentum.

The company production line strategy  is gradually coming to a completion. Production capacity is clearly higher than that of 3Q12, which continues to reflect operation scale results; while c each production line maintains full production and sales capacity.