New Stock Preview | Eastcom: Seizing the Green Display Track Worth Trillions, What is the Value of the E Ink Leader?

Global green and low-carbon transformation continues to deepen, driving the increasing demand for the application of smart IoT devices in the digitalization and paperless direction. Among many mainstream display technologies, electronic paper, with its ultra-low power consumption, paper-like texture, eye protection experience, thinness, toughness, flexibility, and other characteristics, is more in line with the development trend of intelligent devices compared to LCD and OLED technologies that rely on backlight or self-luminous technology and have higher power consumption. Its nearly zero-power static display capability significantly extends device battery life and meets the demand for green energy-saving technology in the global "carbon neutrality" strategy, leading to a continuous increase in the penetration rate in scenarios such as smart retail, smart office, and smart logistics. With its deep technical expertise in the field of electronic paper display, global production capacity layout, and stable supply chain coordination advantages, Zhejiang Orient Financial Holdings Group Kemi Electronics Co., Ltd. ("Oriental Kemi") has taken the lead in the commercial end intelligent IoT electronic paper display solutions market. According to the Zhaoshi Consulting report, based on revenue in 2024, Oriental Kemi's market share in the global commercial end intelligent IoT electronic paper display solutions market is 26.3%, ranking first. Recently, in order to further improve its global production capacity layout, accelerate the industrialization of full-color and flexible electronic paper technology, and expand high-value-added application scenarios, Oriental Kemi submitted an application for listing on the Hong Kong Stock Exchange. The planned funds raised will mainly be used in three directions: one is to serve as a source of funds for the intelligent upgrade of new production capacity and production bases; the second is to invest in research and development to enrich the product matrix; and the third is to supplement operating funds and general corporate purposes. Global layout, stable performance The prospectus shows that Oriental Kemi, as a global leader in intelligent IoT electronic paper display solutions, has been deeply involved in the field of electronic paper display technology for more than a decade. Based on its core technology of independently owned electronic paper display module design and manufacturing, the company focuses on research and development and production of various intelligent IoT electronic paper display modules and related display solutions. The company's product matrix covers various forms of full size, full color, and is widely used in smart retail, smart office, smart education, smart logistics, smart transportation, e-readers, and emerging applications, empowering the smart life and work scenarios of the IoT era with digital new display solutions. Oriental Kemi's competitive advantages cover four dimensions: technology, production capacity, supply chain, and global layout. In terms of technology, as of June 30, 2025, the company has accumulated 94 patents, including 28 invention patents, covering key areas such as drive design and flexible packaging. The company has several pioneering technological achievements, such as the world's first foldable OTFT flexible electronic paper ink screen (with a bending radius of less than 3mm), the world's first curved electronic paper touch display screen hardware wallet based on OTFT technology, and a 13.3-inch full-color electronic paper. Currently, the company's research products include small and medium-sized full-color OTFT, full-color large-size products based on Spectra6 technology, etc., which are expected to further open up emerging market spaces such as smart medical and intelligent wearable devices. In terms of production capacity and smart manufacturing, according to the prospectus, as of June 30, 2025, Oriental Kemi has established four production and R&D bases worldwide, with 47 professional production lines, an annual capacity of more than 130 million smart IoT electronic paper display modules, and its scale ranks first in the industry globally. The abundant production capacity ensures product supply. From 2022 to 2024, the company's sales of smart IoT electronic paper display modules increased from 50.6 million units to 67.1 million units, reaching 52.7 million units in the first half of 2025. On the supply chain side, Oriental Kemi has established deep cooperation with core suppliers such as E Ink Holdings. E Ink Holdings is the largest supplier of electronic ink film and PS protection film for the company. through a wholly-owned subsidiary, forming a "technology + capital" binding relationship. In terms of market layout, Oriental Kemi's customer service covers international markets such as Europe, America, and Asia, with overseas sales accounting for 63.3% of revenue in 2024. With the official production start of its production base in Vietnam in 2025, it has become an important support point for the company to expand into emerging markets such as Southeast Asia and Latin America, enabling it to be closer to local customers and reduce logistics costs while diversifying risks associated with single-market policy. With the above competitive advantages, Oriental Kemi's performance has remained stable. From 2022 to 2024, the company's revenue was 1.214 billion yuan, 1.024 billion yuan, and 1.152 billion yuan, and in the first half of 2025, revenue reached 796 million yuan, nearly 70% of the full-year revenue in 2024. The net profit during the same period was 92 million yuan, 51 million yuan, 53 million yuan, and the net profit in the first half of 2025 rebounded to 43 million yuan, with a net profit margin increasing from 5% in 2023 to 5.4% in the first half of 2025. High concentration of customers and suppliers However, behind the stable performance, the financial data also reveal potential risks in the company's operations, with the high concentration of customers and suppliers being the most critical pain points. It is noted that in 2022, 2023, 2024, and the first half of 2025, the revenue from the top five customers accounted for 93.3%, 88.7%, 82.6%, and 89.7%, respectively. Among them, the largest customer's revenue accounted for 47.7%, 50.7%, 36.3%, and 36.1%, respectively. As of December 31, 2022, 2023, 2024, and June 30, 2025, the book value of trade receivables and bills receivable was 242 million yuan, 211 million yuan, 271 million yuan, and 349 million yuan, respectively. The company stated that the above trade accounts receivable and notes receivable represent the maximum credit risk exposure associated with trade accounts receivable and notes receivable faced by the company as of the respective dates. In terms of supplier concentration, in 2022, 2023, 2024, and the first half of 2025, Oriental Kemi's purchases from the top five suppliers accounted for 89.6%, 90.2%, 78.4%, and 78.7%, respectively. The purchase proportion from the largest supplier has remained above 46% for a long time, reaching 51.6% in the first half of 2025 (mainly E Ink Holdings). If core suppliers experience shortages in production capacity, price increases, or termination of cooperation, the company may find it difficult to find alternative suppliers in the short term, which may lead to production interruptions or cost increases. In addition, attention should be paid to the company's cash flow and balance sheet structure. From 2022 to 2024, net cash flows from operating activities were 61 million yuan, 178 million yuan, and 19 million yuan, but in the first half of 2025, there was a net outflow of 123 million yuan, mainly due to an increase in inventory to 480 million yuan in the first half of 2025, a growth of 49.6% from the end of 2024. The company's debt-to-asset ratio increased from 38% in 2022 to 48.4% by June 30, 2025, with the proportion of short-term borrowings rising and the current ratio decreasing from 2.3 in 2022 to 1.5 in the first half of 2025, indicating increased liquidity pressure. Industry opportunities and potential risks intertwine From the perspective of industry opportunities, the electronic paper display track is currently in a golden growth period driven by the dual factors of "policy + demand." Globally, the "carbon neutrality" strategy is driving intelligent IoT devices towards low power consumption, and the zero-power static display characteristics of electronic paper perfectly align with this trend. At the Chinese level, the "Steady Growth Action Plan for the Electronic Information Manufacturing Industry 2023-2024" includes electronic paper as a key focus for paperless substitution, and the "Expansion of Domestic Demand Strategic Plan (2022-2035)" supports innovation in new display technologies, leading to the continued release of policy dividends. In terms of market demand, according to Zhaoshi Consulting forecasts, the global market size for intelligent IoT electronic paper-related solutions is expected to increase from 548 billion yuan in 2024 to 1.084 trillion yuan in 2029, with a compound annual growth rate of 14.6%. The smart retail sector (mainly electronic price tags) is expected to grow at a compound annual rate of 15.6% from 2024 to 2029, with new scenes like smart education and smart logistics growing at over 15%. As a global leader, Oriental Kemi, with its technological and production capacity advantages, is expected to fully enjoy the industry growth dividends. However, industry competition and technological iteration risks may squeeze the company's profit margins. According to Zhaoshi Consulting, in 2024, the market share of the top five companies in the global intelligent IoT electronic paper display solutions industry reached 81.2%, with high concentration. The company faces challenges from domestic competitors in terms of cost and local services and also needs to deal with the preferred advantage of overseas companies in the consumer market. Additionally, if LCD, OLED, and other display technologies make breakthroughs in the low-power consumption field, it may create pressure on electronic paper technology. In conclusion, Oriental Kemi, as a global leader in the electronic paper display field, has core competitive strengths in technology leadership, sufficient production capacity, and a stable supply chain. It operates in a high-growth industry, offering significant long-term investment value. However, risks such as customer and supplier concentration, cash flow pressure, and increased industry competition should not be overlooked. For investors, closely monitoring the progress of the company's post-listing fundraising projects, optimizing customer structure, and the effectiveness of overseas market expansion will be crucial. Improvements in these indicators will further validate the company's growth potential. Conversely, if core customers are lost, technological iteration lags, or geopolitical risks escalate, a reassessment of its investment value may be necessary.