New stocks preview | To accelerate the exploration of the large-size AMOLED blue ocean, Everdisplay Optronics (688538.SH) will go public in Hong Kong as a "back-up".

Due to the demand of global strategic layout and the optimization of approval process for A-share companies listing in Hong Kong, since 2025, the trend of A-share companies listing in Hong Kong has significantly accelerated. According to Wind data, as of October 13, a total of 83 A-share companies have submitted listing applications to the Hong Kong Stock Exchange this year, and 11 A-share companies have successfully landed on the Hong Kong Stock Exchange. Among them are leading companies in various industries, such as Contemporary Amperex Technology, Jiangsu Hengrui Pharmaceuticals, Chifeng Jilong Gold Mining, etc., and these companies have achieved good stock price increases after listing in Hong Kong, so investors are paying special attention to A-share leading companies listing in Hong Kong. The process of the world's third largest and China's largest medium-to-large size AMOLED semiconductor display panel manufacturer's listing in "H shares" has recently received the latest news. According to the Hong Kong Stock Exchange, Shanghai North Electro-Optic Co., Ltd. (688538.SH) submitted a listing application to the main board of the Hong Kong Stock Exchange on October 24, with CICC as the exclusive sponsor. It is worth noting that the company had submitted a listing application on April 23 this year, making this the second submission. Although North Electro-Optic is a leading company in the field of medium-to-large size AMOLED semiconductor display panels in China, its performance shows continuous significant losses. From 2022 to 2024, North Electro-Optic recorded net losses of RMB 1.602 billion, RMB 3.244 billion, and RMB 2.518 billion respectively, and once again reported a loss of RMB 840 million in the first half of 2025. This means that North Electro-Optic has accumulated losses of up to RMB 8.2 billion in the past three and a half years. Leading Market Position in Multiple Segments Established in October 2012, North Electro-Optic has always been at the forefront of the Chinese AMOLED industry, challenging the global dominance of international companies in this high-tech field. Over the course of thirteen years of operation, North Electro-Optic has successfully expanded into the medium-to-large size AMOLED panel field, establishing a leading position in the market through its long-term focus on developing advanced AMOLED panel design and manufacturing technology, as well as the rich industry experience accumulated from its involvement in small and medium size AMOLED display products since its inception. According to Zhaoshi Consulting data, based on the sales volume of medium-to-large size AMOLED panels in 2024, North Electro-Optic ranked first in China and third globally with a sales volume of 3.2 million units, capturing a market share of 14.5% globally and breaking into the industry's top echelon. Behind North Electro-Optic's achievement of leading global sales of medium-to-large size AMOLED panels lies the fact that the company's products have penetrated various different fields, including tablet/laptop computers, smartphones, smart wearables, automotive displays, as well as emerging application areas with strong innovative attributes such as aviation, desktop displays, smart IoT, and smart homes. Moreover, North Electro-Optic also leads in terms of sales in multiple specific fields. According to Zhaoshi Consulting data, based on sales volume in 2024, North Electro-Optic ranked second globally and first in China in the field of tablet/laptop computer display panels, fourth globally and second in China in automotive displays, fourth globally and third in China in smart wearables, and seventh globally and fifth in China in smartphones. North Electro-Optic's revenue mainly comes from the segments of tablet/laptop computers, smartphones, and smart wearables. In 2024, revenue from these three segments accounted for 36.8%, 47.3%, and 12.6% respectively. Revenue from automotive displays and emerging application fields accounted for 1.7% and 1.6% respectively. It is clear that North Electro-Optic's presence in emerging applications remains relatively small. From a revenue perspective, North Electro-Optic's revenue fluctuations are quite noticeable. From 2022 to 2024, the company's revenue was RMB 4.191 billion, RMB 3.038 billion, and RMB 4.958 billion respectively. The significant decrease in revenue in 2023 was due to the impact of the global economic situation, with a decline in demand in the consumer electronics industry leading to increased competition and lower product prices, affecting revenue for that period. In 2024, with the market demand rebounding, the company saw a significant increase in shipments in the tablet/laptop, smartphone, and automotive display segments, leading to a return to revenue growth. In the first half of 2025, although revenue from smartphones significantly declined, the increase in sales of tablet/laptop computer panels by 59.6% led to a 12.64% increase in North Electro-Optic's revenue to RMB 2.597 billion. Looking at the profit side, North Electro-Optic's continuous losses are mainly due to two reasons: high depreciation and amortization costs for production lines and high financial costs. Data shows that from 2022 to the first half of 2025, North Electro-Optic's depreciation and amortization costs were RMB 1.469 billion, RMB 1.713 billion, RMB 1.917 billion, and RMB 1.076 billion respectively, while the net financial costs for the same period were RMB 296 million, RMB 518 million, RMB 623 million, and RMB 232 million respectively. Such high depreciation, amortization costs, and financial costs have naturally eroded North Electro-Optic's profitability. Market Growth Opportunities, Global Market Size to Exceed RMB 210 billion by 2030 In fact, the significant losses incurred by North Electro-Optic due to depreciation, amortization costs, and financial pressure are not unique to the company but are common in the entire AMOLED panel industry, dictated by the industry's business model. The AMOLED industry is a typical capital and technology-intensive industry, where building an advanced production line requires an investment of hundreds of billions of RMB. These huge investments are accounted for as fixed assets, and are later included in costs through depreciation. Furthermore, after the production line is established, it needs to go through a lengthy process of "ramping up production capacity" and "yield improvement" to achieve stable production. During this period, the revenue scale is limited while fixed costs remain high. Intense market competition also poses operational challenges, in addition to the need for companies to invest significant amounts of research and development funds to keep up with technological trends, further exacerbating the need for funds. Therefore, AMOLED companies in the early and middle stages often accumulate interest-bearing liabilities and maintain high levels of debt. Currently, North Electro-Optic is in this special stage of development, and its depreciation and amortization costs are expected to remain relatively high for at least the next 2-3 years, especially after the new production capacity is converted into fixed assets in 2026. As of September 30, 2025, North Electro-Optic's interest-bearing bank loans and other borrowings amounted to RMB 17.2 billion, and the company's financial costs exceeded RMB 600 million in 2024 alone. This significant financial pressure may be one of the core reasons for North Electro-Optic's listing in Hong Kong this time. In its prospectus, the company has stated that a portion of the funds raised will be used to repay some of its interest-bearing bank loans or other borrowings. In addition, investors should also pay attention to the relatively high concentration of North Electro-Optic's customers. In 2024, revenue from the top five customers accounted for over 80% of North Electro-Optic's revenue. This high customer concentration is mainly due to the company's products being concentrated in the consumer electronics market of tablet/laptop and smartphones. Of course, the opportunities facing North Electro-Optic are also evident, as the global market for medium-to-large size AMOLED semiconductor display panels is expected to continue to grow rapidly. According to Zhaoshi Consulting data, from 2020 to 2024, due to the accelerated penetration of AMOLED technology from smartphones into the medium-to-large size fields such as tablets and laptops, the market size of medium-to-large size AMOLED semiconductor display panels increased from RMB 5 billion to RMB 34.4 billion, with a compound annual growth rate of 71%. From 2024 to 2030, due to technological advancements and user experience upgrades, cost reductions and economies of scale, the surge in downstream application scenarios, as well as industry chain collaboration and policy support, the market size of medium-to-large size AMOLED panels is expected to increase from RMB 34.4 billion to RMB 212.3 billion, with a compound annual growth rate of 35.4%. As China's first company to achieve mass production of AMOLED, and with its shipments in the medium-to-large size segment ranking second globally and first in China, North Electro-Optic has established a first-mover advantage and customer base in this rapidly growing core market segment, positioning itself to benefit from the industry's continued growth. Clearly, the challenges and opportunities facing North Electro-Optic are very apparent, as the company stands at a crossroads of destiny. Ahead lies the "golden road" of continued rapid growth in the global medium-to-large size AMOLED market, while behind lurks the challenges of high debt, continuous losses, intense competition, and technological iteration. Whether North Electro-Optic can effectively leverage the capital market to alleviate financial pressure and successfully transform its technological advantage into a sustainable business model will be key to its continued growth in the industry. And this listing in Hong Kong is undoubtedly an important step towards turning the tide.