New Stock Preview | Everdisplay Optronics (688538.SH) goes public in Hong Kong to accelerate its exploration in the large-size AMOLED market.

Due to the demand for global strategic layout and the optimization of the approval process for A-share companies' listings in Hong Kong since 2025, the trend of A-share companies listing in Hong Kong has significantly accelerated. According to data from wind, 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 this year. Among them are leading companies in various industries, such as Contemporary Amperex Technology, Jiangsu Hengrui Pharmaceuticals, and Chifeng Jilong Gold Mining. These companies have achieved good stock price increases after listing in Hong Kong, causing investors to pay special attention to A-share leading companies listing in Hong Kong. The process of the world's third largest and China's largest medium- and large-sized AMOLED semiconductor display panel manufacturer impacting the "H-share" market has recently received the latest news. According to the disclosure from 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 sole sponsor. It is worth noting that the company had submitted a listing application on April 23 this year, making this the second submission. Although Shanghai North Electro-Optic is a leading company in the field of medium- and large-sized AMOLED semiconductor display panels in China, its performance has continued to suffer significant losses. From 2022 to 2024, Shanghai North Electro-Optic recorded net losses of 1.602 billion, 3.244 billion, and 2.518 billion yuan, and a further loss of 840 million yuan in the first half of 2025. This means that Shanghai North Electro-Optic has accumulated losses of up to 8.2 billion yuan over the three and a half years. Leading market positions in various segments Founded in October 2012, Shanghai North Electro-Optic has always been at the forefront of the Chinese AMOLED industry, constantly challenging the global dominance of international companies in this high-tech field. Over the thirteen years of operation, Shanghai North Electro-Optic has successfully expanded into the field of medium- and large-sized AMOLED panels by focusing on the development of advanced AMOLED panel design and manufacturing technologies and leveraging its rich industry experience accumulated from the early days of small and medium-sized AMOLED display products, establishing a leading market position. According to data from Zhishi Consultancy, based on the sales volume of medium- and large-sized AMOLED panels by 2024, Shanghai North Electro-Optic ranked first in China and third globally with a sales volume of 3.2 million units, holding a 14.5% market share globally, making it part of the top tier in the industry. Behind Shanghai North Electro-Optic's leading sales volume in medium- and large-sized AMOLED panels globally, is the fact that the company's products have penetrated into various fields, including tablets/notebooks, smartphones, smart wearables, in-car displays, as well as emerging application areas with strong innovation attributes such as aviation, desktop displays, smart Internet of Things, and smart home, among others. Shanghai North Electro-Optic also holds leading market positions in sales volumes in various segmented fields. According to data from Zhishi Consultancy, based on sales volume in 2024, Shanghai North Electro-Optic ranked second globally and first in China in the field of tablet/notebook computer display panels; fourth globally and second in China in in-car displays; fourth globally and third in China in smart wearables; seventh globally and fifth in China in smartphones. Revenue from Shanghai North Electro-Optic primarily comes from tablet/notebook computers, smartphones, and smart wearables, accounting for 36.8%, 47.3%, and 12.6% of revenue, respectively, in 2024. Revenue from in-car displays and emerging applications accounted for 1.7% and 1.6% of revenue, respectively. It is evident that Shanghai North Electro-Optic's presence in emerging applications is relatively small. From a revenue perspective, Shanghai North Electro-Optic's revenue fluctuations are quite evident. From 2022 to 2024, Shanghai North Electro-Optic's revenue was 4.191 billion, 3.038 billion, and 4.958 billion yuan, respectively. The significant decline in revenue in 2023 was due to the impact of the global economic situation during the reporting period, leading to a decrease in demand in the consumer electronics industry market, intensified industry competition, and a decrease in the average product price, which affected revenue for the period. In 2024, with the market demand rebounding, the company's shipments in the tablet/notebook computer, smartphone, and in-car display fields significantly increased, driving revenue growth back up. In the first half of 2025, despite a significant drop in revenue from smartphones, revenue increased by 12.64% to 2.597 billion yuan, driven by a 59.6% increase in sales of tablet/notebook computer panels. From a profit perspective, Shanghai North Electro-Optic's continued losses are mainly due to two reasons: high depreciation and amortization costs of production lines and high financial costs. Data shows that from 2022 to the first half of 2025, depreciation and amortization costs for Shanghai North Electro-Optic were 1.469 billion, 1.713 billion, 1.917 billion, and 1.076 billion yuan, respectively; while net financial costs during the same period were 296 million, 518 million, 623 million, and 232 million yuan, respectively. Such significant depreciation, amortization costs, and financial costs naturally have a severe impact on Shanghai North Electro-Optic's profit. Market growth brings growth opportunities, Global scale will exceed 210 billion by 2030 In fact, Shanghai North Electro-Optic's substantial losses due to factors such as depreciation, amortization costs, and financial pressure are not isolated cases, but rather common to the entire AMOLED panel industry, determined by the business model of the industry. The AMOLED industry is a typical capital and technology-intensive industry, where constructing an advanced production line requires an investment of hundreds of billions of yuan. These huge investments are converted into fixed assets in accounting terms and are subsequently accounted for as costs through depreciation. Furthermore, after the production line is built, it needs to undergo a long process of "capacity ramp-up" and "yield improvement" to achieve stable production. During this period, the income scale is limited while the fixed costs are high. Fierce market competition also poses operational challenges, in addition to the need for companies to invest significant research and development funds to keep up with technological trends, further exacerbating the need for funds. Hence, AMOLED companies often show a continued accumulation of interest-bearing debts and high levels of debt in the early to mid stages of development. Shanghai North Electro-Optic is currently in this special stage of development, and its depreciation and amortization of production lines are expected to remain at relatively high levels for at least the next 2-3 years, notably after new production capacity begins to operate in 2026. Shanghai North Electro-Optic's interest-bearing bank loans and other loans amounted to 17.2 billion yuan as of September 30, 2025, with the financial cost for 2024 alone exceeding 600 million yuan. Such financial pressure is likely a core reason for Shanghai North Electro-Optic's listing in Hong Kong this time, as stated clearly in its prospectus that part of the funds raised will be used to repay some of the interest-bearing bank loans or other loans. Additionally, the relatively high concentration of Shanghai North Electro-Optic's customers requires investors' close attention. In 2024, revenue from the top five customers accounted for over 80% of Shanghai North Electro-Optic's total revenue. The concentration of customers primarily stems from the company's products being focused on the consumer electronics market of tablets/notebooks and smartphones. Of course, the opportunities facing Shanghai North Electro-Optic are also quite evident, as the global market for medium- and large-sized AMOLED semiconductor display panels is expected to continue to grow rapidly in the future. According to data from Zhishi Consultancy, from 2020 to 2024, due to the accelerated penetration of AMOLED technology from smartphones into tablets, notebooks, and other medium- to large-sized areas, the market size of medium- to large-sized AMOLED semiconductor display panels increased from 5 billion yuan to 344 billion yuan, with a compound annual growth rate of 71%. From 2024 to 2030, due to technological advantages and experience upgrades, cost reductions and economies of scale, the emergence of downstream application scenarios, as well as industrial chain synergy and policy support, the market size of medium- to large-sized AMOLED panels is expected to increase from 344 billion yuan to 212.3 billion yuan, with a compound annual growth rate of 35.4%. As China's first company to achieve mass production of AMOLED panels and ranked second globally and first in China in terms of shipments in the medium- and large-sized field, Shanghai North Electro-Optic has established a first-mover advantage and customer base in this rapidly growing core segment market, and will continue to benefit from the industry's sustained growth. Clearly, Shanghai North Electro-Optic is at a crossroads of fate, with significant challenges and opportunities ahead. In front is the "boulevard of continued rapid growth" of the global medium- and large-sized AMOLED market, while behind is the "torrent" of high debt, continued losses, intense competition, and technological iteration. Whether Shanghai North Electro-Optic can effectively leverage the capital markets to alleviate financial pressure and successfully turn its technological edge into a sustainable business model is key to its continuous growth in the industry wave. This listing in Hong Kong is undoubtedly an important part of its turnaround.