New Stock Outlook | Increase in Revenue without Increase in Profit vs. Seizing High-Growth Track, Will Yunying Valley Technology Seek "Breakthrough" in Hong Kong?

The new generation of display technology represented by AMOLED has made breakthroughs with flexible substrate materials, enabling screens to be foldable, rollable, and further reducing thickness. It is gradually replacing LCD technology in applications such as smartphones, tablets, wearable devices, and automobiles, becoming the mainstream in the market. This also provides more development opportunities for companies focusing on AMOLED display driver chips. Take Yunyinggu Technology, which is going public in Hong Kong, as an example. The company is a fabless model display driver chip design company, mainly providing services such as research and development, design, and sales of AMOLED display driver chips and Micro-OLED display backplanes / drivers. On January 19, the company once again submitted an application for listing on the main board of the Hong Kong Stock Exchange, with CICC and CITIC SEC serving as joint sponsors. This is after restarting the Hong Kong stock listing process following a failed submission on June 26, 2025. In this IPO, Yunyinggu Technology stated in its prospectus that the company plans to use the funds raised to support the research and optimization of AMOLEDTDDI chips, expand their application scenarios, support the research and optimization of Micro-OLED and Micro-LED display driver backplanes, strategic investments or acquisitions, among others. From this, it can be seen that Yunyinggu Technology is strengthening its development determination in the industry trend. However, can its perennial loss-making performance attract investors' attention in the secondary market? Increased revenue but no increased profitability, entering the "growth pains" period Founded in 2012, Yunyinggu Technology has clearly become a major brand in the display industry after more than ten years of development. According to a Frost & Sullivan report, based on sales statistics for 2024, Yunyinggu is the fifth largest supplier in the global smartphone AMOLED display driver chip market and the largest supplier in mainland China. At the same time, Yunyinggu is the largest independent supplier in the global Micro-OLED display backplane/driver market located in China: with a market share of 40.7% in 2024, ranking second globally. As of December 31, 2024, Yunyinggu Technology's AMOLED display driver chips have been mass-produced and shipped to several top smartphone brand manufacturers globally, used in over 10 product series. These brand manufacturers collectively account for more than a quarter of the global market share. However, despite the dual advantage of being a top player and holding a high market share, Yunyinggu Technology has not been able to reverse its "profitability dilemma." According to the prospectus, from 2022 to 2024, the company achieved revenues of RMB 551 million, RMB 720 million, and RMB 891 million respectively, with annual growth. However, the company's losses have continued to increase, with losses of RMB 124 million, RMB 232 million, and RMB 309 million respectively during the same period. In addition, the company's gross profit margin has been extremely unstable, with gross profit margins of 31.9%, 0.4%, and 2.5% respectively during the same period. As of October 2025, Yunyinggu Technology's revenue was RMB 900 million, an increase of 17% compared to the same period last year; the net loss was RMB 195 million, compared to a net profit of RMB 206 million in the same period last year; the gross profit margin was 14%, an increase of 6.9 percentage points from the same period last year. Furthermore, Yunyinggu Technology's perennial losses may be due to being "squeezed on both sides" in the market. According to GMTEight, the company is in the middle of the industry chain and lacks bargaining power with both suppliers and customers, leading to severely compressed profit margins. In addition, under the double pressure of international giants' competition and domestic competition, the company is inevitably affected by price wars. Despite the company's chip sales increasing from 14.06 million units in 2022 to over 50 million units in 2024, achieving revenue growth, the gross profit margin plummeted from 31.9% to 2.5%, resulting in incremental revenue but no incremental profitability. It can be seen that although Yunyinggu Technology is in a top position in the industry, it is inevitably caught in the growth pains of increasing revenue but not increasing profitability. Seizing the high-growth track, driving breakthroughs with technological strength? Compared to the declining demand for LCD display driver chips, the industry is gradually shifting towards advanced display technologies such as AMOLED, thereby driving strong growth in the AMOLED display driver chip market in recent years. According to Frost & Sullivan, the global AMOLED display driver chip market has been growing steadily in recent years, with sales increasing from approximately 723.7 million units in 2020 to 1,292.2 million units in 2024, with a compound annual growth rate of 15.6%. However, due to the slowdown in smartphone shipments, it is expected that the compound annual growth rate of the global AMOLED display driver chip market from 2024 to 2029 will be slightly lower than historical growth. Nevertheless, emerging high-growth application areas such as TVs, tablets, and automotive displays are expected to be the main drivers of growth, supporting the continuous upward development of the global AMOLED display driver chip market. In terms of sales volume, the global AMOLED display driver chip market is forecasted to reach approximately 2,112.0 million units by 2029, with a projected compound annual growth rate of 10.3%. In this development context, Yunyinggu Technology's fully self-developed technical capabilities will obviously enable the company to have sufficient momentum to anchor industry dividends. Currently, Yunyinggu has mastered the industry-leading full-stack self-developed display driver technology, covering key technologies such as display driver chip design, driver compensation algorithm development, and pixel compensation circuit layout, with the introduction of LTPO display driver chips, high-resolution Real-RGB AMOLED display driver chips, all of which are industry firsts, with core performance reaching the world's leading level, thereby establishing certain technological barriers. At the same time, Yunyinggu also attaches great importance to research and development investment - from 2022 to October 31, 2025, the company's research and development expenses were RMB 188 million, RMB 177 million, RMB 242 million, and RMB 225 million, accounting for 34.1%, 24.6%, 27.2%, and 25.1% of total revenue during the same period. However, this is not a one-size-fits-all solution, as over 90% of the company's revenue depends on the smartphone market. Opening up a second growth curve in a timely manner is also key to the company achieving revenue diversification. Looking at the revenue structure, AMOLED display driver chips are the absolute core source of revenue for Yunyinggu Technology, accounting for as high as 91.6% of revenue in 2024, mainly targeting high-end smartphones. The revenue share of Micro-OLED display backplanes/drivers is relatively disparate, mainly targeting AR/VR devices, with the revenue share declining from 34.3% in 2022 to 8.4% in 2024. Therefore, if Yunyinggu Technology wants to break free from dependence on a single business, it needs to apply its technical capabilities to areas such as automotive displays, industrial simulations, which are relatively less price-sensitive but have large growth potential, and invest heavily in researching and developing next-generation display technologies such as AMOLED TDDI (touch and display integration) chips, Micro-LED, to reserve power for long-term development. In summary, Yunyinggu Technology's growth story presents a typical tension between "high ceiling track and low profitability reality." Simply put, it stands on a broad track, but it is currently experiencing the pains of growth. The core logic of investing in it is betting that it can leverage the trend of localization and industrial capital support to successfully translate its technological and market share advantages into true and sustainable profitability in the future. Therefore, for investors, this may be a high-risk, high-uncertainty investment that requires a full understanding of the core risks mentioned above.