Rainbow shares: a joint venture with Corning's 8.6+ generation TFT-LCD back-end processing line project was approved

Recently, Rainbow shares received a decision from the State Administration for Market Regulation. The decision does not prohibit or implement further review of the new joint venture between Rainbow shares and Corning Singapore Holdings Co., Ltd. (hereinafter referred to as 'Corning Company').

This means that the joint venture project between Rainbow and Corning has been officially approved.

Previously, Rainbow Shares passed a resolution and decided to sign a 'Joint Venture Contract' with Corning. The two parties jointly invested in the establishment and operation of Sino-foreign joint ventures in Shuangliu District, Chengdu City, Sichuan Province, and High-tech Zone, Xianyang City, Shaanxi Province. , To build a back-end processing production line for 8.6+ generation TFT-LCD glass substrates.

According to the previous announcement, the new production line will be put into operation in September 2018, 'Because it has only been approved now, the production date may be delayed, and we are working hard to catch up.' Tao said in an interview with a reporter from the Securities Daily.

Layout Xianyang and Chengdu

This cooperation between Rainbow and Corning began as early as May 26 last year. At that time, Rainbow shares announced that, recently, Rainbow shares and Corning Display Technology (China) Co., Ltd. signed a memorandum of joint venture cooperation, the two parties will jointly fund the establishment of a joint venture in China. Subsequently, the cooperation between the two parties continued to advance.

According to the data, Corning is an indirect wholly-owned subsidiary of Corning of the United States. It is mainly used as an investment platform company for Corning of the United States to invest in China.

'The company holds 51% of the equity in the joint venture.' Long Tao told the 'Securities Daily' reporter that Rainbow and Corning will set up a Sino-foreign joint venture in Xianyang High-tech Industrial Development Zone and Chengdu Shuangliu District. Operating enterprises, the investment scope of the first phase of the joint venture project is to build a 8.6 generation LCD glass substrate back-end processing production line.

The 'Securities Daily' reporter learned that the total investment of the first phase of the project is 60 million U.S. dollars each; the registered capital is 20 million U.S. dollars each, and the two parties will contribute in cash according to their respective equity ratios.

According to the previous announcement of Rainbow Shares, the cooperation project between the two parties in Chengdu Shuangliu is expected to be put into production in September 2018. It can produce up to 110,000 glass substrates per month, and the maximum annual sales after production is expected to exceed 8,000. Ten thousand U.S. dollars. 'The current production may be postponed, and we are speeding up the progress and strive to start production as soon as possible.' Long Tao told a reporter from Securities Daily.

Turning losses into profit

2017 is an important year for Rainbow. After many consecutive years of losses, Rainbow shares finally turned losses into profits this year. According to the 2017 annual report of Rainbow Shares, in addition to government subsidies, the company's turnaround was largely due to its layout in glass substrates.

In recent years, benefiting from the continuous growth of demand for electronic products such as smart phones, tablet computers, LCD TVs, and notebook computers in the terminal consumer market, the flat panel display industry has continued to expand. In 2018, global demand for glass substrates is expected to exceed 500 million square meters for the first time, and domestic demand is expected to exceed 200 million square meters. The product supply gap is still as high as about half, especially for G8.5+ and G6LTPS high-definition glass. Products such as substrates are currently almost 100% dependent on imports in China, and there are huge opportunities for local manufacturers to substitute imports. Based on this, major manufacturers in the industry have shifted their business focus to G8.5 and above high-generation panel production lines. Rainbow shares are also gradually upgrading their production lines and deploying to high-generation production lines.

In 2017, Rainbow shares made a fixed increase, and the total net funds raised were 19.04 billion yuan. The investment projects were the capital increase projects in Xianyang and Hefei.

Among them, Xianyang Rainbow Optoelectronics Technology Co., Ltd. invested 14 billion yuan in the construction of the G8.6 TFT-LCD project. According to a reporter from the Securities Daily, the total investment of the project is 28 billion yuan, which is the first 8.6 billion yuan project in Northwest China. Generation of LCD panel production line; In addition, Rainbow (Hefei) Liquid Crystal Glass Co., Ltd. invested 5.220 billion yuan in the construction of G8.5 LCD substrate glass production line project, with a total investment of 6.003 billion yuan.

At present, the G8.6 LCD panel production line has been officially put into operation. The first phase of the project is expected to be completed in August 2018. Huaan Securities analyzes that it is expected that the G8.6 LCD panel production line will be fully completed by the end of 2018. It can achieve annual sales revenue of 10 billion yuan. If this goal is achieved, it will be 29.7 times of 2016 revenue. The G8.5 glass substrate production line has been put into construction. After it is put into production, it is expected to bring annual sales income of 2.022 billion yuan to Rainbow.

Huaan Securities believes that these will help Rainbow Co., Ltd. become the leader of domestic liquid crystal substrate glass, and the company's future performance is expected to achieve qualitative changes.

Long Tao told the 'Securities Daily' reporter: 'This joint venture project has no direct connection with last year's fixed increase project. The company invested first in order to speed up the progress.' According to the announcement, the joint venture company's production line has been completed. After it is put into production, the products will be used for matching sales of no less than 70% of related parties.