Hisense Electric to raise 1.5b Yuan to expand upstream industry

The fund will be used for the company's LCD TV modules, the integration of design and manufacture of machines and related construction projects, as well as supporting the production of flat-panel TVs (SMT machines, injection molding machine).

Hisense Electric said the funds raised will be used for the company's LCD TV modules and the integration of design and manufacture of machines and related construction projects, as well as supporting the production of flat-panel TVs (SMT machines, injection molding machine) project.

It’s an effective way to grow in the competitive TV industry by developing TV LCD module technology & industry, striving for first place in flat-panel TV industry, said Hisense Electric.

Displaysearch forecasts that China's LCD TV shipments will grow by 45% in 2009, and the average annual compound growth rate will reach 35% in the next 3 years. LCD TV shipments are estimated to exceed CRT TV, becoming the hottest TV type in China by 2010.

If the TV companies cannot control the upstream resources of flat-panel display, its controllable costs will be less than 20% or less, Hisense Electric said.

As large panel makers continuously extended to the lower reaches, the controllable costs will be further reduced. The profits in the chain of flat-panel TV industry are mainly from the middle & upper reaches of the flat panel display and modules. As the world's leading supplier of flat panel display is also major manufacturer of flat-panel TVs, the downstream business will be severely affected once there are fluctuations in supply and demand.

Hisense Electric disclosed that RMB 12.45 billion ($1.82 billion) will be investigated into LCD TV modules & the integration of design and manufacture and supporting projects, with annual after-tax profit averaging RMB 2.08 billion ($304 million). 　

Hisense Electric would investigate RMB 285.97 million ($41.8 million) into the production supporting project of flat-panel TVs (SMT machines, injection molding machine). Once completed, the after-tax profit is expected to be RMB 35.14 million ($5.14 million).

Hisense Electric completed in September 2007 the first production line for Chinese television industry with annual output of 500,000 TV LCD modules, increased it to three production lines by August 2008, raising production capacity up to 150 million units per year.