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Year of writing: 2021
Author: Tony
Electronic paper maker Yuantai's share price hits a record high
Dismantling the four major growth drivers in the field of e-paper
In July 2021, Yuantai’s stock price climbed all the way and hit a record high. Yuantai almost monopolized the market in the electronic paper industry, with a market share of as high as 90%. It is a leader in a niche market, and its gross profit margin in 2020 is also as high as 45% is a company with extremely high gross profit in the electronics industry, which shows Yuantai's strong competitiveness. The company continues to acquire and develop in the field of electronic paper technology, and its leading edge has become more obvious; and it has cooperated with a number of Total Solution companies and industrial computer factories to build a deeper moat that makes it difficult for other competitors to surpass. Perhaps many people think that readers who use e-books are very rare, but for Yuanta, there are four major growth drivers in the field of e-paper: color e-readers, electronic shelf labels (ESL), e-notebooks, IoT (digital signage). E-paper has the advantages of power saving, eye protection, and visibility under the sun, and it consumes power only when the screen is updated, and almost no power is wasted at other times. These advantages also make electronic tags and IoT the killer applications of electronic paper.
Color e-book (picture source: Yuantai official website)
Due to its technological exclusivity, Yuantai has included many major international customers. In the field of e-paper readers, it supplies companies such as Amazon Kindle e-books, Rakuten Kobo e-books, and iFlytek. In the field of e-labels, it enters Walmart, Costco, BestBuy, Alibaba Hippo Fresh, Amazon Go and other channels. The digital signage includes: Singapore bus signage, Australian traffic signage, US Boston route signage, Taichung bus signage, and so on.
Among the applications in the electronic paper field, I am most optimistic about the rapid growth of electronic tags and IoT applications. Nowadays, electronic shelf labels are widely used in a few countries such as Germany, Japan, and Singapore. If they are implemented in more retail markets in the future, the scale can be expected. Electronic labels do not have to worry about power consumption at all, because the battery life is about 5 years. In addition, electronic tags have many advantages. There are thousands of items in convenience stores. In the past, if the prices were to be changed, the clerk had to manually replace the price tags, which was time-consuming and might make mistakes; but if you change it to use With electronic tags, the headquarters only needs to ask employees to enter prices, and all retail stores' price adjustment items will change accordingly, and the prices can be changed more immediately in response to factors such as the external environment and marketing activities. With unmanned shops being popular nowadays, electronic product labels will also become more popular. The other is the application of IoT. When the era of the Internet of Everything comes, displays will become indispensable. In addition to LCD and LED displays, there are more options for electronic paper. If the Internet of Things needs to be used in an environment where power is not available or power consumption is extremely low and the sun is strong, e-paper will be more suitable for screens, such as outdoor billboards.
Electronic label ESL (picture source: Yuantai official website)
Due to its technological exclusivity, Yuantai has included many major international customers. In the field of e-paper readers, it supplies companies such as Amazon Kindle e-books, Rakuten Kobo e-books, and iFlytek. In the field of e-labels, it enters Walmart, Costco, BestBuy, Alibaba Hippo Fresh, Amazon Go and other channels. The digital signage includes: Singapore bus signage, Australian traffic signage, US Boston route signage, Taichung bus signage, and so on.
Among the applications in the electronic paper field, I am most optimistic about the rapid growth of electronic tags and IoT applications. Nowadays, electronic shelf labels are widely used in a few countries such as Germany, Japan, and Singapore. If they are implemented in more retail markets in the future, the scale can be expected. Electronic labels do not have to worry about power consumption at all, because the battery life is about 5 years. In addition, electronic tags have many advantages. There are thousands of items in convenience stores. In the past, if the prices were to be changed, the clerk had to manually replace the price tags, which was time-consuming and might make mistakes; but if you change it to use With electronic tags, the headquarters only needs to ask employees to enter prices, and all retail stores' price adjustment items will change accordingly, and the prices can be changed more immediately in response to factors such as the external environment and marketing activities. With unmanned shops being popular nowadays, electronic product labels will also become more popular. The other is the application of IoT. When the era of the Internet of Everything comes, displays will become indispensable. In addition to LCD and LED displays, there are more options for electronic paper. If the Internet of Things needs to be used in an environment where power is not available or power consumption is extremely low and the sun is strong, e-paper will be more suitable for screens, such as outdoor billboards.
Yuantai’s revenue in 2020 will still be dominated by displays, accounting for 71%, and electronic tags and other Internet of Things accounted for 29%; however, compared to 2019, displays accounted for 78.98%, and electronic tags and other Internet of Things accounted for 21.02%. The proportion of electronic tags and the Internet of Things has gradually increased, and its revenue growth has reached 55%. Yuantai gradually develops into the application field of the Internet of Things, which will find the next wave of growth momentum for the company. The company's revenue will grow rapidly in the first half of 2021, and the prospects are promising.
Reference material: Yuantai official website