O-Film Tech seems to have emerged from the quagmire.

According to the recently disclosed financial report, in the first three quarters of this year, O-Film Tech's operating revenue was 14.47 billion yuan, a year-on-year increase of 33.76%; net profit was 47.12 million yuan, a year-on-year increase of 115.74%; and non-recurring profit after tax was 26.74 million yuan, a year-on-year increase of 104.7%. In the third quarter alone, the company's non-recurring profit after tax was 41.1 million yuan, a year-on-year increase of 800%.

'No winter is insurmountable, and no spring will not arrive. Everything will pass, and everything will come.'

It seems that the spring that Cai Rongjun has been longing for has finally arrived.

After being kicked out of the 'Apple supply chain', who will be O-Film Tech's next major client? There have been reports that O-Film Tech has secured the majority of orders for the rear camera, front camera, and fingerprint module of Huawei's Mate 60 series.

Regarding the supply to Huawei phones, due to confidentiality agreements, Cai Rongjun did not directly respond but said, 'Stubbornly alive.' It seems calm and carefree, but in reality, it feels like a light boat has already sailed past countless mountains.

Judging from the company's increased production lines, massive recruitment at the factory site, and research by professional institutions, it is basically confirmed that O-Film Tech is primarily supplying Huawei.

Like Huawei, Cai Rongjun is also anticipating a U-turn.

On April 23, 2023, Cai Rongjun pointed out that after experiencing the lowest point in 2022, the company has bottomed out and stabilized in 2023, entering a new stage of development. We must sound the 'counter-attack horn'.

By partnering with Huawei, O-Film Tech has 'come back from the dead,' indirectly demonstrating its technological prowess. Moreover, due to US technology suppression, Huawei phones are adopting domestic supply chains, and the related performance improvement will also have strong sustainability.

In the field of lenses, O-Film Tech is deeply involved in Huawei's 6P-7P high-end lens projects, and the next-generation 7P product has already been sampled to Huawei. Therefore, for next year's new products, O-Film Tech modules will most likely continue to be the primary supplier.

Moreover, as the consumer electronics industry is in a period of cyclical adjustment, component suppliers are undergoing significant shuffling. After weaker competitors exit, the position of leading enterprises will become more stable.

In addition, downstream demand is booming, and there is a short-term shortage of modules such as lenses, leading to price increases by suppliers. An analysis report points out that currently, the supplier of under-screen optical fingerprint modules for the Huawei Mate 60 series has increased the price of related products by 15% to 20%, with some models even seeing a 30% increase.

With both quantity and price increasing, the probability of O-Film Tech's turnaround has greatly increased. The capital market has already reacted first, with the company's stock price hitting the daily limit for six consecutive days, resulting in a direct surge in market value of 15 billion yuan.

After being kicked out by Apple, O-Film Tech's performance plummeted.

Additionally, since 2020, the company's major client Huawei has seen its mobile phone business hit rock bottom due to US suppression. In 2021, Huawei's shipments fell out of the top five globally. With both major clients experiencing significant changes, Cai Rongjun faced the darkest moment of his life.

The once star enterprise instantly fell to the bottom. From 2020 to 2022, O-Film Tech lost over 9.7 billion yuan, and when combined with losses in the first half of 2023, the total loss exceeded 10 billion yuan.

The secondary market shunned it, and O-Film Tech's stock price fell by nearly 80% from its peak; it's worth noting that during its glory days in 2012-2013, its stock price surged by over 10 times. From 2012 to the peak in 2017, the stock price increase was even more than 21 times, with a market value exceeding 70 billion yuan at its highest.

Along with the stock price fluctuations, the wealth of the Cai Rongjun family has also experienced a roller coaster ride. Since 2014, when the company's performance began to rise, the Cai family's wealth expanded from 5 billion yuan to 17.2 billion yuan in 2018.

However, since then, their wealth has declined year after year, falling out of the top 400 rankings. In 2022-2023, they didn't even make it into the top 500.

With its ups and downs and twists and turns, O-Film Tech is perhaps one of the companies in the A-share market that has endured the most trials.

The consumer electronics industry updates and iterates extremely quickly, with each generation of products introducing new technologies and experiences. For companies that fail to bet on the right trends or fail to plan ahead, this can be fatal.

Additionally, over-reliance on a single major client, especially within the Apple supply chain, has hurt companies like GoerTek and O-Film Tech. Cai Rongjun should now have a deep understanding of this.

It can be said that 'surviving' is a topic that industry participants must face and is also the main theme of Cai Rongjun's business battles.

Cai Rongjun graduated from the Department of Electromechanical Engineering at Shantou University, which was funded by Li Ka Shing, who has always been his idol. After graduating from university in 1995, he joined Kodak Japan, rising from a grassroots technician to a core engineer. Therefore, Cai Rongjun not only has a formal education background but also possesses profound scientific research experience.

In 2001, during this period, Hong Kong Xunqi and Shenzhen Zhixiong Electronics jointly established O-Film Tech, initially engaged in precision thin-film components for optical fiber communication.

In other words, Cai Rongjun was not the founder of O-Film Tech. Later, O-Film Tech invited Cai Rongjun and his brother Cai Gaoxiao to serve as general manager and deputy general manager, respectively, to boost the company's research and development efforts.

In September 2004, the original shareholders transferred their controlling stake to the Cai brothers for 4.39 million yuan, officially ushering in the era of Cai Rongjun's leadership at O-Film Tech.

The Cai brothers are proficient in optoelectronic technology. Two years later, O-Film Tech launched infrared filters and became the global leader in this niche market, occupying one-third of the global market share. Leveraging this advantage, O-Film Tech successfully listed on the Shenzhen Stock Exchange in August 2010.

However, in the first year of its listing, Cai Rongjun sensed a crisis. While the company's revenue surged that year, its net profit remained stagnant. He clearly recognized that the original business was approaching its ceiling with limited growth potential.

At that time, Apple fueled the touch-screen smartphone craze. Cai Rongjun keenly perceived the enormous opportunities in the mobile consumer electronics industry and invested all the funds raised from the IPO into the touch control field.

This strategy was a huge success, and Cai Rongjun led the company to surpass TPK, becoming the world's largest touch screen manufacturer. After a brief lull in performance in 2011, O-Film Tech shone brightly from 2012 to 2014, with revenue and net profit skyrocketing, and its stock price surging more than tenfold in just two years from 2012 to 2013. Since then, O-Film Tech has become a significant supplier in the consumer electronics industry.

However, the only constant in the high-tech industry is 'change' itself. Subsequently, Apple and Samsung adopted different touch screen solutions, intensifying industry shuffling. In 2015, O-Film Tech's profits declined again, as its old touch screen business was squeezed into the low-end market, with thinner profits, and its new businesses showed no signs of improvement.

At this point, O-Film Tech was 'internally and externally troubled, with a gap between old and new businesses'.

At this time, the micro-camera project that Cai Rongjun had been involved in since 2012 took on a significant role. As consumer demand for mobile phone photography and videography gradually increased, OEMs correspondingly raised camera order volumes and technical requirements. Cai Rongjun, who had planned ahead, once again hit the right trend. At the same time, Cai Rongjun also decided to enter the fingerprint recognition field.

After overcoming the trough in 2015, the company's performance peaked again in 2016-2017, with net profits of 719 million and 823 million yuan, respectively, in the two years. The stock price also surged to an all-time high in November 2017.

However, in 2018, due to excessive investment expenditures, poor management, and investments gone wrong with LeTV and Gionee, the company suffered a loss of over 500 million yuan after impairment of inventories, exposing O-Film Tech's internal control issues after years of rapid growth.

Assessing the situation and learning from failures are important signs of an entrepreneur's maturity. Cai Rongjun said he pays more attention to failures than success stories.

The hard hit in 2018 made him focus on conducting internal management reforms at O-Film Tech with a 'precision and efficiency' approach. That year, the company successfully turned losses into profits.

But the subsequent story surpassed outside expectations when Apple tore up the cooperation agreement, giving Cai Rongjun a taste of the cruelty and cold-bloodedness of business competition. O-Film Tech fell from its peak to the quagmire and was even criticized as a negative example by the outside world.

But as he said: Life is a constant repetition of adversity, which no one can escape and will surely arrive. Seemingly terrifying adversity ， It is the source of success 。 Facing adversity ， What we need to do is ， Face it calmly 、 Accept it 、 Then solve it 。What seems like a dreadful adversity is the source of success. Facing adversity, what we need to do is face it calmly, accept it, and then solve it.

Currently, with Huawei's resurgence from adversity, O-Film Tech also has the confidence to survive. The company is stepping on the gas and sounding the horn for a counter-attack.

Don't forget that as early as the trough in 2015, Cai Rongjun also ventured into the field of the Internet of Vehicles. The following year, he raised 1.37 billion yuan in funding to strengthen the research and development of automotive lenses and seize the opportunity in intelligent automotive business. In the first half of 2023, smart car products contributed revenue of 616 million yuan, accounting for nearly 10% of total revenue.

From infrared cut-off filters to touch screens, to micro-cameras and fingerprint recognition, and then to automotive electronics, O-Film Tech has been constantly 'messing around.' Even in the face of difficulties, Cai Rongjun has not stopped betting on the future.

The development journey of O-Film Tech mirrors the rise and fall of the consumer electronics industry. However, during the trough period, Cai Rongjun devoted himself to laying out forward-looking technologies, ultimately ushering in a moment of desperate counterattack.

If it weren't for years of technological accumulation, this 'luck' would not have fallen on O-Film Tech.

Disclaimer

This article involves content related to listed companies, based on the author's personal analysis and judgment based on information (including but not limited to interim announcements, periodic reports, and official interaction platforms) publicly disclosed by the listed companies in accordance with legal obligations; the information or opinions in this article do not constitute any investment or other business advice. Market Value Watch assumes no responsibility for any actions taken as a result of adopting this article.

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