"No winter lasts forever, and no spring is far away. Everything will pass, and everything will come."

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

On the evening of April 19th, O-Film released its 2023 annual report, achieving operating revenue of 16.862 billion yuan, an increase of 13.73% year-on-year; and net profit attributable to shareholders of 76.905 million yuan, reversing losses into profits year-on-year.

After being kicked out of Apple's supply chain, who is O-Film's next major customer? It has been reported that O-Film has obtained the majority of orders for the rear camera, front camera, and fingerprint module of the Huawei Mate 60 series.

Regarding the supply situation to Huawei phones, due to confidentiality agreements, Cai Rongjun did not respond directly but said, "Stubbornly alive." It seems casual, but in reality, it feels like a light boat has passed through countless mountains.

From the company's increased production lines, large-scale recruitment in the factory area, and research by professional institutions, it is basically confirmed that O-Film is the main supplier to Huawei.

Like Huawei, Cai Rongjun is also looking forward to a U-turn.

On April 23, 2023, Cai Rongjun pointed out that after experiencing the lowest point in 2022, the company has stabilized in 2023 and entered a new stage of development. We must sound the "counterattack horn".

Binding with Huawei, O-Film's "resurrection" also indirectly confirms its technological strength. Moreover, due to US technological suppression, Huawei phones adopt domestic supply chains, and the related performance improvement will also have strong sustainability.

In terms of lenses, O-Film is deeply involved in Huawei's 6P-7P high-end lens project, and the next-generation 7P product has already been sampled for Huawei. Therefore, O-Film's modules are highly likely to remain the main supplier for next year's new products.

Moreover, as the consumer electronics industry is in a period of cyclical adjustment, with a significant shakeout among component suppliers, the position of leading companies will become more stable after weaker competitors exit the market.

In addition, downstream demand is booming, and there is a short-term shortage of modules such as lenses, leading to price increases among suppliers. An analysis report pointed out that currently, the suppliers of the under-screen optical fingerprint modules for the Huawei Mate 60 series have increased their prices by 15% to 20%, with some models even increasing by 30%.

With both quantity and price increasing, O-Film's chances of a turnaround have greatly increased. The capital market has reacted first, with the company's stock price soaring for six consecutive days, resulting in a direct increase in market value of 15 billion yuan.

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

In addition, since 2020, the company's major customer Huawei has seen its mobile phone business fall into a trough due to US suppression. In 2021, Huawei's shipment volume fell out of the top five globally. Both major customers encountered significant changes, and Cai Rongjun faced the darkest moment of his life.

Once a star company, it suddenly fell to the bottom. In the three years from 2020 to 2022, O-Film lost more than 9.7 billion yuan, coupled with losses in the first half of 2023, totaling over 10 billion yuan in blood loss.

The secondary market avoided it like the plague, and O-Film's stock price fell nearly 80% from its peak; it should be noted that during its glory days in 2012-2013, its stock price increased by more than 10 times. From 2012 to the peak in 2017, the stock price increase exceeded 21 times, with a market value of over 70 billion yuan.

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

However, since then, its wealth value has declined year after year, falling outside the top 400, and it did not even enter the top 500 list in 2022-2023.

With ups and downs and twists and turns, O-Film is probably one of the companies that has faced the most hardships in the A-share market.

The consumer electronics industry updates and iterates extremely quickly, with new technologies and experiences for each generation of products. This is fatal for companies that fail to bet on the trend and deploy in advance.

In addition, over-reliance on a single major customer, especially companies in Apple's supply chain such as GoerTek and O-Film, has been very detrimental. Cai Rongjun should have a deep understanding of this now.

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

Cai Rongjun graduated from the Department of Mechanical and Electrical Engineering at Shantou University, which was funded by Li Ka Shing, who has always been his idol. In 1995, after graduating from university, he entered Kodak Japan and worked his way up from a grass-roots technician to a core engineer. Therefore, Cai Rongjun not only has a scientific background but also has profound scientific research experience.

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

That is to say, Cai Rongjun is not the founder of O-Film. Later, O-Film invited Cai Rongjun and his brother Cai Gaoxiao to serve as general manager and deputy general manager, respectively, to assist the company in research and development.

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

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

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

At that time, Apple was driving the trend of touchscreen smartphones. Cai Rongjun keenly perceived the huge opportunities in the mobile consumer electronics industry and invested all the funds raised from the IPO into the touchscreen field.

This battle was a great success, and Cai Rongjun led the company to surpass TPK and become the world's largest touchscreen manufacturer. After a brief hibernation in 2011, O-Film flourished from 2012 to 2014, with revenue and net profit rocketing like a rocket. The stock price even surged more than 10 times in just two years from 2012 to 2013. Since then, O-Film has become an important supplier in the consumer electronics industry.

However, the only constant in the high-tech industry is "change" itself. Since then, Apple and Samsung have adopted different touchscreen solutions, intensifying industry shuffling. In 2015, O-Film's profits declined again, with its old business of touchscreens being squeezed into the mid-to-low-end market, where profits were becoming increasingly thin, and its new business was showing no signs of improvement.

At this time, O-Film was "internally and externally troubled, with a lack of continuity."

At this point, the micro-camera project that Cai Rongjun got involved in in 2012 took on the main responsibility. As consumers' requirements for mobile phone photography gradually increased, OEMs correspondingly increased the order volume and technical requirements for cameras. Cai Rongjun, who had deployed in advance, once again stepped on the trend. At the same time, Cai Rongjun also decided to enter the fingerprint recognition field.

After overcoming the trough in 2015, the company reached a second peak in 2016-2017, achieving net profits of 719 million yuan and 823 million yuan, respectively, for the two years. The stock price also surged to an all-time high in November 2017.

However, in 2018, due to excessive investment expenses, poor management, and stepping on landmines such as LeTV and Gionee, the company suffered a loss of over 500 million yuan after impairment provisions for inventories, exposing O-Film's internal control issues after years of rapid growth.

Assessing the situation and learning from failures are important signs of an entrepreneur maturing. Cai Rongjun said that he pays more attention to failures rather than success cases.

The blow in 2018 made him focus on implementing internal management reforms to "create efficiency through refinement" at O-Film. That year, the company successfully reversed losses into profits.

But the subsequent story surprised the outside world. Apple tore up the cooperation agreement, which gave Cai Rongjun a taste of the cruelty and cold-bloodedness of business competition. O-Film fell from its peak into the mud, and was even used as a negative example by the outside world, frequently criticized.

But as he said: Life is constantly repeating adversity, which no one can escape and is bound to come. Seemingly scary adversity is the source of success. In the face of adversity, what we need to do is face it squarely, accept it, and then solve it.

Currently, Huawei is reborn from adversity, and O-Film also has the confidence to survive. The company is revving up and sounding the horn for a counterattack.

Don't forget that as early as the trough in 2015, Cai Rongjun also ventured into the field of connected vehicles, raising 1.37 billion yuan the following year to strengthen the research and development of automotive lenses and seize a share of the automotive intelligence business. In the first half of 2023, smart automotive products contributed revenue of 616 million yuan, accounting for nearly 10%.

From infrared cutoff filters to touchscreens, to micro-cameras and fingerprint recognition, and then to automotive electronics, O-Film Technology has been constantly "stirring up trouble." Even in the face of difficulties, Cai Rongjun has not stopped betting on the future.

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

Without years of technological accumulation, this "luck" would not have fallen on O-Film.

Disclaimer

The content of this article involving listed companies is based on the author's personal analysis and judgment based on information disclosed by the listed companies in accordance with their statutory obligations (including but not limited to temporary announcements, periodic reports, and official interactive platforms). The information or opinions in this article do not constitute any investment or other business advice. Market Value Observation does not assume any responsibility for any actions taken based on this article.

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