The former big white horse Ovation exploded again with a black swan.
On the evening of April 16, Ovation released the “Announcement of 2020 Annual Performance Forecast, Earnings Express Revision and Apology”, Ovation intends to revise its performance downward, expecting a loss of 1.85 billion yuan in 2020, after previously expecting a profit of 810 million – 910 million yuan.
For the downgraded results, Ovation explained that due to the specific customer’s plan to terminate the procurement relationship with the company and its subsidiaries, the company recognized an asset impairment loss after conducting an impairment test on the relevant assets.
In the announcement, Ovation’s board of directors apologized to the shareholders for the performance forecast and data correction of the earnings flash, saying that “the termination of orders from overseas customers due to changes in the international trade environment was an unexpected event that the company could not anticipate in advance”.
After the news was fermented, it caused a hot debate in the scale shareholder group.
Some investors spouted, “2019 was Ovation hurt, when Ovation is also performance explosion, I stepped on the mines again.” There are also investors said, “once 19 years of performance explosion, loss of 300,000, from then on never dare to enter the Ovation”.
This is not the first time Ovation lightning. 2019, Ovation is expected to attribute net profit of 1.839 billion yuan before the official disclosure of the 2018 annual report. Waiting for the official disclosure of the financial report, the net profit attributable to change to a loss of 519.0 million yuan. After the performance explosion, Ovation’s share price saw a continuous drop and was also subject to regulatory sanctions.
K-line data shows that Ovation’s current share price has been cut compared to the high point in July last year. Since Ovation hit a stage high of 23.62 yuan in July last year, the share price has entered a downward channel. As of the close of business on April 16, Ovation’s share price was 8.7 yuan, with a total market value of 23.44 billion yuan.
Compared with the historical high, Ovation’s share price fell by more than 60%, and the total market value evaporated more than 30 billion yuan.
The continuous decline of Ovation’s share price is related to a series of negative news.
For example, in the early hours of July 21 last year, according to media reports, “the U.S. Department of Commerce’s Bureau of Industrial Security (BIS) blacklisted 11 Chinese companies, including Nanchang Ophiglight”. After the news appeared, Ovation closed down 3.73% that day.
On September 1 last year, another media report said, “Apple removed Officel from the supply chain list, after Apple iPad low price version by Officel, GIS, TPK three together to supply touch modules”, and said that most of Officel’s touch orders have been returned to Lanshi Technology. After the news appeared, Ovation opened down and eventually closed down 6.61%.
After that, the news of Ovation being kicked out of Apple’s industrial chain continued to ferment.
In the afternoon of January 21 this year, according to media reports, “In 2020, Ovation did continue to digest Apple orders, but from 2021 onwards, Ovation received no new orders from Apple and even had to sell its South China plant in Apple’s industrial chain to Lixin Precision.” In the afternoon of the same day, Ovation ended the flash crash, eventually plunging 7.26%.
In March of this year, the news of Ovation’s termination of cooperation with Apple continued to ferment, and its share price also continued to be depressed. Ovation later responded that “the company will not fall due to the cessation of specific customer business (market interpreted as Apple), and will next base on the optical track and focus on microelectronics business”.
Recently, Ovation’s important asset Guangzhou Delta 100% stake is also about to be sold.
Information shows that as early as November 2016, Ovation officially entered the Apple supply chain by acquiring Guangzhou Delta Imaging Technology Co. According to public reports, Ovation supplies Apple with touch modules (for low-cost iPads) and optical products (for cell phone cameras).
On April 12, Wintel disclosed that it intends to set up Zhuhai Delta Technology Co., Ltd. with Gree Ventures as the designated acquirer of 100% of Guangzhou Delta’s equity and related operating assets.
What will be the future development of Ovation after it has left the halo of “Apple supply chain company”?
It is worth noting that on April 15, Morgan Stanley resumed tracking Ovation with an Underweight rating and a target price of RMB 6.80. Compared with the current share price of RMB 8.7, Morgan Stanley’s target price for Ovation has room to fall by 21.83%.
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