Changhong to continue stock trading halt

Experts believe this indicates firm may close plasma display panel business

China's leading electronic appliances manufacturer Changhong Electric Co will continue halting its stock trading on Monday, which has caused experts to speculate that the company would finally shut down its money-losing plasma display panel (PDP) business.

Having suspended its trading on the Shanghai bourse on September 15, the Sichuan-based company announced over the weekend in a filing that the suspension will continue, pending a decision over what to do with its PDP unit.

The filing, which was posted on the Shanghai Stock Exchange Saturday, did not disclose when the trading will be resumed. Several calls to Changhong's spokesperson went unanswered by press time.

Analysts said that they have no doubts that Changhong, one of the few remaining plasma TV manufacturers, would end its PDP business due to a continuing decline in global demand for PDP TV sets as LCD TVs are becoming a consumer favorite in China and abroad.

Domestic consumers prefer LCD (liquid crystal display) TVs, which save more energy and cost less than comparable PDP TVs, Liu Buchen, an analyst at consultancy Jiachunqiu Media Institution in Zhengzhou, told the Global Times Sunday.

"Unlike leading manufacturers of LCD TVs, Panasonic and other PDP TV makers have been unwilling to share their production technology and sales channels with each other, which has made it hard for the PDP TV industry to expand its scale or to cut costs," he said.

A report released by industry tracker NPD DisplaySearch earlier this year estimated that the global PDP TV shipments in 2015 would plunge to 500,000, down from 5.2 million in 2014 and 10.3 million in 2013.

The low demand in the PDP industry appears to have already dampened Changhong's overall financial performance.

In the first half of the year, Changhong recorded a net loss of 181 million yuan ($29.5 million), a 179.73 percent fall year-on-year.

Among its major subsidiaries, Sichuan COC Display Devices Co, which is mainly involved in PDP production, suffered the greatest loss of 127 million yuan in the first half, accounting for 70.7 percent of Changhong's total net loss, according to a financial report posted by Changhong in mid-August.

Changhong will have to shut its PDP business down due to the lack of relevant components for its PDP production, said Liu. "The company will have nowhere to purchase PDP components after its major suppliers such as South Korea's LG Electronics all gradually began to suspend or close their PDP production."

Multinational TV makers have already started to withdraw from the gloomy PDP industry since 2013.

After Japanese electronic appliances manufacturer Panasonic ended its PDP business at the end of 2013, Samsung reportedly anticipated similar restructuring by November 30 of this year.

South Korean firm LG also expressed the intention of suspending its PDP production in the near future, according to media reports. If so, experts said that Changhong would be the sole remaining PDP TV maker.

Zhang Bing, director of China Market Research at DisplaySearch, thought the closure of Changhong's PDP unit would benefit the company's future development.

The company can spin off the doomed segment and gear up for the development of its LCD operation, making it possible for Changhong to regain its leadership among Chinese TV set makers, Zhang told the Global Times Sunday.

Experts said that Changhong used to be the No.1 best-selling TV brand in the Chinese market in late 1990s.

But given its inefficient supply chain and weak innovative capabilities, Changhong lost its crown to rivals like Hisense, said Zhang.

In 2013, Skyworth led the Chinese TV market in sales with a 17 percent share, followed by Hisense and TCL, seizing 15.6 percent and 14.3 percent respectively, according to a report issued by Beijing-based All View Consulting Ltd earlier this year. Changhong ranked fourth with 13.9 percent while foreign players such as Samsung and Sony were not in the top five.