Changhong Electric Co., the top electronic appliances manufacturer in China still has its stock trading on hold. This halt has caused some experts to believe that the manufacturer will close down its plasma display panel company (PDP), which has been losing money. Trading on Shanghai bourse was suspended on September 15th. Over the weekend, the Sichuan-based manufacturer stated that their suspension would continue until a decision is made on their PDP unit.
Due to a constant decline in demand globally, analysts have no doubt that Changhong’s PDP business will come to an end. The biggest change has come from consumers converting to LCD TVs. LCD TVs are preferred by domestic consumers, because they cost less and they save more energy when compared to PDP TVs. Other manufacturers of PDP TVs, such as Panasonic are not willing to share any production technology (like the manufacturer of LCD TVs). This has made it difficult for PDP TV manufacturers to cut their cost and expand their scale.
It has been estimated that the shipments for PDP TVs will have a drastic drop down to 500,000. This is coming from a shipment of 10.3 million for 2013 and 5.2 million for 2014. The overall financial performance of Changhong has already experienced a major loss from the PDP industry’s low demand. During the first half of 2014, a net loss totaling $29.5 million (181 million yuan) was recorded by Changhong. This was a year-on-year fall of 179.73%.
More than 70% of their total net loss came from Sichuan COC Display Devices Co., one of their major subsidiaries. Sichuan is primarily focused on PDP production and had a loss in the first half, totaling 127 million yuan. The relevant components used for Changhong’s PDP production is lacking, which is another reason they will have to shut down their PDP business.