The global green and low-carbon transformation continues to deepen, driving increasing demand for smart IoT devices in digitalization and paperless applications. Among mainstream display technologies, e-paper stands out with its ultra-low power consumption, paper-like texture, eye-friendly experience, lightweight design, shatter resistance, and flexibility. Compared to LCD and OLED technologies that rely on backlighting or self-illumination with higher power consumption, e-paper better aligns with smart device development trends. Its near-zero power consumption for static display significantly extends device battery life and meets global "carbon neutrality" strategic demands for green energy-saving technologies, with penetration rates continuously rising in smart retail, smart office, and smart logistics scenarios.
Leveraging deep technical expertise in e-paper display, global production capacity layout, and stable supply chain collaboration advantages, Zhejiang Dongfang Kemao Electronic Co., Ltd. (hereinafter "Dongfang Kemao") has secured the leading position in the commercial IoT e-paper display solutions market. According to Frost & Sullivan, based on 2024 revenue, Dongfang Kemao holds a 26.3% share of the global commercial IoT e-paper display solutions market, ranking first.
Recently, to further improve global production capacity layout, accelerate industrialization of full-color and flexible e-paper technologies, and expand high-value application scenarios, Dongfang Kemao submitted its listing application to the Hong Kong Stock Exchange main board. The proposed fundraising will primarily serve three purposes: first, as a funding source for new production capacity and intelligent upgrading of production bases; second, investing in R&D to enrich the product matrix; third, supplementing working capital and general corporate purposes.
**Global Layout with Steady Performance**
The prospectus shows that Dongfang Kemao, as a global leader in smart IoT e-paper display solutions, has been deeply cultivating the e-paper display technology field for over a decade. Based on proprietary core technologies in e-paper display module design and manufacturing, the company focuses on developing and producing various smart IoT e-paper display modules and related display solutions.
The company's product matrix covers full sizes and full colors in various forms, widely applied in smart retail, smart office, smart education, smart logistics, smart transportation, e-readers, and emerging applications. It empowers smart living and working scenarios in the IoT era with digitalized new display solutions.
Dongfang Kemao's competitive advantages span four dimensions: technology, production capacity, supply chain, and global layout. Technologically, as of June 30, 2025, the company accumulated 94 patents, including 28 invention patents covering key areas like driver design and flexible packaging. The company has achieved multiple pioneering technological achievements, including the world's first 180-degree bendable OTFT-based flexible e-paper ink screen (with bending radius within 3mm), the world's first mass-produced curved e-paper touch display hardware wallet based on OTFT technology, and 13.3-inch full-color e-paper. Current R&D products include small and medium-sized full-color OTFT and large-size full-color products based on Spectra6 technology, expected to further open emerging market spaces like smart healthcare and wearable devices.
In production capacity and intelligent manufacturing, the prospectus shows that as of June 30, 2025, Dongfang Kemao has established 4 production and R&D bases globally, with 47 professional production lines and annual production capacity exceeding 130 million pieces of smart IoT e-paper display modules, ranking first globally in the industry. Abundant capacity ensures product supply, with smart IoT e-paper display module sales growing from 50.6 million pieces in 2022 to 67.1 million pieces in 2024, and reaching 52.7 million pieces in the first half of 2025.
On the supply chain front, Dongfang Kemao has established deep cooperation with core suppliers like E Ink Holdings. E Ink Holdings is the company's largest supplier of electronic ink films and PS protective films, and has also become a company shareholder through strategic investment via its wholly-owned subsidiary, forming a "technology + capital" binding relationship.
In market layout, Dongfang Kemao's customer service covers international markets in Europe, America, and Asia, with overseas sales revenue accounting for 63.3% in 2024. With the Vietnam production base officially starting operation in 2025, it becomes an important support point for expanding emerging markets in Southeast Asia and Latin America, enabling proximity to local customers to reduce logistics costs while diversifying single-market policy risks.
Under these competitive advantages, Dongfang Kemao maintains steady performance. From 2022 to 2024, the company's revenue was RMB 1.214 billion, RMB 1.024 billion, and RMB 1.152 billion respectively, with first-half 2025 revenue reaching RMB 796 million, approaching 70% of full-year 2024 revenue. Net profits during the same periods were RMB 92 million, RMB 51 million, and RMB 53 million respectively, with first-half 2025 net profit recovering to RMB 43 million, and net profit margin improving from 5% in 2023 to 5.4% in the first half of 2025.
**High Customer and Supplier Concentration**
However, behind the steady performance, financial data also reveals potential operational risks, with high customer and supplier concentration being one of the core pain points.
From 2022, 2023, 2024, and the first half of 2025, Dongfang Kemao's revenue from top five customers accounted for 93.3%, 88.7%, 82.6%, and 89.7% respectively. The largest customer's revenue proportion was 47.7%, 50.7%, 36.3%, and 36.1% respectively.
Notably, as of December 31, 2022, 2023, 2024, and June 30, 2025, trade receivables and bills receivable had book values of RMB 242 million, RMB 211 million, RMB 271 million, and RMB 349 million respectively. The company stated these represent the maximum credit risk exposure related to trade receivables and bills receivable as of the relevant dates.
Regarding supplier concentration, from 2022, 2023, 2024, and the first half of 2025, Dongfang Kemao's procurement from top five suppliers accounted for 89.6%, 90.2%, 78.4%, and 78.7% respectively. The largest supplier's procurement proportion has long remained above 46%, reaching 51.6% in the first half of 2025 (mainly E Ink Holdings). If core suppliers experience capacity shortages, price increases, or cooperation termination, the company would struggle to find alternative suppliers in the short term, potentially leading to production interruption or cost increases.
Additionally, the company's cash flow and asset-liability structure require attention. From 2022 to 2024, net cash from operating activities was RMB 61 million, RMB 178 million, and RMB 19 million respectively, turning to net outflow of RMB 123 million in the first half of 2025, mainly due to inventory reaching RMB 480 million in the first half of 2025, a 49.6% increase from the end of 2024. The company's asset-liability ratio rose from 38% in 2022 to 48.4% as of June 30, 2025, with increasing short-term borrowing proportion and current ratio declining from 2.3 in 2022 to 1.5 in the first half of 2025, indicating increased liquidity pressure.
**Industry Opportunities and Potential Risks Intertwined**
From industry opportunities perspective, the e-paper display track is in a golden growth period driven by both "policy + demand" dynamics. Globally, "carbon neutrality" strategies drive smart IoT devices toward low power consumption transformation, with e-paper's zero power consumption for static display perfectly matching this trend. In China, the "Electronic Information Manufacturing Industry 2023-2024 Stable Growth Action Plan" includes e-paper in paperless replacement priorities, while the "Domestic Demand Expansion Strategic Planning Outline (2022-2035)" supports new display technology innovation, with policy dividends continuously released.
In market demand, according to Frost & Sullivan forecasts, the global smart IoT e-paper related solutions market will grow from RMB 54.8 billion in 2024 to RMB 108.4 billion in 2029, with a compound annual growth rate of 14.6%. Smart retail (mainly electronic shelf labels) will achieve a 15.6% compound annual growth rate from 2024 to 2029, while new scenarios like smart education and smart logistics will see growth rates exceeding 15%. As the global leader, Dongfang Kemao is well-positioned to fully benefit from industry growth dividends with its technological and capacity advantages.
However, industry competition and technological iteration risks may compress the company's profit margins. According to Frost & Sullivan, the top five manufacturers in the global smart IoT e-paper display solutions industry held 81.2% market share in 2024, indicating high concentration. The company faces challenges from domestic competitors in cost and localized services, as well as overseas manufacturers' first-mover advantages in consumer markets. Meanwhile, if LCD, OLED, and other display technologies achieve breakthroughs in low power consumption, they may pose substitution pressure on e-paper.
**Comprehensive Assessment**
Overall, Dongfang Kemao, as a leading global enterprise in e-paper display, possesses core competitive advantages in technological leadership, sufficient production capacity, and stable supply chains, operating in a high-growth industry track with significant long-term investment value. However, risks including customer and supplier concentration, cash flow pressure, and intensifying industry competition cannot be ignored.
For investors, close attention should be paid to the progress of fundraising projects after listing, customer structure optimization, and overseas market expansion effectiveness. If these indicators continue to improve, it will further validate the company's growth potential. Conversely, if core customer losses, technological iteration lags, or geopolitical risks escalate, investment value reassessment will be necessary.