The recent financial performance of a prominent player in the consumer electronics sector has raised eyebrows, particularly in light of a troubling trend that seems to be continuingIn the first three quarters of 2024, a notable company reported a net profit of 931 million yuan, which marks a significant 12.33% decline compared to the previous yearThis decline is particularly striking as it represents the seventh consecutive quarter of negative profit growth for the company since 2023 beganDespite the broader industry context, including substantial revenue growth reported by competitors like Longyung Precision and Lens Technology, this company’s performance feels decidedly uninspiring.

To fully comprehend the gravity of the situation, one must explore the revenue trajectory of the company in questionSince its listing in 2017, its revenue saw a consistent rise, peaking in 2021 at an all-time highHowever, since then, the company has witnessed a steady decline in revenue, culminating in 2023 with a figure of 20.17 billion yuanThis represents a compounded annual growth rate of -2.15% from 2020 to 2023. Such statistics are alarming and prompt investigation into the underlying factors contributing to this downturn.

One of the primary issues affecting revenue stems from the company's core business sectors: interactive smart panels and LCD TV panel cardsIn the first half of 2024, these two segments accounted for approximately 34.1% and 32.9% of total revenue, respectivelyHowever, the recent downturn can largely be attributed to a shrinking demand in the television market, as global shipments for televisions fell to 196 million units in 2023—the lowest figure seen in almost a decade, representing a 3.5% year-on-year decreaseConsequently, the LCD TV panel card segment was severely impacted, generating 5.928 billion yuan in revenue, which is an alarming 18.4% decline from prior results.

The second significant factor contributing to the alarming profit figures can be attributed to the rising costs associated with production

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As a midstream supplier of panel cards, the company relies heavily on upstream materials such as semiconductor chips and printed circuit boards (PCBs). Recent years have seen an unfortunate surge in the prices of both chips and copper, dramatically increasing the company’s operating costs by 31.63% year-on-year in the first half of 2024. This spike is a direct factor in the declining profit margins, which have alarmingly decreased from a net profit margin of 10.1% in 2022 to just 5.73% in the first three quarters of 2024.

Furthermore, the gross profit margin has also faced a decline, dropping from 27.67% to 21.98%, resulting in the company being outperformed by competitors such as Ugreen Technology, Anker Innovations, and EdifierThis decrease can largely be traced back to the shrinking revenue share of higher-margin products, particularly in the interactive smart panel segment, which saw its revenue share plummet from 42.4% in 2022 to 34.1% in the first half of 2024, subsequently dragging the overall gross profit margin lower.

While the company initially made its name in the television panel card space, it is worth noting that the profit margins in that sector hover around a meager 15%. In contrast, the interactive panel business, which is currently driving overall revenues, boasts margins closer to 30%. Consequently, any optimism surrounding the company's future performance hinges on the potential for expansion within the more lucrative interactive smart panel market.

The interactive smart panel is essentially a larger version of a tablet computer, and in this sector, the company has targeted both educational and corporate markets under the brands Seewo and MAXHUBSeewo, for instance, primarily serves small to medium-sized educational institutions, capturing a dominant 50.2% share of the domestic market as of 2023, solidifying its position as the industry leaderDespite this, the growth outlook for Seewo within the education sector appears less than promising

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By the first quarter of 2024, the installation rate of smart blackboards in China's educational institutions reached 99.8%, leaving very little room for business expansion.

In recent years, the interactive smart panel sales growth in China's educational sector has been less than 3%, signaling a troubling trend in overall market demandAnalysts forecast that the market will largely stagnate between 2025 and 2028, making it increasingly challenging for Seewo to capitalize on its already impressive market penetration.

In response to these challenges, the company has introduced a "trade-in" program for its educational smart screens, hoping to stimulate growth in its interactive panel divisionYet, whether this strategy can generate the anticipated success remains uncertainThere are two main factors placing limits on this initiativeFirst, interactive educational panels operate on a cyclical basisThe last major replacement cycle for educational screen devices in China occurred around 2020, with most classrooms transitioning from blackboards to greener alternatives and from projectors to electronic screensHowever, given that the replacement cycle for interactive panels typically spans upwards of six years, substantial contributions from this segment appear unlikely until at least 2026.

Second, the willingness and capacity of training institutions to replace their devices currently display a level of skepticismAs these facilities have faced heightened operational pressures in recent years, their financial constraints make substantial investments in new equipment increasingly difficult, thus diminishing the effectiveness of the trade-in approach.

Another avenue for growth lies with MAXHUBThis brand focuses primarily on providing conference panels and wireless projection productsHousehold names such as Tencent, Midea, and GAC Group utilize MAXHUB's technologyIn terms of market share, MAXHUB commanded an impressive 29.5% of the domestic conference panel market in 2023, marking its seventh consecutive year in the top position

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However, if MAXHUB remains predominantly a hardware supplier and largely refrains from engaging in software applications, it risks becoming less sticky with clients, which could ultimately hinder sustainable growth.

In comparison, Seewo possesses greater imaginative potential in the software applications realmWith its robust position in the educational panel market, Seewo has the opportunity to roll out valuable services beyond the hyper-competitive office software market, which is currently dominated by major players like Kingsoft and MicrosoftOne of the most notable value-added services introduced by the company is the Seewo Teaching Model, launched in October 2023. This advanced model reportedly utilizes AI technology to automate the creation of lesson plans, grading, and student performance analysis, and has reached a commercial stageHowever, practical questions remain regarding the real-world effectiveness of these functions.

From an educational perspective, if the daily core tasks of lesson preparation and grading rely too heavily on large models, there may be a disconnection from students' weaknessesSimilarly, from a learning standpoint, the abundance of resources without tailored guidance could limit effective results.

The ultimate question for the continued success of the company's panel business is where its growth potential truly liesThe answer may well reside in international expansionAs of 2022, the penetration of interactive educational panels in overseas markets remained under 10%, far below the domestic figure, presenting an enormous opportunity for prospective growthData from 2023 showed that the export volume for smart panels reached approximately 1.186 million units, and projections indicate sustained growth over the coming years, with a compound annual growth rate anticipated at 7% from 2023 to 2028. This expansive market opens doors for significant revenue opportunities.

The company’s recent forays into overseas markets showed initial signs of a downturn, likely due to environmental factors affecting demand

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