BenQ-AUO Group (2352. TW): Form Joint Task Force for a Voyage into New Oceans!

BenQ-AUO Group (2352.TW): Form Joint Task Force for a Voyage into New Oceans!

Preface

In 2014, following CiHong Chen’s appointment as the GM of Qisda, he set out to optimize the existing businesses of the BenQ-AUO Group, aiming to venture into the medical and business solutions sectors. That’s how the plan of “Joint Task Force” was born. Its goal is to facilitate a comprehensive value transformation within the group. By recruiting members from within the group, it sought to control key components, deepen technological expertise, integrate systems, and achieve vertical integration across the upstream, midstream, and downstream sectors, offering complete solutions.

As part of this initiative, BenQ and AUO divided the group’s business units into five major areas: Information Technology (IT), Medical, Business Solutions (BSG), Networking and Communication(NCG), and Materials.

Three years later, in 2017, CiHong Chen assumed the Chairman and officially embarked on mergers and acquisitions. His approach to M&A often involved collaboration with target companies, participating in private placements, or publicly acquiring shares in the market. By 2022, the consolidated revenue of the parent company, Qisda, had reached NT$239.8 billion, a growth of 75% compared to 2017. Additionally, the company continued cultivating its presence in the five major areas, with each sector achieving significant revenue.

However, with the subsidiary companies operating under the Joint Task Force led by BenQ and AUO Group, has there been growth in their operations? Has the group been able to leverage synergies effectively?

According to Qisda Group’s corporate briefing information, we have categorized the group members based on their domains (as shown in the chart below). We will provide a brief overview and acquisition history for each of the 12 companies that joined the BenQ and AUO Group after 2017. Finally, we have compiled the operational performance of these companies, aiming to assess whether the change of ownership has positively impacted their subsequent operations.

BenQ and AU Joint Task Force Value Transformation.
BenQ and AU Joint Task Force Value Transformation. Source: Qisda Corporate Briefing

Note: This article only encompasses the group members incorporated after CiHong Chen assumed Chairman.

Members in the IT Area

BenQ-AUO Group_ Members in the IT Area.
BenQ-AUO Group_ Members in the IT Area. Source: TEJ Group Solution.

Incorporating DataImage (3168) 

DataImage Technology was founded in November 1997 by Chairman DaoRong Wei and General Manager SiPing Yu. It specializes in designing and manufacturing professional LCD modules, primarily producing displays for navigation and maritime applications. The company has extensive experience designing and manufacturing high-brightness, high-contrast display modules.

In 2018, as part of the effort to enhance the technological capabilities of existing displays, Qisda set its sights on DataImage. Following mutual agreement, the boards of directors of both companies approved a collaboration in November 2018. Qisda acquired approximately 33% of DataImage through a private placement. By April 2019, the BenQ and AUO Group held a 38% share in DataImage.

In December 2018, following a board and supervisor election at DataImage, the BenQ and AUO Group secured five out of the six director seats. TEJ considers December 2018 the point when DataImage became part of the BenQ and AUO Group.

Incorporatin Topview (6556)

Topview Technology was established in October 2000 and is primarily engaged in the development and manufacturing of video surveillance systems. The company specializes in the professional design and manufacturing of networking security applications and servers.

In an effort to strengthen its product line for wireless network surveillance IP Cameras, Qisda showed interest in Topview. In August 2019, both boards of directors approved an equity collaboration, with Qisda participating in Topview’s private placement and acquiring approximately 36% ownership. By April 2020, the BenQ and AUO Group held around 40% of Topview’s shares.

In September 2019, following a board and supervisor election at Topview, the BenQ and AUO Group secured five out of the six director seats. TEJ considers September 2019 the point when Topview officially became part of the BenQ and AUO Group.

Incorporating Simula (3511)

Simula Technology, founded by SuGuan You in December 2003, specializes in the design, manufacturing, and sales of connectors. Recognizing the potential long-term markets in automotive electronics and biotechnology, SuGuan You initiated a transformation towards smart connectivity in automotive electronics. Simula successfully secured connector orders for remote healthcare from a Danish medical factory.

Aligned with Qisda’s goals of venturing into healthcare and business solutions, in April 2020, both boards of directors approved an equity collaboration. Qisda participated in Simula’s private placement, acquiring approximately 38% of Simula’s shares. Additionally, Qisda further purchased around 13% of Simula’s shares on the open market.

After Qisda acquired private equity in April 2020, SuGuan You promptly resigned as Chairman. In June 2020, following a board and supervisor election at Simula, the BenQ and AUO Group held approximately 51% of Simula’s shares and secured all four director seats. TEJ considers June 2020 the point when Simula officially became part of the BenQ and AUO Group.

Members in the MEDICAL Area

BenQ-AUO Group_ Members in the MEDICAL Area.
BenQ-AUO Group_ Members in the MEDICAL Area. Source: TEJ Group Solution.

Incorporating DIVA (4153)

DIVA Technology Development, founded by GuoSen Chen in April 1995, specializes in producing medical, industrial, and professional color display monitors.

In an effort to optimize its existing display business, in 2021, the BenQ and AUO Group, led by its subsidiary DataImage, conducted a private placement of common stock in DIVA, held by Ennoconn’s subsidiary Hua Cheng Investment. Additionally, they acquired a portion of the shares from other major shareholders. As of October 2021, the BenQ and AUO Group held a 39% share in DIVA.

Following a board and supervisor election at DIVA in October 2021, the BenQ and AUO Group secured five of the six director seats. TEJ considers October 2021 the point when DIVA officially becomes part of the BenQ and AUO Group.

Members in the BSG Area

BenQ-AUO Group_ Members in the BSG Area.
BenQ-AUO Group_ Members in the BSG Area. Source: TEJ Group Solution.

Incorporating DFI (2397)

DFI, founded by YanQi Lu in July 1981, is a leading global provider of industrial computers and embedded solutions.

Starting in 2016, Qisda gradually acquired an 8.7% stake in DFI to enhance the value and application of business solutions. In September 2017, Qisda announced a public acquisition of DFI’s shares. DFI’s Chairman, YanQi Lu, did not oppose the acquisition and expressed that the close integration could expand operational dynamics between the two companies. This move was perceived as relinquishing operational control, with market speculation suggesting that the Lu family released control due to succession issues.

In November 2017, YanQi Lu resigned as Chairman and General Manager. By April 2018, the BenQ and AUO Group held a 55% share and secured three director seats. TEJ considers November 2017, when CiHong Chen assumed the role of Chairman at DFI when DFI officially became part of the BenQ and AUO Group.

Incorporating AEWIN (3564)

Established in October 2000, AEWIN primarily provides professional design and manufacturing services for network security applications and servers.

Recognizing complementary aspects in products and distribution channels between AEWIN and its subsidiary DFI, Qisda aimed to enhance product value and expand the portfolio and scale of products. In February 2019, an agreement was reached, and both boards of directors approved a collaboration. Through a private placement, DFI acquired approximately 51% of AEWIN’s shares. By April 2019, the BenQ and AUO Group held a share of around 52%.

Following a board and supervisor election at AEWIN in April 2019, the BenQ and AUO Group secured five of the six director seats. TEJ considers April 2019 the point when AEWIN officially became part of the BenQ and AUO Group.

Incorporating MetaAge (6112)

MetaAge, formerly known as Sysage, was founded in April 1998 by ZuoSui Wu, leading a group of network engineers. The company primarily focuses on enterprise network infrastructure, security, management, and backup systems. It provides comprehensive planning and system integration services, acting as the agent of over 40 renowned ICT brands worldwide.

Recognizing Sysage’s global representation of more than 40 well-known ICT brands, Qisda initiated a strategic move by leveraging its hardware advantages. In September 2019, both boards of directors approved an equity collaboration, with Qisda participating in Sysage’s private placement and acquiring approximately 35% of Sysage’s shares. By March 2020, the BenQ and AUO Group held around 38% of Sysage’s shares.

Following a board and supervisor election at Sysage in September 2019, the BenQ and AUO Group secured five of the six director seats. TEJ considers September 2019 the point when Sysage officially became part of the BenQ and AUO Group. In June 2022, Sysage was rebranded as MetaAge.

Incorporating Acepillar (8374)

Acepillar was established in March 1984, initially focusing on the agency and distribution of transmission components. Later, it transformed into a supplier and technical service provider for automation products such as drives, transmissions, and controls.

Recognizing Acepillar’s extensive portfolio of over 2500 automation components and a customer base of over 7000 companies in the automation machinery manufacturing industry across the Taiwan Strait, Qisda expressed interest. In September 2019, its subsidiary, DFI Information, participated in a private placement of Acepillar, acquiring approximately 21% of Acepillar’s shares. Qisda continued to make additional purchases in the market, reaching a shareholding of around 30% by April 2020.

Following a board and supervisor election at Acepillar in November 2019, the BenQ and AUO Group secured five of the six director seats. TEJ considers November 2019 the point when Acepillar officially became part of the BenQ and AUO Group.

Members in the NCG Area

BenQ-AUO Group_ Members in the NCG Area.
BenQ-AUO Group_ Members in the NCG Area. Source: TEJ Group Solution.

Incorporating Unictron (6792)

Unictron, founded in April 1988, primarily focuses on producing antennas and antenna modules for the wireless communication industry, as well as piezoelectric ceramics for daily and industrial products. The company is a critical supplier in the global supply chain for antennas and chips used in wireless communication, mainly serving Japanese automotive manufacturers.

To expand its product portfolio and scale, Qisda’s subsidiary, Darfon (8163), acquired a 60% stake in Unictron in the market in 2018.

Unictron went public in August 2020, and by July 2020, the BenQ and AUO Group held approximately 56% of its shares, securing five out of the 9 director seats. Considering the commencement of consolidation within Darfon from December 2018, TEJ considers December 2018 the point when Unictron officially became part of the BenQ and AUO Group.

Incorporating Alpha Network (3380)

Alpha Network was established in September 2003 as a spin-off from D-Link’s ODM/OEM business division. Its main business focuses on network switches, broadband, and wireless networks.

In 2018, Alpha Network entered into a strategic alliance with Qisda. Qisda participated in a private placement, acquiring an 18% share in Alpha Network. In 2020, amid a corporate governance battle at D-Link and with the goal of expanding into the 5G and networking sectors, Qisda publicly acquired Alpha Network’s stocks. Due to fair competition concerns, the completion of the transaction was delayed. Subsequently, agreements were reached with former Chairman ChungWang Lee and D-Link, leading to the acquisition of their shares in September and December, respectively. By the end of December 2020, the BenQ and AUO Group held a 60% share in Alpha Network.

In April 2020, ChungWang Lee was dismissed, and WenFang Huang, the representative of Qisda, assumed the position of chairman in June 2020. The public acquisition was completed in June 2020. After acquiring the shares from ChungWang Lee and D-Link in December 2020, the BenQ and AUO Group held a 60% share, and by January 2021, they had obtained four director seats. TEJ considers June 2020, the completion of the acquisition, the point when Alpha Network officially became part of the BenQ and AUO Group.

Incorporating Hitron (2419)

Hitron, founded by WeiYen Cheng in March 1986, started as an agent for electronic instruments and was later transformed into a networking equipment manufacturer specializing in the R&D of cable modems.

In December 2019, Alpha Network participated in a private placement of Hitron, acquiring a 30% share. Subsequently, Alpha Network acquired additional shares of Hitron through a public tender offer, ultimately securing a 60% ownership stake.

In June 2020, the parent company, Alpha Network, was publicly acquired by Qisda. By January 2021, Qisda appointed representatives to all six director seats of Alpha Network. TEJ considers June 2020, the completion of the acquisition of Alpha Network’s shares, the point when Hitron officially became part of the BenQ and AUO Group.

Incorporating IDTech (6486)

IDTech, founded by Hitron in March 1983, initially focused on digital media business. In 2012, Hitron transferred its system integration business to IDTech, making it the planning factory for Hitron’s system integration.

In December 2019, due to the acquisition of the parent company Hitron by Alpha Network, IDTech moved to the D-Link Group under the umbrella of its parent company. In June 2020, Alpha Network was publicly acquired by Qisda. By April 2021, Qisda appointed representatives to all four director seats of Alpha Network, including 3 seats for IDTech. TEJ considers June 2020, the completion of the acquisition of Alpha Network’s shares, the point when IDTech officially became part of the BenQ and AUO Group.

Read More:

Joint Task Force: Reviewing Operational Performance

Newly-Incorporated Companies Operational Performance 

From the case of the BenQ and AUO Group, it can be observed that since the inception of the Joint Task Force plan in 2014, the BenQ and AUO Group have been following the vision of the Joint Task Force. They have optimized the profitability of existing business units and expanded operational projects into new blue oceans: Medical and Business solutions. Looking at the operational overview of the acquired companies mentioned in the above article, in the year following the acquisition, except for some companies in the networking domain experiencing a decline in revenue and EPS, most companies in other sectors showed growth, as indicated in the table below:

Newly-Incorporated Members’ within BenQ & AUO Group Performance.
Newly-Incorporated Members’ within BenQ & AUO Group Performance. Source: TEJ Financial Dataset 

Core Company: Qisda Operational Performance

On the other hand, examining the core company of the BenQ and AUO Group, Qisda, before introducing the Joint Task Force plan, Qisda’s revenue was 119.2 billion, with an EPS of only 0.36 (as shown in the figure below). To escape the intense competition in the Red Ocean and shift towards high-value-added businesses, the Joint Task Force plan was proposed. Since 2017, the execution of M&As under the leadership of CiHong Chen, the revenue growth has been rapid, reaching 239.8 billion by 2022, a growth of 75% compared to 2017. On the other hand, the EPS started significant growth in 2021, running 4.2 in 2022, a 56% increase from 2017. Compared to 0.36 a decade ago, the value upgrade and transformation plan of the BenQ and AUO Group can be considered to have achieved quite favorable results.

Qisda’s Revenue and EPS in the Last Decade.
Qisda’s Revenue and EPS in the Last Decade. Source: TEJ Financial Dataset

In summary, based on the operational outcomes of the BenQ and AUO Group, it is evident that when the core company within the group establishes clear development goals and subsequently follows a plan to selectively acquire companies, both acquiring and target companies, after the transition, are expected to bring positive benefits to their operations. This demonstrates that, in addition to having foresight, the ability to implement goals consistently is a crucial factor for sustained operational growth within the enterprise.


Want to know more?

TEJ, with nearly 20 years of experience in corporate governance recognition, provides a consistent and verifiable basis for identifying the ultimate controllers of groups. By incorporating the TCRI (Taiwan Corporate Credit Rating Index), which has nearly 30 years of company credit rating data, TEJ introduces a quantified model to unveil the credit risk levels of these groups. 

Through TEJ GCRI Index, you can access information about the affiliation of each company to its respective group, inclusion and withdrawal dates, and reasons for such actions. Additionally, comprehensive annual financial data and group credit risk levels (GCRI) are available for each group. For more information, please refer to TEJ Credit Risk Solution!

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