(Yicai Global) June 22 -- Shares in BOE Technology Group advanced nearly 2 percent today after the Chinese display panel giant said that it has received the go-ahead from the country’s regulators to raise CNY20 billion (USD3 billion) in a private placement of shares.

BOE's stock price [SHE:000725] finished up 1.93 percent at CNY6.34 (USD0.98) apiece, giving it a total market valuation of CNY217 billion (USD33.5 billion).

The China Securities Regulatory Commission has approved the new share sale, although confirmation has yet to be made in writing, the Beijing-based company said yesterday. BOE first announced in January that it intended to issue no more than 20 percent of the company’s total equity to under 35 strategic investors.

Most of the money will be used to hike production of BOE’s active-matrix organic light-emitting diode and OLED panels, which are used in a wide range of electronic devices from television sets and computer monitors to smartphones, it said.

The compound annual growth rate of the world’s display industry is expected to reach 7 percent from this year, BOE President Liu Xiaodong said at an industry event last week. Three quarters of this will be made up of innovative applications, such as vehicle displays, smart home appliances, wearable devices and electronic tags, he added.

BOE will use CNY6.5 billion (USD1 billion) of the proceeds to lift its stake in its Wuhan AMOLED plant to 47.14 percent from 23 percent and become the largest shareholder, BOE said. The factory in central Hubei province has been in operation for over a year and can produce 120,000 pieces a month.

A further CNY6 billion will go towards a new AMOLED production line in Chongqing, southwestern Sichuan province with a designed monthly output of 48,000 units. The first phase is expected to be ready by November and the whole project, costing CNY46.5 billion, should start production next December.

Another CNY1 billion will be used to build a OLED micro-display plant in southwestern Yunnan province for augmented and virtual reality display screens. Costing CNY3 billion (USD463 million), it is expected to start operation in January 2024 and should have an annual capacity of 5.23 million units.

BOE will use CNY3 billion to repay loans to improve the firm’s gearing ratio, or the ratio of assets-to-debt, which stood at 57.72 percent as of last September, it said.

It will also use CNY500 million to build a digital hospital and a further CNY3 billion will go towards replenishing working capital, it added.

Editor: Kim Taylor