Market & performance review: since March 2022, the panel (Shenwan) index has fallen by 10.69%. In February 2022, the revenue of TCL Huaxing and Youda large-size LCD maintained year-on-year growth
Market review: since March 2022, the panel (Shenwan) index has fallen by 10.69%, outperforming Shanghai Composite Index, Shenzhen Component Index and Shanghai Shenzhen 300 index by 5.53pct1 16pct、3.76pct； Of which Boe Technology Group Co.Ltd(000725) , Tcl Technology Group Corporation(000100) , Tianma Microelectronics Co.Ltd(000050) , Caihong Display Devices Co.Ltd(600707) , Infovision Optoelectronics (Kunshan) Co.Ltd(688055) decreased by 8.51%, 11.33%, 9.75%, 3.60% and 12.01% respectively. In terms of valuation, as of April 6, the total market value of A-share panel industry was 448697 billion yuan, and the overall Pb (LF) was 1.28x, which was 6.0% since 2016.
Performance review: according to omdia data, the global large-size LCD panel’s monthly revenue in February was US $6.089 billion, down 6.80% month on month and 6.18% year-on-year. Among them, TCL Huaxing and Youda’s large-size LCD panel’s revenue maintained year-on-year growth, while BOE, qunchuang and LG’s large-size LCD panel’s monthly revenue decreased by 16.83%, 14.10% and 5.51% year-on-year respectively. Samsung gradually withdrew from the LCD industry. Major LCD manufacturers in China ( Tianma Microelectronics Co.Ltd(000050) , Tcl Technology Group Corporation(000100) , Boe Technology Group Co.Ltd(000725) , Caihong Display Devices Co.Ltd(600707) , Infovision Optoelectronics (Kunshan) Co.Ltd(688055) , Youda, qunchuang optoelectronics and Hanyu Caijing) 3q21 had a revenue of 161132 billion yuan, a month on month increase of 1.13% and a year-on-year increase of 47.88%; The net profit attributable to the parent company was 19.862 billion yuan, a month on month decrease of 19.86% and a year-on-year increase of 376.25%; The gross profit margin increased by 12.38% PCT year on year, decreased by 2.75 PCT to 27.16% month on month, and the net profit margin increased by 8.50 PCT year on year, decreased by 3.23 PCT to 12.33% month on month; The turnover days of accounts receivable increased by 3.59 days to 58.85 days month on month, significantly lower than 65.49 days in 3q20; Inventory turnover days increased by 5.07 days year-on-year and 6.19 days month on month to 50.62 days.
Price & cost: in March, the price of LCD TV panel hit the bottom, and the decline of it panel price expanded month on month; The price of 1q22lcd TV panel has been close to or lower than the average cost and cash cost
TV: according to omdia data, the price of 32, 43, 50, 55 and 65 inch LCDTV panel changed by 0.0%, 0.0%, – 1.2%, – 1.8% and – 1.7% month on month in March 2022 to $38, 68, 84, 107 and 176 / piece; Omdia predicts that the price of 32 and 43 inch LCDTV panels will remain at $38 and $68 / piece in April 2022, and the price of 50, 55 and 65 inch LCDTV panels will decline by 1.2%, 0.9% and 1.7% to $83, 106 and 173 / piece, further narrowing the decline. According to WitsView data, the average price of 1q22 LCD TV panel has been close to or lower than the average cost and cash cost, and the prices of 32 inch and 55 inch LCD TV panels are 4.03% and 5.06% lower than the cash cost respectively; The prices of 43 and 65 inch LCD TV panels are 0.46% and 3.42% higher than the cash cost respectively.
Notebook: according to omdia data, in March 2022, the prices of 10.1-inch (tablet), 14 inch (notebook) and 23.8-inch (display) lcdit panels decreased by 3.5%, 5.6% and 4.8% month on month to $27.2, 38.7 and 73.2/piece; Omdia expects the prices of 10.1, 14 and 23.8 inch lcdit panels to drop by 3.7%, 5.9% and 5.1% month on month to 26.2, 36.4 and 69.5 dollars / piece in April 2022. According to WitsView data, the average price of 1q2214 inch notebook panel is 131.07% higher than the cash cost; The average price of 15.6-inch notebook panel is 128.44% higher than the cash cost.
Supply & Demand: in February 2022, the shipping area of large-size LCD panels in the world increased by 5.23% year-on-year. The demand for TV panels is stable, and the demand for display and laptop panels is still strong
In terms of supply, we expect that the global large-size LCD production area in 2022 will increase by 10.13% compared with that in 2021, of which the production capacity of 1q22, 2q22, 3q22 and 4q22 will increase by 1.15%, 1.82%, 1.40% and 1.41% respectively month on month; It is estimated that the global large-size LCD production area in 2023 will increase by 5.06% compared with that in 2022, of which the production capacity of 1q23, 2q23, 3q23 and 4q23 will increase by 0.98%, 0.31%, 2.10% and 1.97% respectively month on month.
In terms of demand, the trend of large-size, high-end and diversification of terminal demand continues. In February 2022, the global large-size LCD panel shipment area increased by 5.23% year-on-year, including the global LCD TV panel shipment area increased by 2.73%, the global LCD display panel shipment area increased by 21.99%, the global notebook computer panel shipment area increased by 18.77% year-on-year, and the global tablet computer panel shipment area decreased by 27.95% year-on-year.
We believe that with the end of LCD production expansion, the industry will shift from the supply side (capacity change) to the demand side (large-scale, high-end and diversified terminal demand), the industry cycle attribute will be weakened, the growth attribute will appear, and the profit stability of LCD panel enterprises is expected to be strengthened.
Investment suggestion: continue to recommend Boe Technology Group Co.Ltd(000725) , Tcl Technology Group Corporation(000100) for LCD industry chain
Chinese mainland China’s LCD panel industry has been global leading from scratch, from small to large to large to strong. We are optimistic about the Boe Technology Group Co.Ltd(000725) , Tcl Technology Group Corporation(000100) and other Chinese mainland panel leaders’ grasp of the era bonus of China’s consumer upgrading localization. With the scale effect, cost advantage brought by the high generation line and the industry’s voice and pricing power brought by the leading market share, we can steadily enhance our profitability.
Risk tips
The risk that the demand for semiconductor display devices is less than expected; Risk of price fluctuation of semiconductor display devices; Supply risks of production equipment and raw materials.
