\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 25 Boe Technology Group Co.Ltd(000725) )
Event: on March 31, BOE released its 2021 annual report. The company achieved a revenue of 219.31 billion yuan, an increase of 61.79% year-on-year; The net profit attributable to the parent company was 25.83 billion yuan, a year-on-year increase of 413.0%; The net profit deducted from non parent company was 23.94 billion yuan, with a year-on-year increase of 796.4%. The company achieved a revenue of 56.03 billion yuan in 2021q4, an increase of 65.5% at the same time; The net profit was 5.816 billion yuan, an increase of 127%. The company’s dividend is 7.96 billion yuan, accounting for 30.8% of the net profit attributable to the parent company, with a dividend rate of about 5%.
The company has achieved the best performance in history in 21 years, and the leading advantage in the industry remains the same. In the past 21 years, the leading position of the company remained the same, and the market share of the company continued to rank first in the world in five application fields such as mobile phone, tablet computer, notebook computer, display and TV; The market share of more than 8-inch on-board display panel remains the first in the world. Benefiting from the high landscape of the panel display industry last year and the company’s leading advantages in the industry, the company achieved a revenue of 219.31 billion yuan in 21 years, an increase of 61.8% at the same time; The net profit attributable to the parent company was 25.83 billion yuan, an increase of 413.0% at the same time. In terms of business, the display device business achieved a revenue of 202.22 billion yuan in 21 years, an increase of 64.3% at the same time. This business is the main source of revenue of the company, accounting for 92.21% of the total revenue. The innovative business of the Internet of things achieved a revenue of 28.38 billion yuan, an increase of 48.0%, accounting for 14.2% of the total revenue. Sensors and solutions and smart medical workers achieved revenue of 216 million yuan and 1.847 billion yuan respectively, accounting for less than 1% of the total revenue. Mled is a new business of the company for 21 years, with a revenue of 451 million yuan in 21 years.
The company has continuously optimized its product structure and achieved a new high gross profit under the background of strong demand for panels. The gross profit margin of the company reached a new high of 28.87% in 21 years, an increase of 9.15pcts over 20 years. The panel industry maintained a high outlook in the first half of the year, with strong downstream demand. With the tight supply of some raw materials (driving IC) in the upstream, the industry showed a situation of short supply, and the corresponding product prices rose to varying degrees. Among them, the highest prices of it (17.3tn) and TV (32inch) in 21 years rebounded by 50% / 175% respectively compared with the bottom prices in 20 years. At the same time, the company continued to optimize the product structure: in 21 years, it panels with high degree of customization and value accounted for the highest proportion (more than 40%), TV and mobile phone panels accounted for relatively low proportion, the proportion of high-end products increased significantly, and the company’s gross profit margin increased from 28.1% in 21q1 to 34.0% in 21q2. In the second half of the year, due to the repeated epidemic in China, the consumer demand was damaged, and the terminal shipment was under pressure. Finally, the overall industry went down, and the gross profit margin of the company’s products decreased from 33.6% in Q3 to 19.6% in Q4; The net interest rate decreased from 19.3% in Q3 to 10.4% in Q4.
R & D investment exceeded 10 billion for the first time, and flexible OLED and mled continued to increase in volume. The company’s R & D expenditure in 21 years was 10.67 billion yuan, an increase of 39.7%. It has ranked among the top 10 international patent applications in the world for six consecutive years. BOE has continuously invested in technological innovation such as BD cell, mled backlight + display, folding OLED screen and ltop integrated development, laying the foundation for the expansion of the company’s business boundary. In 21 years, the company’s flexible OLED market share ranked first in China and second in the world, and the monthly product shipment exceeded ten million for the first time in December of 21 years. The large volume of flexible OLED in the future will improve the company’s profitability. Mled is an important part of the company’s “1 + 4 + n” development strategy and is expected to bring more profits to the company in the future.
The panel price tends to the bottom, the production capacity of Korean enterprises continues to withdraw, and the leading position of the panel is stable. Panel prices have fallen to varying degrees from the second half of the year to Q1 this year, and the decline has gradually narrowed since the beginning of the year. We expect that the panel price has approached the bottom and the price is expected to stabilize. Supply side: according to DSCC data, Samsung display (SDC) will completely terminate LCD panel production in June 2022. On the one hand, the price of LCD TV panel will be stable in the short term; On the other hand, the production capacity of Korean factories will be gradually withdrawn, and the market share of production capacity of mainland manufacturers led by BOE will be further increased (in 22 years, TV panels in mainland China accounted for 82%, LCD panels accounted for about 76%, and OLED panels accounted for about 46%). Demand side: according to the data of WitsView in March, the prices of 32 / 43 / 55 inch TV panels were US $40 / 71 / 108 respectively, with a month on month decrease of US $0 / 1 / 2. The decline of small and medium-sized TV panels narrowed, and there is limited room for continuous decline. According to DSCC data, OLED TV panel shipments will exceed 10 million in 22 years. Driven by VR / AR, vehicle and other multi terminal scenarios, panel demand is expected to hit the bottom and pick up. In the long run, with the increasing concentration of the industry, the periodicity will weaken, and BOE, the industry leader, is expected to take the lead in stepping out of the industry cycle.
Investment suggestion: we predict that the company will realize a revenue of 228.1/2572285.1 billion yuan from 2022 to 2024, with a net profit attributable to the parent company of 21.7/272/31.1 billion yuan and a corresponding current price PE of 7 / 6 / 5. Considering the leading position of the company in the field of panel display, the market share of the company is expected to further improve, and AMOLED and mled products are expected to gradually contribute to profits and maintain the “recommended” rating.
Risk tip: the competition in the panel industry intensifies, the price of upstream raw materials rises, and the downstream demand is less than expected.
