BOE TCL'S Performance In The First Quarter Increased Significantly, And The "Super Cycle" Of Panel Industry Continued

Recently, the panel industry leader ushered in a historic performance growth.

On April 12, BOE's annual report shows that in 2020, the company's revenue will reach 135.553 billion yuan, with a year-on-year growth of 16.80%; the net profit attributable to the parent company will increase by 162.46% to 5.036 billion yuan; the net profit in the first quarter of 2021 is expected to increase by 782% - 818% year-on-year to 5 billion-5.2 billion yuan, equivalent to the net profit of last year, while the month on month increase is 95% - 103%, far exceeding market expectations.

On the same day, TCL technology released a performance forecast for the first quarter of 2021, with a net profit of 3.031-3.42 billion yuan, a year-on-year increase of 10.3-11.6 times; and the net profit attributable to its parent company was 2.32-2.55 billion yuan, up 470% - 520% year-on-year.

Prior to this, the first quarter performance forecast released by Shenzhen Tianma also showed a rise in the same direction. During the reporting period, the net profit attributable to shareholders of listed companies was RMB 500 million-550 million, with a year-on-year increase of 65.93% - 82.52%.

There are two main reasons for the substantial increase in performance. One is the sharp rise in panel prices due to tight supply and demand. Since the second half of last year, LCD panel has started the longest price rise cycle in the past 10 years, and the panel price has been rising for 10 months. There are many comprehensive factors for the rise of panel price. After the cold winter of the first two years, the panel enterprises are ushering in a bumper harvest year.

On the other hand, thanks to counter cyclical mergers and acquisitions in the trough period, leading enterprises' production capacity expanded rapidly, and Matthew effect became more prominent. As a result, BOE and TCL technology, the two domestic panel giants, also saw the largest growth.

Benefited from the counter cyclical mergers and acquisitions in the trough period, the leading enterprises' production capacity expanded rapidly. Figure IC Photo

Strong business cycle

On April 14, at the online presentation meeting of BOE's 2020 annual performance, Chen Yanshun, chairman of the company, said that the current round of panel price rise has internal causes and external driving effects, and will be normalized in the future. In the process of price rise, each link is obviously close to the leading enterprises, and the stability of the industry development will be significantly enhanced. In the next three years, there will be no obvious capacity redundancy in the semiconductor display industry.

"The price hike of large-size panels will start in June 2020, and we predict that it will last for 10 months and rise to the first quarter of this year, which is the longest price rise cycle in the past decade." Previously, Li Yaqin, general manager of group intelligence consulting, analyzed to the reporter of 21st century economic report that "the growth rate has also reached the highest level in a decade. The size growth of TV panel and display panel is basically more than 50%, and the growth rate of some TV panel specifications is more than 80% and 90%

At present, after rising for 10 months, due to the shortage of upstream components and other factors, the supply-demand relationship is still tense, and the price rising trend continues to intensify.

BOE also said that one of the main reasons for the sharp increase in performance is that in 2021, the semiconductor display industry will continue to maintain high momentum, the demand side, remote office, online service, home entertainment and other application markets will further expand, and the demand for it and TV products will continue to grow; on the supply side, due to the short-term shortage of raw materials such as glass substrate and driving IC, the effective supply and output of the industry will be higher than that of the other industries The decline, semiconductor display industry supply and demand tension further intensified.

Cinda Securities pointed out that in terms of shipment volume, BOE's display device sales in 2020 will increase by 18% year-on-year, with mobile phones, tablets, notebooks, monitors and TVs The market share of the five mainstream products such as the world's largest; the market share of innovative application products has increased rapidly, and the market share of wearable, ESL, electronic signs, splicing, and IOT financial applications has ranked first in the world; the volume of flexible OLED has accelerated, and the annual sales volume has more than doubled.

In the first quarter of 2021, TV panels continue to maintain a strong rise against the background of upstream shortage and downstream stock preparation. According to WitsView data, the prices of TV panels of various sizes have increased by 12% - 18% month on month. At the same time, the growth of it panel was significantly expanded by the upstream material shortage and downstream new product demand. According to WitsView data, in the first quarter, all sizes of laptop panel rose by 10.4% - 16.9% month on month, and display panel rose by 6.5% - 15.3% month on month. Looking forward to the whole year, affected by the shortage of key materials, the overall panel shipment of the industry will be under pressure, while the demand for downstream terminals of it or TV will continue to be strong. In this case, panel prices may remain strong throughout the year.

Giant horse race

In addition to the panel price increase factors, BOE also mentioned that the expansion of industrial chain is also an important reason for the performance increase. BOE has built a business group system extending to the semiconductor display industry chain and the value chain of various scenarios of the Internet of things, and actively participated in the reorganization of the display industry in the second half of the year, successfully completed the product line merger and acquisition, and further improved the technology and product layout.

In December 2020, BOE completed the M & A of Chengdu 8.6 generation and Nanjing 8.5 generation LCD production lines of CLP panda, realizing further expansion of production capacity. At the same time, its g10.5 generation B17 production line capacity continued to release, which also brought a certain capacity increase in the first quarter. Cinda securities expects BOE's capacity to increase to about 16.4 million square meters in the first quarter, up 26.8% month on month.

Recently, BOE is still expanding its LCD production capacity. With the increasing demand for medium and large size panels, the monthly production capacity of Wuhan BOE 10.5 generation LCD panel line will be expanded from 155000 to 180000, and the full production will be achieved in 2022.

TCL technology has just officially announced the establishment of it panel production line (T9 project), which will spend 35 billion yuan to start construction in Guangzhou. In April this year, TCL technology acquired 60% equity of Suzhou Samsung electronic liquid crystal display company and 100% equity of Suzhou Samsung display company. Since the second quarter of 2021, TCL technology has contributed revenue and benefits to TCL technology. After the acquisition of Samsung in Suzhou, TCL technology will have 3 full capacity 8.5 generation lines, 1 full capacity 11 generation lines and 1 11 generation lines that are in the process of mass production climbing. In July last year, TCL technology delisted Zhonghuan electronics and formally entered the semiconductor and semiconductor photovoltaic field. Zhonghuan Electronics was included in the consolidated statements in Q4 last year, which has become one of the driving factors for the year-on-year growth of TCL technology performance.

In addition, Huike and Youda have also launched production expansion plans. It is reported that Ke Furen, general manager of Youda, said on April 14 that the epidemic situation has pushed up the demand for high-level laptop panels. The board of directors has approved the capacity expansion plan for the sixth generation LTPS of Kunshan plant, which will increase the production capacity to 45000 pieces in two stages. In the first phase, the monthly production capacity of Kunshan factory will be increased from 28000 to 36000 pieces in the third quarter of next year to meet customers' demand for high-level NB panels and micro led mass production.

It is worth noting that in addition to LCD production capacity, BOE and TCL technology are also laying out in the field of OLED with diversified and matrix layout in the panel product structure.

For example, TCL technology has gradually expanded from TV panel to mobile phone, commercial display and it panel. In the future, the product structure will be gradually optimized. TV products will move towards large-scale and high-end. At the same time, the proportion of IT products will be greatly increased. AMOLED products will increase with the increase of production capacity. The construction of large-scale OLED production line is also under discussion.

Chen Yanshun said BOE has invested in flexible OLED production lines in recent years and has made mass production and shipment. "I believe that with the gradual maturity of flexible OLED technology, products and technology, and the steady expansion of market application scope, flexible OLED will certainly usher in better development space in the next three years." He said that at present, manufacturers of flexible OLEDs in mainland China are under some pressure due to external competition, mature internal products and processes. However, BOE's flexible OLEDs can still maintain a growth rate of more than double this year, and is confident that through two years of efforts, flexible OLEDs will become a new profit growth point of the group.

In the LCD industry, with the continuous withdrawal of Korean manufacturers, the production capacity continues to concentrate in mainland China. In the leading OLED field in South Korea, changes are also brewing. In the future, the competition at all levels of the display industry will be more intense.

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