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天风证券:消费电子复苏趋势渐显 电子布有望迎向上拐点

Tianfeng Securities: The recovery trend of consumer electronics is gradually showing that electronic fabrics are expected to reach an upward inflection point

Zhitong Finance ·  11/24/2023 07:44

Currently, the price and profit of electronic yarn/electronic cloth are at the bottom of history. This round of consumer electronics recovery is compounded by the rigidity of the supply side, and the industry is expected to usher in a new upward cycle.

The Zhitong Finance App learned that Tianfeng Securities released a research report saying that the fundamentals of the electronic cloth industry currently have high expectations of improvement. Since this year, the demand side consumer electronics recovery trend has gradually become apparent. The electronic cloth and downstream industries in the industry chain are gradually being removed from storage. At the same time, the marginal impact on supply-side production capacity and supply has weakened. Currently, electronic yarn/electronic cloth prices and profits are at a relatively low level, so there is plenty of room for upward repair.

Tianfeng Securities's main views are as follows:

The demand side welcomes the recovery of consumer electronics, and the middle and high-end electronics bullies are remarkable

Electronic cloth industry chain terminals are mainly used in the fields of advanced communications, computers, consumer electronics, and automotive electronics. The economic downturn since '22 has lengthened this round of consumer electronics switching cycles. Benefiting from the iteration of smartphone technology, 23Q3 China's smartphone and tablet shipments entered an upward channel, +2.0%/+4.1%, respectively. Actual mobile phone retail volume also increased slightly year-on-year. From an inventory perspective, the Q3 inventory of leading electronic distribution and downstream CCL companies was clearly removed. At the end of Q3, the inventory of Honghe Technology/Shengyi Technology was 113.2/109.6 days, respectively, -22.2/-2.7 days compared to -22.2/-2.7 days, compared to -19.6/-0.5 days over the previous year. The current historical bottom of demand is relatively clear. In the future, with the increasing popularity of AI applications on smartphones and the implementation of AIPC demand on tablet devices, it may drive the release of a new wave of switching demand.

There is little new production capacity on the supply side, and the pattern is relatively stable

As of October 2023, China has a total production capacity of 991,000 tons of electronic yarn, no more than 10 domestic production enterprises, CR5 reaching 76.8%, and the supply pattern is relatively concentrated. The industry has reignited 600,000 tons since '17. Of these, '19 and '22 are two years of high supply pressure on the industry. Supply shocks have narrowed marginally since '23. As of October this year, only one electronic yarn production line in the industry has resumed production. Furthermore, there are no new or ongoing production lines. With the gradual digestion of newly ignited production capacity in '22, the bank anticipates that future supply shocks may weaken marginally. By market, low-end electronic cloth technology barriers are low, pricing is market-based, and the industry cycle is more volatile. α is cost; China Jushi is the industry leader, and its electronic cloth production capacity is nearly 1 billion meters; high-end cloth technology barriers are high, and there are few industry participants; α is product performance. Among mainland Chinese companies, only Honghe Technology has a very thin layout. Other market participants are a few Taiwanese companies and Japanese companies.

Prices and profits are at the bottom of history, so there is a lot of room for upward correction

The electronic yarn industry has gone through two cycles since 15 years, and the background of the upward inflection point of each cycle is demand strength after the supply shock has weakened: 1) During the 17Q2-18Q4 period, the fields of smartphone, automotive electronics, and 5G base station construction bloomed a lot, driving electronic yarn prices into an upward channel, while the supply-side added less in 17-18; 2) In the 20Q4-21Q3 period, due to the impact of the COVID-19 pandemic, the demand side achieved growth with the theme of “home economy”. At the same time, the demand side achieved growth with the theme of “home economy”., while the supply side 20- There were few new additions in '21. Currently, the price and profit of electronic yarn/electronic cloth are at the bottom of history. This round of consumer electronics recovery is compounded by the rigidity of the supply side, and the industry is expected to usher in a new upward cycle.

Risk warning: The recovery in terminal demand fell short of expectations, the impact on production capacity exceeded expectations, and the cost and price of raw materials rose.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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