It is expected that Q2 panel prices will still rise, and TV panel prices are expected to break through last year's high.
The Zhitong Finance App learned that Huaxi Securities released a research report saying that LCD: TV panel prices in early March were close to the high prices in September last year. Supply and demand are still tight due to good downstream demand expectations and early stocking by machine manufacturers. The bank expects Q2 panel prices to rise, and TV panel prices are expected to break through last year's high. OLED: The bank believes that in the current situation where domestic OLED screen manufacturers are still losing money, they may seize the opportunity of structural shortages and raise the price of mobile phone OLED panels to a reasonable price to ensure the continuous long-term operation of the enterprise. The bank determined that after the price increase of OLED panels for mobile phones in Q4 last year, it is expected that there will be room to continue to rise this year.
Investment suggestions: Tongxingda (002845.SZ), other beneficiary screen manufacturers: TCL Technology (000100.SZ), Shentianma A (000050.SZ), Vicino (002387.SZ), etc.; industrial chain: Liande Equipment (300545.SZ), Sanli Spectrum (002876.SZ), Yitian Co., Ltd. (300812.SZ), etc.
Huaxi Securities's views are as follows:
LCD panel price increases are expected to return to a high point, and OLED structural shortages drive price increases
LCD: TV panel prices in early March were close to the high prices in September last year. Supply and demand are still tight due to good downstream demand expectations and early stocking by machine manufacturers. The bank expects Q2 panel prices to rise, and TV panel prices are expected to break through last year's high. OLED: The bank believes that in the current situation where domestic OLED screen manufacturers are still losing money, they may seize the opportunity of structural shortages and raise the price of mobile phone OLED panels to a reasonable price to ensure the continuous long-term operation of the enterprise. The bank determined that after the price increase of OLED panels for mobile phones in Q4 last year, it is expected that there will be room to continue to rise this year.
What is behind the continued rise in prices is an improvement in the relationship between supply and demand
LCD dynamic regulation of production capacity has become the norm to stabilize a good supply and demand relationship. Demand is improving in the beginning of 2024, and downstream procurement is expected to increase sequentially for two consecutive quarters. Increased demand prompted downstream to accept price increases. Yang Zhuxiang, general manager of Innolux, said that as long as the capacity utilization rate remains at a reasonable level, there is a chance that panel supply and demand will be relatively tight in the next 3 years from 2024 to 2026. There is a structural shortage of OLED panel production capacity, and short supply is driving up overall prices. Demand for OLED mobile phone panels improved in February, and the price of flexible OLED panels is likely to rise further.
The operating situation of the screen factory improved quarter by quarter, and price increases brought about an inflection point in performance
According to the 2023 performance forecast for screen manufacturers, with the rise in panel prices, the profitability of panel manufacturers has improved markedly and is improving quarter by quarter, and an inflection point in the performance of some screen manufacturers has already appeared. The bank believes that the improvement in the performance of screen manufacturers will also benefit upstream and downstream of the industrial chain. On the one hand, the improvement in demand from screen manufacturers will increase upstream and downstream revenue performance, and on the other hand, the increase in screen factories' profits is also expected to release more profit margins upstream and downstream.
Risk warning: downstream demand fell short of expectations; panel price increases fell short of expectations, etc.; Vicino received a decision on administrative supervision measures from the Jiangsu Securities Regulatory Bureau in April 2021 due to credit disclosure issues.