The Zhitong Finance App learned that Minsheng Securities released a research report saying that on the demand side, the expected increase in panel prices is compounded by demand for promotions and event preparation, and current brand procurement remains relatively strong. On the supply side, supported by a recovery in demand and healthy panel inventories, the operating rate level of panel manufacturers has clearly recovered since March, but the shutdown of old production lines and the consolidation of industry mergers and acquisitions are expected to lead to further clarification of supply-side production capacity and further concentration of the supply pattern. Looking ahead to the second and third quarter, production capacity for large panels is expected to be further concentrated among domestic manufacturers, the pricing power of domestic manufacturers will be further increased, and domestic manufacturers are expected to experience a simultaneous rise in operating rates and prices as supply and demand in the industry gradually improve.

Minsheng Securities's views are as follows:

The price of full-size TV panels increased in March.

Consulting agencies announced TV panel prices in late March. According to news from Qunzhi Consulting on March 26, the price of 32” /50” /55” /65” /75” TV panels rose by 1/2/4/5/5 US dollars in March, with increases of 2.9%/1.9%/3.1%/2.9%/2.1%, respectively. Among them, the price increase for large panels such as 55” /65” /75” was further expanded compared to 2/4/4 US dollars in February.

Both supply and demand are stimulated, and the global TV panel market is still showing a dynamic tight supply and demand situation.

On the demand side, the increase in panel prices is expected to be compounded by demand for promotions and event preparation, and current brand procurement remains relatively strong. On the supply side, supported by a recovery in demand and healthy panel inventories, the operating rate level of panel manufacturers has clearly recovered since March, but the shutdown of old production lines and the consolidation of industry mergers and acquisitions are expected to lead to further clarification of supply-side production capacity and further concentration of the supply pattern.

On the demand side, the peak stocking season is approaching, and OEM's are increasing their procurement plans.

Since the Spring Festival, the rise in panel prices is expected to be compounded by promotions and event stocking requirements. Currently, brand procurement remains relatively strong. At the same time, it was affected by black swan events such as the Ryong COP film production capacity affected by the earthquake in Japan. Although the factory is already recovering, the production capacity of manufacturers such as CSOT/Auo/Sharp continues to be affected to varying degrees. For example, Huaxing's high-end panels are mainly supplied to leading customers Samsung/TCL/Xiaomi/Sony. The shortage of COP films has caused insufficient panel supply, and the impact of structural shortages has been amplified. According to AVC Revo (AVC Revo) data, in the first quarter of 2024, the procurement volume of TOP11 machine manufacturers increased to 41M, an increase of 9% over the previous quarter. The procurement volume in the second quarter will further increase to 47M, and overall procurement will be positive.

On the supply side, the operating rate recovered and increased in March, and overseas customs are expected to drive the supply side's production capacity to clear.

After large-scale maintenance and production cuts in panel factories in February, as demand for TVs increased markedly after entering March, panel factories began to actively increase the operating rate of production lines. TrendForce expects the average operating rate of panel factories to rise above 80% in March. Furthermore, according to Japanese media reports, Hon Hai Group's transfer to the Sakai Plant (SDP), a subsidiary of the Japanese company Sharp that produces large LCD panels, may stop production in June. If SDP stops production, it will further reduce global LCD production capacity, which is beneficial to the balance between supply and demand for TV panels and the upward trend in prices. According to Omdia data, the 10th factory (2880 x 3130mm) in Sakai, Japan was built in 2008, and commercial production began in the summer of 2009. In 2024, SDP's annual TFT production capacity was 8.87 million square meters, accounting for about 2.6% of the total global TFT production capacity dedicated to the production of large FPDs. In 2023, the 7th generation and larger substrates produced by Chinese factories will account for 77% of global production. If SDP is shut down, production of such substrates will be concentrated more in China, accounting for more than 80% of global supply, and the TV panel supplier industry in mainland China such as BOE, Huaxing Optoelectronics, and Huike will further increase their voice.

Looking ahead to the second and third quarter, production capacity for large panels is expected to be further concentrated among domestic manufacturers, the pricing power of domestic manufacturers will be further increased, and domestic manufacturers are expected to experience a simultaneous rise in operating rates and prices as supply and demand in the industry gradually improve. Let's take a look at the details:

BOE A (000725.SZ): A leading company in the global semiconductor display industry. The company's semiconductor display product shipments and shipping area rank first in the world. Among them, the five mainstream LCD applications such as smartphones, tablets, laptops, displays, and televisions continue to rank first in the world, and flexible OLED smart phones account for nearly 20% of global shipments. At the same time, the company has developed into a leading IoT innovation enterprise under the “1+4+N+ Ecological Chain” business development strategy, committed to providing smart ports and professional services for information interaction and human health.

TCL Technology (000100.SZ): The company focuses on the pan-semiconductor industry layout with semiconductor displays, new energy photovoltaics and semiconductor materials as the core, and the company's LCD production capacity is in the top two in the world. In the large LCD field, TCL Huaxing collaborates with itself and the industrial chain to firmly establish large-scale and high-end TV panel strategies, and actively develop commercial display services such as interactive whiteboards, digital signage, and splicing screens. In the first half of 2023, the company increased its share of 55 inch and above products to 78%, 55 inch and 75 products ranked first in the world, and 65 products ranked second in the world; in the medium size sector, TCL Huaxing accelerated the layout of new IT and automotive businesses to enhance product competitiveness, optimize customer structure, and create new momentum for business growth; in the small-size field, TCL Huaxing Consolidate the LTPS mobile phone panel market position, drive flexible OLED business growth with product innovation, and expand the VR/AR and exclusive display markets.

Rainbow Co., Ltd. (600707.SH): The company's main business is the R&D, production and sales of substrate glass and display panels, and has formed the world's only industrial layout with a “panel+substrate” upstream and downstream industry linkage effect. The company's main display panel products cover 32 inch, 34 inch (curved), 50 inch, 58 inch, 70 inch, 85 inch, 100 inch and other mainstream market TV displays. The technology is 4K/8K, narrow bezel, high-definition, etc., and the products are mainly used in TV displays and other new application scenarios; the company's glass substrate business has successively built the first domestic market. 5th generation, 6th generation, 7.5 generation, 8.5+ generation substrate glass production line, high generation (G8.5+a-Si) substrate glass has been industrialized.

Risk warning: electronics industry cycle recovery falls short of expectations, industry competition intensifies, exchange rate fluctuations