As industry concentration is further skewed towards mainland Chinese manufacturers, the LCD panel industry's cyclical attributes weaken and growth attributes increase. In the short term, as demand drives up prices and operating rates, the profitability and sustainability of leading panel manufacturers are expected to gradually improve.
The Zhitong Finance App learned that Dongwu Securities released a research report saying that in March, the prices of 32” /43” /50” /55” /65” /75” panels were 37 US dollars/63 US dollars/110 US dollars/131 US dollars/173 US dollars/237 US dollars, respectively. It is expected that the price of TV panels of all sizes will rise further in April, similar to March. As industry concentration is further skewed towards mainland Chinese manufacturers, the LCD panel industry's cyclical attributes weaken and growth attributes increase. In the short term, as demand drives up prices and operating rates, the profitability and sustainability of leading panel manufacturers are expected to gradually improve.
It is recommended to focus on: 1) BOE A (000725.SZ), TCL Technology (000100.SZ), and Rainbow (600707.SH), which directly benefit from the increase in panel prices; 2) Demand from related material companies is expected to increase in the context of increasing panel manufacturers' operating rates. It is recommended to focus on Sanli Spectrum (002876.SZ), Tianlu Technology (301045.SZ), etc.
The main views of Dongwu Securities are as follows:
The overall upward trend of TV panels is expected to continue: in March, TV panel prices of all sizes showed an overall upward trend:
1) According to Qunzhi Consulting data, in late March, the prices of 32” /50” /55” /65” /75” panels were 36 US dollars/108 US dollars/133 US dollars/180 US dollars/243 US dollars/243 US dollars, respectively, and the price increase trend was obvious.
2) According to Ovirevo data, in March, the prices of 32” /43” /50” /55” /65” /75” panels were 37 US dollars/63 US dollars/110 US dollars/131 US dollars/173 US dollars/237 US dollars/237 US dollars, respectively, increasing by 1 USD/2 US dollars/3 US dollars/3 US dollars/3 US dollars. It is expected that the price of TV panels of all sizes will rise further in April, similar to the increase in March.
3) According to Lotu Technology data, in March, 32” /43” /50” /55” /65” /75” TV panel prices were 36 USD/66 USD/104 USD/130 USD/180 USD/241 US dollars, respectively, rising by 1 USD/2 USD/3 USD/3 USD/3 US dollars/3 US dollars. It is expected that the price will continue to rise in April, similar to the increase in March. Judging from the capacity utilization rate, according to AVC industry observations, the production capacity of upstream panel manufacturers is expected to continue to increase. The 10.5 generation line is in full production, and the 8.5 generation line has slightly adjusted. The overall operating rate is expected to reach 87% in April, and the recent upward trend in panel prices is becoming more and more clear.
Japanese and South Korean manufacturers continue to withdraw from the shutdown, increasing the concentration and voice of mainland manufacturers
According to the “Mainichi Shinbun” (Mainichi Shinbun) report, Sharp's 10th generation LCD factory in Japan may be shut down. Its TFT production capacity in 2024 is 8.87 million square meters, accounting for about 2.6% of the total global TFT production capacity dedicated to the production of large FPDs. South Korea's LGD Guangzhou G8.5 LCD plant is also expected to be sold in the second quarter, accounting for about 4% of large-scale production capacity. As Japanese and South Korean manufacturers closed their factories and sold, mainland floor panel manufacturers accounted for nearly 85% of the production capacity of large panels, and the concentration of the LCD industry and the pricing power of domestic manufacturers for large panels increased further.
The revenue of global display panel manufacturers is expected to increase 11% year-on-year in 2024
Dongwu Securities pointed out that on the basis of a 27% year-on-year decline in 2022, the panel industry's revenue experienced another decline in 2023. After a 2-year cycle of decline, it can be observed that the development context of the industry is breaking out of the bottom and moving towards growth in the short term. According to data from Qunzhi Consulting, global display panel revenue in 2023 was 93.46 billion US dollars (including LCD, AMOLED, Mini LED and other display categories), down about 7.6% from 2022. Qunzhi Consulting predicts that in 2024, the sales revenue of global panel manufacturers will increase by about 11% year-on-year to about 103.3 billion US dollars.
Risk warning: Industry demand recovery falls short of expectations; OLED profitability of mainland factories falls short of expectations.