In October 7, BOE A (000725) released the first three quarters of 2021 earnings forecast shows, the net profit attributable to shareholders of listed companies in the third quarter exceeded 7.1 billion RMB, up more than 430% year on year, slightly down 3.7-6.3% quarter on quarter; the net profit attributable to shareholders of listed companies in the first three quarters exceeded 19.862 billion RMB, an increase of more than 702% year-on-year.
Under the two-wheel drive of the exuberant demand and continuous tension supply caused by the drive IC and other raw materials shortage in the first half year, prices of IT, TV and other products have raised by different levels. However, after entering the third quarter, due to the impact of shipping congestion and rising logistics costs, the downstream customers’ will weakened, and the price of TV products appears structural adjustment. While prices for IT products have remained stable thanks to better demand and supply concentration.
As for the global panel prices, in the third quarter of this year, TV panel and netbook panel ended the continuous price rise of several months, and began to adjust, especially some popular small and medium-sized TV panel price decline rapidly. However, relatively speaking, in 10.5 generation line supply of large size panel, the decline is slightly less than small and medium-sized TV panel. And this is under the premise of panel factory to limit production in order to guarantee the price, take the initiative to reduce the capacity of small and medium-sized TV panel, and increase the standard product list of large panel, so as to ensure the economic operation efficiency of the production line.
In fact, according to the current 10.5 generation line operation in Mainland China, it occupy a certain industry advantage in production capacity and controllable operating costs. At present, several 10.5 generation lines dominated by BOE and TCL are slowly exerting positive leading effect on China’s panel industry. Especially in the competition for large size panel industry pricing power, they began to have a certain degree of autonomy and control, no longer infected by overseas enterprises from time to time.
BOE’s third-quarter earnings fell slightly, only 3.7-6.3 percent quarter-on-quarter on the back of a price correction. It states that currently the BOE has basically stabilized the basic disk and has become a certain resistant to the impact of the downturn. In addition, the recent expansion of the panel industry shows that the industry is relatively optimistic about the long-term prosperity of the 10.5 generation line and IT panel.
Recently, media reports said sharp’s Guangzhou Super Sakai 10.5 generation plant maintains the established expansion pace, estimated to make a large investment of 8 billion to 10 billion RMB, towards the monthly production capacity of 150,000 pieces, with the expansion of up to 66%, and capacity growth is the industry 10.5 generation plant in the largest. BOE and CSOT have announced early that they will expand the 10.5 generation factory. In the short term, the industry will increase the capacity of a 10.5 generation factory with a monthly output of more than 100,000 pieces.
Regarding these expansion, the industry generally believes that before the explosion of VR and AR content, 8K content will be applied in the TV consumption level firstly, and then it is possible to transform into VR and AR experience upgrade. Therefore, 8K large-size TVS above 75 inches will accelerate the popularization in the market and form a generational replacement with 4K TVS below 65 inches. For the production of 75-inch or larger 8K TV panels, the production cost advantage of the 10.5 generation line is very obvious, generally saving about 10% to 20% compared with the old 8.5 generation line.
In fact, there is a more flexible place for BOE, is that they can adjust the supply rhythm of small and medium-sized TV panel through the way of holding 8.6 generation of new line capacity. In addition, the IGZO production line of CLP Panda is basically similar to a-SI products in terms of equipment and technology. BOE has no obligation to promote IGZO products at all, and can completely put aside IGZO’s high technical face and directly produce A-SI technology IT panel and car panel products needed in the market to quickly restore its profitability.
Although BOE is very large without unified management and operation mode of overseas traditional panel enterprises, each panel factory is relatively independent. But it is this pattern that makes the BOE with strong flexibility. For example, BOE took the lead in the industry with 8.5 generation line to produce mobile phone panels before, and recently, produce vehicle-mounted panels ahead of the industry. For traditional panel companies, almost no one will put forward this approach. Perhaps the model of 10.5 generation panel lines in Mainland China fight for industry pricing power with advanced production capacity which may bring some enlightenment to China’s manufacturing industry chain.
Chen Yanshun, BOE A’s chairman, had previously said at a half-year earnings presentation that BOE’s current market value was undervalued. BOE is in the forefront of the global semiconductor display industry in terms of capacity scale, market share, product and technology capabilities, innovation capabilities, management capabilities and profitability.
Post time: Oct-16-2021