Events:
According to the company's annual report of 2021 and quarterly report of 2022, the company achieved revenue of 163.691 billion yuan in 2021, an increase of 113.05% over the same period last year, a net profit of 10.057 billion yuan, an increase of 129.2% over the same period last year, and a net profit of 9.437 billion yuan, an increase of 221.73% over the same period last year.
2022Q1 achieved a revenue of 40.598 billion yuan, an increase of 26.18% over the same period last year, a net profit of 1.353 billion yuan, a decrease of 43.73%, and a net profit of 612 million yuan, down 71.29%.
Comments:
Semiconductor display, new energy photovoltaic and semiconductor materials jointly drive the company's high performance in 2021. The company continues to dig deep into the fields of semiconductor display, new energy photovoltaic and semiconductor materials, and the three major businesses have achieved rapid growth in 21 years.
TCL Huaxing, which focuses on semiconductor display, benefited from the high demeanor of the panel industry and the increase in the company's production capacity in 21 years, achieving a sales area of 39.4915 million square meters in 21 years, an increase of 36% over the same period last year, a revenue of 88.1 billion yuan, an increase of 88.4% over the same period last year, and a net profit of 10.65 billion yuan, an increase of 339.6% over the same period last year. TCL Central, which focuses on new energy photovoltaic and semiconductor materials, achieved revenue of 41.1 billion yuan, an increase of 115.7% over the same period last year, and a net profit of 4.44 billion yuan, an increase of 200.6%. The production capacity of new energy photovoltaic materials has been increased to 88GW, and the market share of G12 silicon wafers has increased to 28%. Semiconductor materials continue to maintain strong growth, and shipments of 8-12 inch polished wafers and epitaxial wafers are accelerating.
22Q1 shows that the business is under pressure, and the performance contribution of new energy photovoltaic and semiconductor materials business has improved. Quarterly report by business: (1) the semiconductor display business achieved an operating income of 20.04 billion yuan, an increase of 15.3% over the same period last year, and a net profit of 340 million yuan, down 85.8% from the same period last year. Due to the rising commodity prices and inflation expectations caused by the 22-year Q1 geo-conflict, as well as the weakening of downstream production and consumption links caused by the spread of the epidemic, the prices of panels, especially large-sized TV panels, continued to decline, resulting in a decline in the profitability of the company's business.
(2) TCL Central realized revenue of 13.37 billion yuan, an increase of 79.1% over the same period last year, and a net profit of 1.46 billion yuan, an increase of 96.2% over the same period last year. The new energy photovoltaic business continues to develop. By the end of Q1 in 2022, the single crystal production capacity has been increased to 95GW, of which G12 production capacity accounts for 72%, ranking first in the global market share. In terms of semiconductor materials, the 8-inch production capacity reaches 800000 pieces per month, and the 12-inch production capacity reaches 170000 pieces per month. At present, the above 28nm series products have entered the stage of mass production and signed long-term strategic cooperation agreements with a number of first-line customers at home and abroad.
Supply and demand of TV panels are expected to improve, and prices may stabilize and pick up in the third quarter. Over the past 22 years, the decline of TV panel has slowed down. At present, the price of LCD TV panel TV panel has been close to or lower than the average cost and cash cost level, and the falling space is limited. According to WitsView data, the prices of 32-inch and 55-inch LCD TV panels in the first quarter of 22 were 4.03%, 5.06%, 4.43% and 3.42% higher than the cash cost, respectively. At present, the price of TV panel brings cost optimization to TV manufacturers, at the same time, with the arrival of the peak season of TV stock after 22Q2, the demand driven by large-scale sports events and part of the production capacity are pulled out, TV panel is expected to pick up at the beginning of the third quarter. The company's TV products account for a relatively high proportion, and profitability is expected to pick up at that time.
Optimize the structure of panel products and grasp the structural opportunities of medium-sized panels such as commercial display and vehicles. With the gradual enrichment of smart scenes closely related to commercial display, including education, corporate conferences, medical care, rail transit, intelligent security, cultural travel, etc., it is expected that the market demand of Shangxian will continue to grow. According to Oviyun's forecast, the compound growth rate of China's commercial market scale will be 11.8% from 2020 to 2024, and the market size will reach 110.6 billion yuan by 2024. Among them, the growth rate of market segments represented by interactive whiteboards, splicing screens and signage advertising machines will be significantly accelerated. In the future, the company will strategically adjust the panel income structure, increase the medium-size panel production capacity and the proportion of products, make use of the existing product advantages and customer resources in the medium-size field, and seize the high growth opportunities in Shangxian, vehicle and other industries. In terms of capacity expansion, the company's expanded sixth-generation LTPS LCD display panel production line project is speeding up construction, the 8.6th generation oxide semiconductor new display device production line T9 project has completed plant construction, located in medium-sized IT and vehicle and other new business, is expected to produce in 2023, when the company's 8.6th production line will have a first-mover advantage over peers, is expected to quickly gain market share.
Make efforts to show the high-end market and attach importance to R & D investment. The company has long had a competitive advantage in the high-end panel market. In 2021, the high-end TV market, including 8K, high brush, oversized size, and high-end notebook laptops, ranks first in the industry. In 2021, the company's R & D cost was 7.236 billion yuan, an increase of about 64% over the same period last year. The cumulative number of applications for Chinese mainland patents was 14051, ranking first among Chinese mainland enterprises. Quantum dot patents ranked second in the world, covering 14 fields such as quantum dot materials, backlighting, panels, etc., forming a thorough patent layout and expected to establish a leading edge with the arrival of the next generation display technology.
Earnings forecast, valuation and rating: considering that the prosperity of the panel industry is still in the downward range and is expected to pick up in the third quarter of 2022, and combined with the company's quarterly report, we lowered the company's net profit from 2022 and 2023 to 7.608 billion yuan (- 44.3%) and 9.512 billion yuan (- 41.1%), compared with the original forecast of 13.655 billion yuan and 16.152 billion yuan. At the same time, the profit forecast for 2024 will be added.
The company is expected to have an operating income of 185.009 billion / 210.172 billion / 240.05 billion yuan and a net profit of 7.608 billion / 9.512 billion / 120.28 billion respectively from 2022 to 2024, corresponding to 8X/6X/5X respectively. Taking into account the current valuation level of the company, the high growth of the new energy photovoltaic and semiconductor materials business, as well as the expectation of bottoming out the prosperity of the panel industry, maintain the company's "buy" rating.
Risk tips: panel price fluctuations, lower-than-expected demand, industry overcapacity.