What happened: the company released its 2021 annual report and 2022 quarterly report. In 2021, the company achieved revenue of 163.691 billion yuan, an increase of 113.05% over the same period last year, and a net profit of 10.057 billion yuan, an increase of 129.2% over the same period last year. Revenue in the first quarter of 2022 was 40.598 billion yuan, an increase of 26.18 percent over the same period last year, and the net profit was 1.353 billion yuan, down 43.73 percent from the same period last year.
It shows that the business structure has been continuously optimized, and the production and sales of large-size panels have achieved steady growth. In 2021, TCL Huaxing realized a sales area of 39.4915 million square meters, an increase of 36 percent over the same period last year. Semiconductor display business realized operating income of 8.1 billion yuan, an increase of 88.4 percent over the same period last year, and a net profit of 10.65 billion yuan, an increase of 339.6 percent over the same period last year. Of this total, the operating income of large sizes was 56.55 billion yuan, an increase of 95.1% over the same period last year, while that of small and medium-sized sizes was 23.41 billion yuan, an increase of 31.6% over the same period last year. The company's TV panel market share is the second in the world, and the 55-inch product share ranks first in the world. TCL Huaxing large size shipping area increased by 38% compared with the same period last year. The proportion of products with size 65 inch and above is more than 47%. The share of 65 inch and 75 inch products increased to the second in the world. T1, T2, T6 large-size production lines to maintain full production and full sales, the acquisition of Suzhou Samsung T10 in the second quarter. Small and medium-sized panels continue to enter the field of IT and vehicles, display and notebook products equipped with Mini Led backlight have reached cooperation with brand customers, and vehicles have achieved head domestic mass shipments and breakthroughs for overseas key customers. Affected by panel price fluctuations, 2022Q1 Huaxing shows that the net profit of the business has decreased by 85.8% compared with the same period last year, under short-term pressure. We believe that with the arrival of the peak 2022Q2 stock season, panel prices are expected to stabilize and pick up, and profitability will be enhanced.
The production capacity of semiconductor photovoltaic and materials business is expanding steadily. The operating performance of Central Semiconductor has increased significantly. In 2021, the company's new energy photovoltaic and semiconductor materials business achieved revenue of 41.1 billion yuan, an increase of 115.7% over the same period last year, becoming the company's second growth engine. The production capacity of new energy photovoltaic materials in TCL Central has increased to 88GW, and its market share has climbed to 28%. Relying on the technical advantages of G12 + stacking tiles, G12 silicon wafers have the first market share, and efficient N-type monocrystalline silicon wafers have the first market share in the world. At the same time, as the only semiconductor wafer manufacturer with both zone melting and Czochralski processes in China, the company continues to expand its production capacity. Ningxia Central Phase 6 50GW single crystal silicon plant has been put into production, and the annual 25GW production in Tianjin and the annual 30GW production in Inner Mongolia are under construction, which will further promote the release of G12 silicon wafer production capacity. In terms of semiconductor materials, the company has reached the production capacity target of 8 inches 750,000 chips / month and 12 inches 170,000 chips / month, and the products above 28nm have been successfully verified by many customers and entered the incremental stage. In the future, the company will increase investment in the semiconductor field and accelerate the development of semiconductor track.
TV panel prices are likely to bottom out at the end of the second quarter, waiting for prices to reverse. According to WitsView data, in late April, 32-43-55 inch LCD TV panels fell by US $2-5-3, respectively, and fell 5%, 7.04% and 3.7% respectively in a single month. 65-inch TV panels fell the most, falling by US $12, or 8.28% a month, and some size panels may have fallen below cash cost prices.
Investment rating and valuation: we estimate that the company's revenue from 2022 to 2024 will be 1821.27 yuan, 2093.39 yuan and 245.602 billion yuan respectively, the net profit will be 63.11 yuan, 91.26 yuan and 10.911 billion yuan respectively, and the EPS will be 0.45,0.65 and 0.78 yuan respectively.
Risk tips: the epidemic rebounded more than expected, the downstream of LCD and mobile phone market demand fluctuations; the company's production capacity release progress is not as expected.