Event: the company released the three-quarter report of 2022, the company realized operating income of 126.515 billion yuan in the first three quarters, an increase of 4.52% over the same period last year; realized net profit of 281 million yuan, down 96.92% from the same period last year; and realized net profit of-1.887 billion yuan, down 122.02% from the same period last year.
Comments:
Q3 performance is in line with expectations: the company's Q3 achieved operating income of 41.993 billion yuan in a single quarter, down 9.95% from the same period last year and 4.48% from the same period last year. The net profit was-383 million yuan, down 116.59% from the same period last year, and the month-on-month loss was narrowed (Q2 was-689 million yuan). The net profit after deducting non-return is-1.26 billion yuan, down 141.3% from the same period last year, which is basically the same as the previous year. Among them, the semiconductor display business due to environmental changes, the cycle repair upstream point delay, the average product price in the first three quarters of this year is significantly lower than the same period last year, especially Q3 price is at an all-time low, industry profit margin is still at the bottom of the cycle.
Panel prices have stabilized, and marginal improvement is expected to strengthen: TCL Huaxing achieved operating income of 52.1 billion yuan and sales area of 3267 million square meters in the first three quarters, an increase of 15 percent over the same period last year. The prices of major products have stabilized and rebounded as industry profits have reached a historical bottom and market demand in some regions has improved. According to the latest panel price data released by WitsView in late October, TV panel prices began to stabilize and pick up after five consecutive seasons of decline. 32 -, 43 -, 50-and 65-inch TV panels were quoted at US $27,48,81,107 per piece, all slightly higher than in September. With the panel factory actively implementing the production reduction plan, the downstream TV panel inventory pressure slows down; at the same time, on the demand side, the whole machine factory begins to purchase panel storage combat readiness inventory in preparation for the fourth quarter sales season and 23 years of terminal demand return. We believe that panel prices will continue to pick up in the fourth quarter, TCL Huaxing profit level is expected to improve marginally.
New energy photovoltaic business has increased rapidly, and silicon wafer production capacity has continued to expand: the company's holding subsidiary TCL Central achieved an operating income of 49.84 billion yuan in the first three quarters, an increase of 71.35% over the same period last year, and a net profit of 5.49 billion yuan, an increase of 68.94% over the same period last year. During the reporting period, TCL Central continued to give full play to the technological advantages of G12 silicon wafers and industrial 4.0 flexible manufacturing, and the production capacity of 50GW (G12) solar-grade monocrystalline silicon smart factory (Ningxia Central Phase 6 project) accelerated its expansion. By the end of Q3 in 2022, the total single crystal production capacity was increased to 128GW. At the same time, the company and partners jointly invest and start the construction of 100000 tons of granular silicon, silicon-based materials projects and 10,000 tons of electronic-grade polysilicon projects to promote the stability and optimization of the industrial chain and supply chain.
Earnings forecast, valuation and rating: based on the company's results in the first three quarters and the situation of the panel industry, we downgrade the company's 2022-2024 net profit to 3.39 (- 95.5%) / 35.1 (- 63.1%) / 66.41 (- 44.8%) million yuan, corresponding to the PB valuation of 1.4X/1.3X/1.2X. Taking into account the company's current valuation level, panel scene demeanor recovery expectations and the growth of new energy photovoltaic business, maintain the "buy" rating.
Risk tips: panel prices fluctuate, downstream demand returns less than expected, and silicon prices fluctuate.