Incident: BOE releases its 2024 quarterly report. 2024Q1 achieved operating income of 45.89 billion yuan, yoy +20.8%, qoq -4.5%; net profit to mother of 984 million yuan, yoy +297.8%, qoq -35.5%; gross profit margin of 14.5% in a single quarter, up 7.6 pcts year on year, down 1.8 pct from month to month.
The utilization rate increased rapidly from March 2024. According to the company's announcement, thanks to the good supply pattern and the early release of downstream demand, the industry boom picked up significantly after the Spring Festival, and the company's performance grew significantly. At the same time, due to the impact of the Spring Festival and New Year holidays in mainland China in the first quarter, the company's operating rate was still at a low level, and the operating rate only increased rapidly since March. We believe that in the case where the overall operating rate was low in the first quarter, the company's performance improved significantly year-on-year. In the future, on the premise that panel prices are stabilizing and rising, the company's performance is expected to grow further along with the increase in the company's operating rate.
Panel prices in late April: Larger TVs lead the rise. According to WitsView data, in late April 2024, the price of 65-inch TV panels increased by 4 US dollars compared to the previous period, and the price of all other sizes increased by 1 US dollar compared to the previous period. IPS panels for 27/23.8-inch monitors all increased by 0.3 US dollars compared to the previous period. The 11.6/14.0-inch laptop panel increased by 0.1 US dollars compared to the previous price, and the price of the remaining panels remained the same. We believe that compared to the first quarter, the cost increase brought about by the rise in panel prices is almost compounded by mid-year promotions, and the desire to prepare goods downstream is strong. At the same time, the normalization of on-demand production strategies in mainland China has contributed to the rise in panel prices. From the demand side, the current trend of large-scale TV screens has been established, and the two major sporting events of the Olympics and the European Cup are approaching at the same time, which may have contributed to TV sales to a certain extent.
AMOLED shipments target 160 million units in 2024. In 2023, the company's flexible AMOLED product shipments reached a record high, and 2024Q1 shipments continued to grow year on year. The company's annual AMOLED shipment target for 2024 is 160 million pieces, an increase of more than 60% over the previous year. The company's AMOLED business is still under heavy depreciation pressure in the short term. In the future, along with the increase in shipment volume and the adjustment of the product structure, the profitability of mature production lines is expected to continue to improve. We believe that the company's AMOLED focuses on the high-end sector. In the future, with the release of production capacity in the world's first batch of 8.6-generation OLED production lines, the company is expected to continue to be a leader in card position semiconductor displays. At the same time, with the gradual penetration of OLED in medium sizes, the company's revenue scale is also expected to further increase.
Profit forecast and investment advice: We expect the company's 2024E/2025E/2026E to achieve operating income of 2081/2315/255.8 billion and net profit of 70.4/97.1/12.66 billion, corresponding to the current stock price PB valuation of 1.2/1.1/1.0x, maintaining a “highly recommended” rating.
Risk warning: Downstream demand falls short of expectations, industry competition intensifies, and new production capacity construction falls short of expectations.