Incidents:
On April 30, the company disclosed its 2024 quarterly report. Revenue for the first quarter of 2024 was 45.888 billion yuan, up 20.84% year on year, and net profit to mother was 984 million yuan, up 297.8% year on year.
Industry sentiment picked up, and first-quarter results increased dramatically:
In the first quarter of 2024, thanks to a good supply pattern and the early release of downstream demand, the industry boom picked up significantly after the Spring Festival. On the LCD side, the demand side was affected by sporting event stocking demand and high price increases expectations. End customer orders were released early, and the company insisted on the “on-demand production” strategy. The operating rate remained low in February, boosted by the release of orders in March. The announcement revealed that the company's LCD utilization rate in March was around 80%, and the LCD TV utilization rate was over 85%. In terms of price, the prices of TV products have risen across the board since February, and continued to rise steadily in March and April. The upward trend in IT product prices is also beginning to gradually show. On the OLED side, the announcement revealed that in 2023, the company's flexible AMOLED product shipments reached a record high, and shipments continued to increase year-on-year in the first quarter of 2024. The annual shipment target for 2024 is expected to be 160 million pieces, an increase of more than 30% over the previous year.
The company continues to push for flexible AMOLED high-end demand, and it has a clear competitive advantage, especially in high-end products represented by folding. The overall industry boom picked up, and the company's performance in the first quarter increased dramatically.
Stabilize the leading position in the industry and accelerate technological and product innovation:
The annual report revealed that in 2023, the company continued to maintain its leading market position in the semiconductor display field, continuing to rank first in the world in overall LCD and five major application areas, continuously optimizing the product structure in the LCD field, maintaining breakthroughs in high-end flagship products, oversized (≥85 inch) products achieved the highest global shipment volume, and ADS Pro products achieved a breakthrough in the high-end TV market. In the OLED field, the company's annual flexible AMOLED shipments were nearly 120 million pieces, a significant increase over the previous year, and the profitability of mature production lines improved significantly year-on-year. In terms of patents, as of 2023, the company has accumulated more than 90,000 independent patent applications, including more than 30,000 flexible OLED-related patent applications; of the annual new patent applications, more than 90% of invention patents and more than 33% of overseas patents, covering the US, Europe, Japan, South Korea and other countries and regions, covering various fields such as flexible OLEDs, sensing, artificial intelligence, big data, etc.; it has more than 40,000 authorized and effective patents worldwide, and ranked in the top 20 US patent licensing rankings for the sixth year in a row (ranked 15th in the world in 2023) position).
Investment advice:
We expect the company's revenue from 2024 to 2026 to be 209.055 billion yuan, 233.192 billion yuan, and 263.99 billion yuan, respectively, and net profit to mother will be 5.122 billion yuan, 9.228 billion yuan, and 23.992 billion yuan respectively. Referring to comparable companies TCL Technology and Rainbow shares, we will give it a PB (MRQ) of 1.5 times 24, corresponding to a six-month target price of 5.19 yuan, for the first time.
Risk warning:
Industry demand falls short of expectations; new product development and introduction falls short of expectations; market competition intensifies.