The LCD industry's production capacity is gradually stabilizing. With the shutdown of production lines by overseas manufacturers and sales of production lines by overseas manufacturers, the industry share is expected to be further concentrated.
The Zhitong Finance App learned that Guoxin Securities released a research report saying that in October 2024, the global shipping area of large LCD panels increased 5.49% year on year. Among them, the global LCD TV panel shipping area increased 7.04% year on year, the global LCD panel shipping area decreased by 2.94% year on year, the global laptop panel shipping area decreased by 2.72% year on year, and the global tablet panel shipping area increased 16.63% year on year. The LCD industry's production capacity is gradually stabilizing. With the shutdown of production lines by overseas manufacturers and sales of production lines by overseas manufacturers, the industry share is expected to be further concentrated. The supply side can better control LCDTV panel prices under the advantage of concentrated share. The cyclical nature of the industry is gradually fading, growth characteristics are showing, and the profit stability of LCD panel companies is expected to gradually strengthen.
The main views of Guoxin Securities are as follows:
Market conditions & performance review: Since November 2024, the panel (Shenwan) index has declined by 3.69%, and the average gross margin of major LCD manufacturers in China has declined in 3Q24 compared to the same period last month
Market review: Since November 2024, the panel (Shenwan) index has fallen by 3.69%, outperforming the Shanghai Composite Index, the Shenzhen Stock Exchange Index, and the Shanghai and Shenzhen 300 Index by 7.47pct, 5.58pct, and 5.80pct, respectively. Among them, Shenzhen Tianma A and Longteng Optoelectronics rose 1.42% and 18.18% respectively, while BOE A, TCL Technology, and Rainbow shares fell 7.71%, 11.13%, and 6.82% respectively. In terms of valuation, as of December 6, the total market value of the A-share panel industry was 567.889 billion yuan, and the overall PB (LF) was 1.61x, which is 59.1% of the past five years.
Performance review: According to Omdia data, the monthly revenue of global large-size LCD panels in October was 5.268 billion US dollars, down 16.38% month-on-month and up 5.04% year-on-year. Among them, BOE's monthly revenue for large-size LCD panels increased 7.74% year-on-year, while the monthly revenue of TCL Huaxing and Huike large-size LCD panels fell 2.70% and 2.44% year on year. In 3Q24, the average gross margin of China's major LCD manufacturers (Shenzhen Tianma A, TCL Technology, BOE A, Rainbow, Longteng Optoelectronics, Youda, Inntron Optoelectronics, Hanyu Caijing) fell 0.77 pct year on year, 0.56 pct month on month to 14.91% month on month, net margin increased 0.15 pct year on year and decreased 0.69 pct to 1.75% month on month.
Price: Prices of LCDTV panels of all sizes remained flat month-on-month in October. Prices of LCDTV panels of all sizes are expected to remain flat month-on-month in November
TV: In November 2024, the price of 32, 43, 50, 55, and 65-inch LCDTV panels was 36, 62, 101, 126, 172 US dollars/piece, and the price of LCDTV panels of all sizes was the same as in October; Omdia expects 32, 43, 50, 55, and 65-inch LCDTV panels to be priced at 36, 62, 101, 126, and 172 US dollars/piece in December, remaining flat from month to month. According to TrendForce, demand for Chinese TV brands was still strong in December, while demand from international brands was weak. Chinese brand customers benefit from the promotion of the trade-in policy. Demand remains stable. Current inventory control for international brand customers is the main target, and overall delivery momentum is weak. Overall stocking momentum is expected to improve in 1Q25. It is expected that the price of 32-65-inch LCD TV panels will remain flat in December, and the price of 75- and 85-inch TV panels is expected to rise.
Laptop: In November 2024, 10.1-inch (tablet), and 23.8-inch (monitor) LCDIT panels cost $16.4, 26.2, and 44.1 dollars, changing 0.0%, 0.0%, and -0.2% month-on-month; Omdia expects 10.1-inch, 14-inch, and 23.8-inch LCDIT panels in December to be 16.4, 26.2, and 44.1 US dollars/piece, respectively, flat from month to month.
Supply & demand: In October, the global shipping area of large LCD panels increased 5.49% year on year. Among them, the shipping area of TVs and tablets increased year on year, and the shipping area of monitors and notebooks decreased year on year
On the supply side, the global large-size LCD production area is expected to increase by 2.31% in 2024 compared to 2023, with 1Q24, 2Q24, 3Q24 and 4Q24 production capacity changing +0.72%, +0.35%, +0.25%, and -0.02%, respectively; the global large-size LCD production area is expected to increase 0.21% in 2025 compared to 2024, with 1Q25, 2Q25, 3Q25, and 4Q25 production capacity changing by -0.02%, -0.02%, 0.00%, and +0.16%, respectively.
On the demand side, in October 2024, the global shipping area of large LCD panels increased 5.49% year on year. Among them, global LCD TV panel shipping area increased 7.04% year on year, global LCD panel shipping area decreased by 2.94% year on year, global laptop panel shipping area decreased by 2.72% year on year, and global tablet panel shipping area increased 16.63% year on year.
Guoxin Securities believes that production capacity in the LCD industry is gradually stabilizing. With the shutdown of production lines by overseas manufacturers and sales of production lines by overseas manufacturers, the industry share is expected to be further concentrated. The supply side can better control LCDTV panel prices under the advantage of concentrated share. The cyclical nature of the industry is gradually fading, growth characteristics are showing, and the profit stability of LCD panel companies is expected to gradually strengthen.
Investment advice: LCD panel industry chain focuses on recommending BOE A, etc.
I am optimistic that domestic panel leaders such as BOE A (000725.SZ) will seize the dividends of the era of China's consumption upgrade and localization, and gradually achieve a steady increase in profitability with the scale effect, cost advantage, and industry voice and pricing power brought about by the leading market share of the higher generation line. At the same time, the rise of the LCD industry has enhanced the competitiveness of domestic TV brands and ODMs to go overseas, recommending Zhaochi shares (002429.SZ), Kanguan Technology (001308.SZ), and Shiyuan shares (002841.SZ).
Risk warning
Risk of demand for display devices falling short of expectations; risk of price fluctuations of display devices; risk of supply of production equipment and raw materials.
