Deep ploughing display field, integrated layout "panel + substrate": the company, as a domestic enterprise in the field of deep ploughing display, integrated layout "panel + substrate" industry, the linkage effect is strengthened year by year, gradually deepening the moat in the field of glass substrate and liquid crystal panel. Glass substrate, the company has 5 generations, 6 generations, 7.5 generations, 8.5 + generation substrate glass manufacturing capacity, breaking the international monopoly. In terms of panels, the company achieved the production of G8.6 LCD panel project in 2018, realizing upstream and downstream supporting and industrial synergy.
With the introduction of mixed cutting technology, the product dislocation competitive advantage is further highlighted. In the context of the rapid rise in panel prices since May 2020, the company's performance has shown explosive growth since 2020Q4.
We expect that the relationship between supply and demand of panels will remain tight in 21 years, panel prices are expected to continue to rise and remain high in the first half of the year, and the company is expected to usher in a period of explosive profits in 2021.
The space for domestic replacement of glass substrate is huge, and 8.5 + generation independent products break the foreign monopoly: glass substrate accounts for a high cost in LCD panels, and its market demand closely follows LCD panels. With the gradual release of production capacity of domestic high-generation LCD panel production lines and the contraction of production capacity of Korean factories, the proportion of domestic market demand in the global LCD glass substrate market will further increase, which is expected to increase from 58% in 2020 to 73% in 2025. From the point of view of the supply side, glass substrate is a technology-intensive industry with high barriers to entry. At present, LCD glass substrate is mostly monopolized by overseas giants such as Corning, NEG, Asahi nitrate, and the proportion of domestic manufacturers is very low, and most of them are concentrated in the products below 8.5G. The company is in a leading position in the field of glass substrate in China, and the independently developed overflow G8.5 + glass substrate products are progressing smoothly. The first production line has been successfully off-line and has entered the stage of user certification, and the second production line has been ignited. Next, the company will gradually complete the construction of 6 production lines in Hefei, all of which are expected to achieve a monthly production capacity of 300,000 pieces after delivery. Will gradually narrow the gap between the company and overseas leaders on the glass substrate.
The relationship between supply and demand of panels continues to be tight, and 21-year price increases are expected to continue: at present, TV panel prices continue to be strong. According to WitsView data, the prices of 65 inches, 55 inches, 43 inches and 32 inches in the first ten days of March 21 were $245,195,123,72 respectively, up 2.1%, 2.6%, 1.7% and 2.9% respectively compared with late February. Compared with the low in early June 2020, it increased by 49.4%, 89.3%, 83.6% and 125.0%, respectively. The reasons for the sharp rise in panel prices include the shrinking production capacity of South Korean factories, the lower-than-expected climbing progress of the high generation of mainland factories, and the strong recovery of downstream demand. In addition, the recent shortage of upstream glass substrate and driver IC further aggravates the shortage of supply in the panel industry. Considering the recovery of downstream demand and the Korean factory's plan to withdraw from LCD panels, the supply of LCD panels is still tight and the price outlook is optimistic. Panel prices are expected to remain high in 2021. Benefiting from the continuous rise in panel prices, the company's main business will enter the performance harvest period.
Investment advice: we are optimistic about the continuation of the LCD panel business cycle, panel prices are expected to continue the upward trend, leading to a substantial improvement in the company's performance. In addition, the company is in a leading position in the field of glass substrate in China, in which G8.5 + overflow glass substrate is progressing smoothly, and the products have been successfully offline. In the future, the production capacity will be gradually expanded to further narrow the gap with overseas manufacturers. It is estimated that the return net profit of the company from 2020 to 2022 is-836 million yuan, 4.605 billion yuan and 5.083 billion yuan respectively, the EPS is-0.23,1.28,1.42 yuan respectively, and the PE is-38.95X, 7.08X and 6.41x respectively.
Risk tips: panel prices are lower than expected; technological breakthroughs are not as expected; capacity release is not as expected.
