1Q24 Net profit attributable to mother approaches the upper limit of the guideline
BOE A announced 1Q24 results: achieved revenue of 45.9 billion yuan (yoy: +21%), net profit to mother of 980 million yuan (yoy: +299%), and net profit of 60 billion yuan after deducting non-return to mother. The main reasons for the year-on-year improvement in performance: 1) The demand side of LCD panels was affected by the demand for stocking at sporting events and high price increases, the early release of orders from end customers, and a sharp increase in the average price of large LCD panels (yoy: +31%); 2) OLED panel shipments continued to grow. Looking ahead to 2024, as customers at home and abroad continue to prepare goods in advance, we expect the price increase trend of large-size LCD panels to continue until July; at the same time, as the supply and demand pattern of OLED panels continues to improve, the profit situation of the company's old OLED production line is expected to improve further.
The company's 24/25/26 EPS is expected to be 0.11/0.21/0.27; 24/25/26 BPS is 3.55/3.75/4.03 yuan. Maintain the target price of 5.70 yuan (based on 1.60 x 24-year PB), which is higher than the comparable company average (0.90 x 24-year PB, premium based on the company's leading position). Maintain a “buy” rating.
Industry: Benefiting from peak season stocking demand, the price of large LCD panels continued to rise in April. According to Omdia data: 1) After experiencing a brief slight correction in 4Q23, the average price of 32, 43, 50, 55, and 65-inch LCD TV panels finally stabilized in January '24, and continued to rise in 2-3 months. With the arrival of the 618 peak season and the arrival of the Olympics & European Cup, the average price of 32, 43, 50, 55, and 65-inch LCD TV panels increased by 5%, 3%, 3%, and 3%, respectively in April; 2) The average price of 6.7-inch OLED panels rose again by $1 to $22 in January '24 after experiencing price increases in November '23. With the further penetration of OLED panels into mobile phones and medium-sized terminals, and the increase in LTPO and folding screen phone shipments, the supply and demand for OLED panels may enter a tight balance, and prices are expected to rise further in 2H24.
Company: It is expected that 2Q operation of the LCD business will continue to improve. The profit of the old OLED production line is expected to improve the LCD business throughout the year. Affected by sporting event stocking demand and high price increases, end customer orders were released early, and the operating rate of the company's LCD production line also increased significantly in March. As end customers continue to prepare goods in advance, we expect the overall operating rate of the company's LCD production line to remain high in May-July, and the price of large-size LCD products is also expected to increase further. In the OLED business, with the further penetration of OLED screens in mobile terminals and the increase in the share of high-end folding machines, we expect the company to achieve the goal of a continuous increase in flexible OLED screen shipments in 24 years (160 million pieces for the whole year), and the profit situation of the old OLED production line is also expected to improve further.
The target price is maintained at 5.70 yuan; the valuation is at a historically low level. Defensive attributes highlight that the company's net profit for 24/25/26 is estimated to be 41/78/10.2 billion yuan, respectively. The company's current stock price corresponds to 1.22 x 24-year PB, which is at a low level since 2016, and its defensive properties are prominent. The target price was 5.70 yuan, based on 1.60 times 24-year PB. Maintain a “buy” rating.
Risk warning: The Korean factory's capacity withdrawal was slower than expected, downstream demand fell short of expectations, and production capacity climbed slower than expected.