Incident: The company released the 2023 annual report and the 2024 quarterly report. In 2023, it achieved total operating revenue of 174.446 billion yuan, an increase of 4.69% over the previous year; realized net profit of 2,215 billion yuan, an increase of 747.60% over the previous year; realized net profit without return to mother of 1,021 billion yuan, reversing the year-on-year loss. 24Q1 achieved total operating income of 39.946 billion yuan, an increase of 1.22% year on year; realized net profit of 240 million yuan, reversing losses year on year; realized net profit deducted from mother of 171 million yuan, reversing losses year on year.
Revenue/profit continued to grow year over year, which is optimistic about showing enhanced business performance:
Looking at a single quarter, 22Q4 achieved total revenue of 41.28 billion yuan (yoy +3.05%, qoq -13.96%), achieving net profit of 604 million yuan (YoY +1.22%, qoq -52.51%); 24Q1 achieved total revenue of 39.946 billion yuan (yoy +1.22%, qoq -3.23%), achieving net profit to mother of 240 million yuan (year-on-year reversal loss, qoq -60.24%). The company achieved year-on-year growth in revenue and performance for 4 consecutive quarters. The month-on-month decline in 23Q4-24Q1 was mainly due to the bottoming out of the PV business cycle and the entry of the display business into the traditional low season. Downstream manufacturers of 24Q2-24Q3 panels have started stocking, which is expected to drive a steady increase in the company's performance.
TCL Huaxing: Prices of large panels have continued to rise. Demand for flexible OLED products has been high for nearly a year. The relationship between panel supply and demand has gradually improved. Under the trend of large size, demand has been growing steadily, and prices have continued to recover. On April 20, WitsView's latest data showed that the upward trend in the price of large panels continued. In late April, the ASP for 65/55/43/32-inch TV panels was $176/129/65/37, respectively, or +4/+1/+1, respectively. The price of monitors and laptop panels also rose slightly. According to the company's announcement, in 2023, TCL Huaxing achieved revenue of 83.655 billion yuan (yoy +27.26%) and net profit of -0.07 billion yuan (year-on-year loss of 7.618 billion yuan); of these, 23H2 achieved revenue of 48.125 billion yuan and net profit of 3.441 billion yuan. 24Q1 TCL Huaxing achieved revenue of 23.376 billion yuan (yoy +54.58%, qoq +4.15%) and net profit of 539 million yuan (year-on-year reversal loss, qoq -66.75%). Looking at 24Q1 in a single quarter, 1) Large size:
The company's TV panel share is stable in the top two in the world, and the operating rate rebounded significantly due to demand for stocking in March. 2) Medium size: The T9 production line climbed according to the plan, the market share of IT products continued to increase, and the display market share remained third in the world. Among them, the market share of e-sports displays steadily ranked first in the world. 3) Small size: The company's flexible OLED products are in short supply, flexible OLED mobile phone panel shipments have risen to third place in the world, product and customer structure have been further optimized, and business performance continues to improve.
TCL Central: The industry cycle is bottoming out and profits are under pressure. Improving quality and efficiency consolidates competitive advantage. As domestic PV production capacity is released, competition intensifies, leading to a continuous decline in product prices and pressure on industry profits. However, new technologies such as N-type products rapidly iterate and the industry's production capacity structure is being adjusted, and backward production capacity will be cleared up at an accelerated pace. According to the company's announcement, in 2023, TCL Central achieved revenue of 59.146 billion yuan (yoy -11.74%) and net profit of 3.899 billion yuan (yoy -44.88%); of these, 23Q4 achieved revenue of 10.492 billion yuan (yoy -38.87%, qoq -23.73%), and realized net profit of 2,681 billion yuan (year-on-year loss). 24Q1 TCL achieved revenue of 99.33 billion yuan (yoy -43.62%, qoq -5.33%), and $A$A achieved net profit of 951 million yuan (year-on-year loss, qoq +64.53%). The company continues to consolidate its technical advantages and market position in G12 large silicon wafers and N-type products. In 24Q1, N-type and large-size (210 series) products accounted for 88% of shipments, with N-type 210 accounting for more than 90% of the export market, maintaining a leading position. The company continues to promote the transformation of Industry 4.0 manufacturing methods, and has reached the leading international level of digitalization and intelligence in silicon wafer, battery and module factories.
Investment advice:
We expect the company's revenue for 2024-2026 to be 185.543 billion yuan, 209.882 billion yuan, and 234.699 billion yuan respectively, and net profit to mother will be 5.306 billion yuan, 7.098 billion yuan, and 8.809 billion yuan respectively, giving 1.8 times PB in 2024, corresponding to a target price of 5.74 yuan, maintaining a “buy-A” investment rating.
Risk warning: downstream demand falls short of expectations; panel prices fluctuate; international trade friction intensifies; competition increases risk.