Incident: Company discloses 2024 quarterly report

The company reported impressive performance growth in the first quarter, and revenue grew steadily: the company achieved revenue of 45.89 billion yuan in the first quarter of 2024, an increase of 20.8% over the first quarter of 2023. With the overall recovery of the industry and the improvement of terminal prices, the company's 24Q1 gross margin was 14.5%, up 7.6pcts, and the cost-side sales/management/R&D expenses ratio was 2.2%/3.2%/5.9%, and 0.3/0.6/1.1pcts. On the profit side, the company achieved significant growth. Net profit to mother reached 980 million yuan, a sharp increase of 297.8% year on year, after deducting non-net profit of 60 billion yuan, up 135.8% year on year. The performance growth rate was impressive.

The LCD field continues to innovate, and the OLED industry is progressing rapidly: 1) As a leading global semiconductor display company, BOE has ranked first in the world in TV display shipments for 6 consecutive years, and relies on self-developed, industry-leading high-end ADS Pro hard screen solutions, and partners such as Hisense, Lenovo, Skyworth, Changhong and other partners to display a series of large-screen and ultra-high-definition smart TV products equipped with UB Cell's high-end LCD technology. As the supply pattern continues to lean towards the mainland's leading market, LCD prices are expected to continue to improve. The recovery is driving the company's performance to continue to improve.

2) In the field of flexible displays, BOE is a domestic enterprise with an early layout, excellent technology, and wide market application. Currently, the company has invested in three 6th generation flexible AMOLED production lines in Chengdu, Chongqing and Mianyang, and built the first domestic 8.6th generation AMOLED production line in Chengdu, greatly promoting the OLED display industry to rapidly enter the middle size development stage. In terms of the market, BOE's flexible OLED shipments have been consistently ranked first in China and second in the world for many years. The company's flexible AMOLED shipments are expected to maintain significant growth, and continue to improve product structure and profitability, becoming a new growth point for the company's performance.

Fully lay out the “1+4+N+ Ecological Chain” to seize the big opportunities in the era of intelligent IoT: 1) Continued rapid development in the IoT innovation business, covering various application scenarios, leading the development cycle and quality control industry, and deeply involved in multiple IoT segmentation scenarios in the field of system solutions; 2) In terms of sensing business, the first four-seater ultra-luxury flagship MPV Gekrypton 009 Guanghui became the world's first mass-produced new energy vehicle equipped with BOE LC smart light curtains, setting a milestone in the intelligent upgrading of BOE's new energy vehicles. Field of light Setting a new benchmark in the industry; 3) The MLED business continues to empower diverse application scenarios such as notebooks, displays, televisions, automotive, XR, and movies. Furthermore, BOE continues to accelerate the pace of global industrial layout and service optimization, and has invested in the construction of the first smart factory independently invested overseas in Vietnam to provide more competitive terminal products and high-quality and efficient services to global customers.

Profit forecast and investment rating: In the context of the gradual recovery of industrial demand, we are optimistic that the company will benefit from the panel industry cycle reversal and rapid layout of the MLED circuit. We maintain our previous profit forecast. The company's net profit for 2024-2026 is 45.5/90.4/155 billion yuan, respectively. The current market value corresponds to PE of 36/18/11 times, respectively, to maintain a “buy” rating.

Risk warning: Demand for LCD TVs falls short of expectations; competition in the display panel industry intensifies.