The concentration of the LCD panel industry is increasing
May 10, 2022
Core Tip: From the perspective of the whole year of 2021, it is still a big year for panels, but it is currently in the trough stage. Therefore, it can be seen that in the first quarter of 2022, while the revenue of panel manufacturers increased, their profits declined year-on-year.
In 2021, under the momentum of the high panel boom, the scale effect will be more obvious, and panel giants have refreshed their annual performance.
Taking the first echelon in China as an example, BOE's revenue in 2021 will reach 219.31 billion yuan, a year-on-year increase of 61.79%, and the net profit attributable to the parent is 25.831 billion yuan, a year-on-year increase of 412.96%; TCL Technology achieved revenue of 163.54 billion yuan, a year-on-year increase of 113% , the net profit attributable to the parent was 10.06 billion yuan, a year-on-year increase of 129.2%.
On the other hand, the revenue growth of the second and third echelons that focus on small and medium size is small, and it is not easy to make profits in the OLED field. For example, Shentianma's revenue in 2021 was 31.829 billion yuan, a year-on-year increase of 8.88%, and the net profit attributable to the parent was 1.542 billion yuan, a year-on-year increase of 4.61%; Visionox's total operating income last year was 4.544 billion yuan, a year-on-year increase of 32.32%, and the net profit attributable to the parent Loss of 1.638 billion.
The doubling growth of BOE and TCL Technology has benefited from the increase in large-size LCD panels. In the first half of 2021, TV panels have made great progress. In the second half of last year, it entered a period of price decline, and the supply and demand relationship of TV panels loosened, and a structural decline began to occur, which has continued to this day.
From the perspective of the whole year of 2021, it is still a big year for panels, but it is currently in the trough stage, so it can be seen that in the first quarter of 2022, while the revenue of panel manufacturers increased, their profits declined year-on-year.
2021: TV LCD panel price volatility
In recent years, the panel industry has faced complex variables. Repeated epidemics, demand shifts, and component shortages have all affected the trend of panel prices.
In the first half of 2021, online economy and online office will be further popularized, and terminal demand will increase accordingly. At the same time, the shortage of upstream components such as chips has also exacerbated the tension between supply and demand, and the price of LCD TV panels has been rising.
Entering September, the price of LCD TV panels reversed rapidly. At that time, Sigmaintell’s report pointed out that brand manufacturers continued to implement conservative procurement strategies, because the growth momentum of terminal demand was limited, logistics costs and efficiency affected channel inventory levels increased, and operating pressures Sustained effect on brand demand. On the supply side, panel makers are actively adjusting production capacity through "large-size" and "controlling production and reducing investment", but the degree of supply adjustment is weaker than the speed of demand change. The price drop of small size is expected to be narrowed, while the large size still maintains a relatively large decline.
Although the supply and demand of TV LCD panels will reverse in 2021 and the growth will slow down in the second half of the year, from the perspective of overall performance, the profits of leading manufacturers still achieve high growth.
For example, the net profit attributable to the parent of TCL Technology in the third quarter of last year was 9.1 billion yuan, a year-on-year increase of 349%, and the net profit attributable to the parent for the whole year of last year doubled; if we only look at the semiconductor display sector (panel business) of TCL Technology , its net profit reached 10.65 billion yuan, a year-on-year increase of 339.6%.
According to the financial report, in the large-size field, TCL Huaxing's shipment area increased by 36% year-on-year, revenue increased by 95.1% year-on-year, and the market share of TV panels increased by 23% year-on-year. The proportion of revenue from mobile phone products increased to 41%.
TCL said that in the first half of last year, the overall prosperity of the semiconductor display industry remained at a relatively high level, but due to the adjustment of some market demand and logistics costs, the price of large-size products began to recover from the third quarter, but the average price was still significantly higher than the previous one. the same period of the year. TCL Huaxing optimized its business structure and increased the contribution of large-size, high-end and medium-size IT products, with both revenue and profit hitting new highs.
Looking at BOE again, in the third quarter of 2021, BOE’s net profit attributable to its parent company was about 7.253 billion yuan, a year-on-year increase of 441.14%. In 2021, BOE’s net profit attributable to its parent company also increased by more than four times. BOE stated that the company's market share in five major application fields including mobile phones, tablet computers, notebook computers, monitors, and TVs continued to rank first in the world. In December 2021, it successfully achieved a monthly shipment of tens of millions of flexible AMOLED products.
It can be seen that after the price entered the cyclical fluctuation, the enterprises accelerated the adjustment of the production capacity structure, and further increased the non-TV production line and product planning.
2022: Q1 results under pressure, weaker demand
Under the large base in the first half of 2021, the performance of panel giants is outstanding, but entering 2022, the panel industry as a whole will be under pressure. On the one hand, the international situation has changed, and terminal demand has continued to slow down; on the other hand, the supply and demand relationship has changed, and panel prices have continued to decline. According to Omdia data, the prices of 32, 43, 50, 55, and 65-inch LCD TV panels in March 2022 dropped by 57.3%, 51.1%, 59.0%, 53.1%, 40.1% to 38, 68, 84, 107, 176 US dollars / piece.
The company's first-quarter earnings also fell. According to the financial report of BOE, in the first quarter of 2022, the operating income was 50.476 billion yuan, an adjusted increase of 0.40% over the same period of the previous year; the net profit was 4.389 billion yuan, a 16.57% decrease compared with the same period last year after adjustment.
In the first quarter, TCL Technology achieved operating income of 40.57 billion yuan, a year-on-year increase of 25.8%; net profit of 2.35 billion yuan, a year-on-year decrease of 27.5%. TCL Technology said that due to factors such as weakening downstream demand and short-term stagnation of the supply chain, the prosperity of the semiconductor display industry fell to the bottom area, and the price of large-size products fell significantly compared with the same period last year, and the industry's profitability was under pressure.
From the perspective of large-size LCD panels, Sigmaintell told the 21st Century Business Herald reporter that the global market in the second quarter was in a state of "double anxiety" caused by the epidemic and changes in the external environment. The "butterfly effect" gradually has an adverse impact on consumer psychology, user purchasing power and supply chain delivery. Sigmaintell predicts that the scale of terminal market demand may "shrink more than expected" in the second quarter.
At the same time, Sigmaintell's "supply and demand model" estimates show that the global LCD TV panel supply and demand ratio in the second quarter was 7.3% (area benchmark), and the supply continued to be loose. From April to May, panel prices continued to decline, and the decline in each size expanded in April. For example, in terms of large size, North American demand is hard to recover in the short term, and Chinese market demand is difficult to meet expectations. It is expected to maintain a large drop of around US$10 from April to May.
Some people in the industry chain also told reporters that at the bottom of the industry cycle, the overall decline of large-size panels should have been limited. The analysis of Everbright Securities also pointed out that LCD panel supply and demand are expected to improve, and prices may stabilize and rebound in the third quarter. Since 2022, the decline of TV panels has slowed down. At present, the price of LCD TV panels and TV panels has approached or is lower than the average cost and cash cost level. , the downside is limited.
Looking at small size, the global demand for smartphones is weak. Under the influence of repeated domestic epidemics and transportation control, the supply of smartphone panels has also been affected to a certain extent. According to Sigmaintell, the price of smartphone panels continued to decline in April. .
Judging from the performance of Shentianma and Visionox, they will also be affected in the first quarter of 2022. Shentianma achieved revenue of 8.675 billion yuan in the first quarter, a year-on-year decrease of 0.72%, and net profit attributable to the parent of 79 million yuan, compared with the same period last year. The loss was 11.9468 million yuan; the revenue of Visionox, which mainly focuses on OLED screens, was 1.49 billion yuan, a year-on-year increase of 22.93%, and the net profit attributable to the parent was a loss of 580 million yuan.
From a long-term perspective, the concentration of the LCD panel industry is increasing, and various companies are also adjusting their production capacity layout, including increasing investment in IT products and OLED fields. At present, in the face of cyclical fluctuations, the adjustment ability also tests the maturity and flexibility of the domestic panel industry.