20181016-中国银河国际证券-TFT-LCD_supply_chain_—_Share_price_weakness_of_TV_makers_may_provide_a_trading_opportunity_4页_531kb

TFT-LCD Supply Chain and TV Maker Share Price Analysis (Sep 2018)

Core Content Overview

The report provides an analysis of the TFT-LCD supply chain and the performance of TV manufacturers in the Greater China region, focusing on share price movements and industry dynamics in Q3 2018.

Main Points and Key Information

TFT-LCD Supply Chain Performance

• Panel Price Recovery: TFT-LCD panel prices for sizes ranging from 32" to 55" rebounded sequentially in September 2018 after a prolonged decline since June 2018.
• Improved Turnover Growth:
  • AUO reported a YoY turnover drop of 5.6% in September 2018, improving from -7.8% in August.
  • Innolux saw a -9.5% YoY turnover drop in September, up from -10.5% in August.
  • Amtran experienced a sharp increase in YoY turnover growth, reaching +49.3% in September, compared to -21.6% in August.
• Industry Resilience: Despite macroeconomic concerns, the TFT-LCD supply chain showed resilience, with panel makers benefiting from stronger demand, although LCD TV panel prices still dropped over 20% YoY.

TV Maker Performance

• TCL Electronics (TCLE):
  • Achieved highest quarterly sales volume in Q3 2018, nearly 8 million sets.
  • Total LCD TV shipments grew 31.1% YoY in Q1-Q3, reaching 21.12 million units, with 82.5% of full-year target.
  • Smart TV and 4K TV shipments grew by 42.7% and 54.9% respectively in Q3.
  • Strong growth in North America, Europe, and emerging markets like Brazil, Australia, and Vietnam.
• Skyworth (0751.HK):
  • Operations improved post-2H FY18, with stronger TV shipments in Apr-Sep 2018.
  • Despite a YoY increase in shipments, lower ASPs led to slower top-line growth.
  • Gross margins and good contributions support its turnaround.
  • Shares hit a multi-year low, suggesting undervaluation and potential M&A interest.
• Share Price Weakness: TV makers like TCLE and Skyworth have faced share price pressure due to:
  • Trade tensions between China and the US.
  • Concerns over China's property market.
  • RMB depreciation.
• Valuation: Skyworth is discounted relative to peers, particularly in terms of PBV, making it an attractive M&A target or private equity candidate.

TFT-LCD Market Outlook

• TFT-LCD Dominance: OLED and Micro-LED are not expected to replace TFT-LCD in the near term.
  • LTPS LCD remains the mainstream for rigid displays due to its price/performance ratio.
  • OLED is more relevant for flexible displays, especially smartphones.
  • Micro-LED development is hindered by massive transfer bottlenecks.
• Chinese Panel Makers:
  • Gaining market share in smaller TVs due to capacity expansion.
  • Korean and Taiwanese suppliers focus on higher-end and niche products, facing less competition from Chinese peers.

Smart TV Growth and Online Video Trends

• Smart TV Platforms: Expected to be long-term growth drivers for both Skyworth and TCLE.
• Online Video Industry: Increasing market attention is anticipated to boost sentiment and share price performance for TV makers.

Key Figures and Performance Metrics

Conclusion

• Trading Opportunity: The improved TFT-LCD panel prices and solid shipment growth suggest a potential trading opportunity for TV makers, especially TCLE and Skyworth.
• Valuation Discount: Skyworth's discounted valuation and PBV make it an interesting investment target.
• Market Sentiment: The online video industry and potential government policies to boost local consumption may reinvigorate investor sentiment.
• Long-Term Outlook: Smart TV platforms are expected to drive long-term growth for both Skyworth and TCL Electronics.

Investment Recommendations

• BUY: For companies with strong growth momentum and positive industry trends.
• HOLD: For companies without clear catalysts but with potential for improvement.
• Potential Catalysts: Government policies, recovery in panel prices, and increased market attention to smart TV and online video industry could boost share prices.