Guosen: The "trade-in for new" policy continues to drive demand for TVs. TV panel prices increased in January.

Guosen released a research report stating that, according to TrendForce, the continuation of the domestic trade-in policy for old to new TVs in January has driven demand for televisions. Additionally, international brand customers are about to start stocking up for the new year, with overall demand expected to remain stable. Due to stronger than expected television demand, panel factory capacity may not be adjusted during the Lunar New Year period, and television panel prices still have room to rise under strong demand. Currently, the LCD industry's capacity is gradually stabilizing, with overseas manufacturers shutting down production lines and selling off production lines, leading to further consolidation of market share. With the advantage of concentrated market share on the supply side, LCD TV panel prices can be well controlled. The cyclical nature of the industry is gradually fading, and its growth attributes are becoming more evident, leading to the gradual strengthening of profitability for LCD panel companies. Guosen's main points are as follows: Performance Review: According to Omdia data, in November, global large-size LCD panel monthly revenue was USD 5.57 billion, up 5.73% month-on-month and 9.71% year-on-year. Among them, BOE, TCL Huaxing, and HKC's large-size LCD panel monthly revenue increased by 11.52%, 11.19%, and 5.11% respectively compared to the previous year. In the 3Q24, the average gross profit margin for major Chinese LCD manufacturers (Tianma Microelectronics, TCL Corporation, BOE Technology Group, Caihong Display Devices, Infovision Optoelectronics, AUO, Innolux, HannStar Display Corporation) declined by 0.77% year-on-year and 0.56% month-on-month to 14.91%, while the net profit margin increased by 0.15% year-on-year but decreased by 0.69% month-on-month to 1.75%. Prices: In December, the price of a 65-inch LCD TV panel increased month-on-month, and it is expected that prices for various sizes of LCD TV panels will increase in January. Television: In December 2024, the prices for 32-inch, 43-inch, 50-inch, 55-inch, and 65-inch LCD TV panels were USD 36, USD 62, USD 101, USD 126, and USD 173 respectively. Except for a 0.6% increase in the price of the 65-inch TV panel, the prices for the other sizes remained unchanged compared to November. Omdia predicts that in January, the prices for 32-inch, 43-inch, 50-inch, 55-inch, and 65-inch LCD TV panels will be USD 37, USD 63, USD 102, USD 128, and USD 175 respectively, with increases of 2.8%, 1.6%, 1.0%, 1.6%, and 1.2% respectively. According to TrendForce, the continuation of China's trade-in policy for old to new TVs in January has driven television demand, while international brand customers are about to start stocking up for the new year, leading to an expected stable overall demand. Due to stronger than expected television demand, panel factory capacity may not be adjusted during the Lunar New Year period, and television panel prices still have room to rise under strong demand. Laptops: In December 2024, the prices for a 10.1-inch (tablet), 14-inch (laptop), and 23.8-inch (monitor) LCD IT panels were USD 16.4, USD 26.2, and USD 44.1, respectively, remaining unchanged month-on-month. Omdia predicts that in January, the prices for a 10.1-inch, 14-inch, and 23.8-inch LCD IT panels will remain unchanged at USD 16.4, USD 26.2, and USD 44.1 per panel, respectively. Supply & Demand: In November, the global shipment area of large-size LCD panels increased by 19.97% year-on-year, with shipments of TV, monitor, notebook, and tablet panels all increasing. In terms of supply, it is expected that the global capacity area for large-size LCD panels will increase by 2.31% in 2024 compared to 2023, with quarter-on-quarter changes of +0.72%, +0.35%, +0.25%, and -0.02% in 1Q24, 2Q24, 3Q24, and 4Q24 respectively. It is predicted that the global capacity area for large-size LCD panels will increase by 0.21% in 2025 compared to 2024, with quarter-on-quarter changes of -0.02%, -0.02%, 0.00%, and +0.16% in 1Q25, 2Q25, 3Q25, and 4Q25 respectively. In terms of demand, in November 2024, the global shipment area of large-size LCD panels increased by 19.97% year-on-year, with TV panel shipments increasing by 21.46%, monitor panel shipments increasing by 8.32%, notebook panel shipments increasing by 23.43%, and tablet panel shipments increasing by 23.51%. Investment Recommendations: Focus on the LCD panel industry chain, especially on companies like BOE Technology Group. Favorable outlook for domestic panel leader BOE Technology Group (000725.SZ) to seize the opportunities of consumption upgrade and domestication in China, gradually increasing profitability through economies of scale, cost advantages brought by high-generation lines, market share leadership, and pricing power. Furthermore, the rise of the LCD industry enhances the competitiveness of domestic television brands and ODMs in overseas markets, recommending Shenzhen Mtc (002429.SZ), Shenzhen KTC Technology (001308.SZ), Guangzhou Shiyuan Electronic Technology (002841.SZ), and others. Risk Warning: Risks related to lower than expected demand for display devices; Risks of price fluctuations in display devices; Risks related to production equipment and raw material supply.