TCL Group (000100): 3Q19 net profit exceeds expected OLED customer cut-in and restructuring volume still needs to be observed

TCL Group (000100): 3Q19 net profit exceeds expected OLED customer cut-in and restructuring volume still needs to be observed

TCL Group’s 3Q19 net profit was lower than expected.

4 ‰, 49 years ago.

4%; gross profit margin continues to decrease by 1.

2ppts to 7.

9%, reflecting the downward pressure on the unit price of the panel industry, but the company effectively controlled the material cost of the product through the strategy of dating suppliers, and the decline in gross profit margin improved; the net profit attributable to mothers reached 500 million, which fell by 46%, which was less than ours.Expectations, mainly due to falling unit prices, expected profit margins exceed our expectations.

In the future, the depreciation of the company’s T1 and T2 production lines will gradually decrease. We expect that the company’s depreciation expenses will be reduced by 1 / 1.2 billion in 2019/20, which can further improve profitability.

We believe that the company’s short-term performance should remain under pressure, while the penetration of new product OLED panel customers and the amount of restructuring still need to be observed, maintaining a neutral industry rating and target price.

00 yuan.

Development trend The 南京桑拿网 relationship between supply and demand of large-size panels will gradually improve in 2020: the company believes that the price of large-size panels in 3Q19 has fallen to the bottom and is expected to continue to maintain stability in the fourth quarter.

On the supply side, the company believes that the increase in supply capacity on the supply side will be limited in 2020, mainly for the 11th generation lines of Huaxing Optoelectronics and BOE, and at the same time, new capacity will enter less after 2021, which will result in higher investment costs for the current 11th generation line(Approximately 45 billion U.S. dollars), and by that time, the manufacturer’s production line depreciation has been completed, which will pose huge cost pressure on the new production line.

At the same time, the company said that since July, the effect of Korean manufacturers’ conversion will gradually improve, and it is expected to further ease the surplus surplus; on the demand side, the company is optimistic 1) The use of 4K and 8K signal broadcasting in the Tokyo Olympics will boost demand for oversized panels, and2) Huawei and other manufacturers entering the television industry are expected to bring animal networking related applications up.

The LTPS production line is fully loaded, and the amount of new OLED customers entering and restructuring still needs to be observed: At present, the capacity of the T3 production line has been increased from 45K / month to 50K / month, and the LTPS product market ranks second in the world.

In terms of OLED, the company said that the production capacity of the T4 production line is expected to climb. It is expected that it will be officially mass-produced in the fourth quarter.

In terms of customer introduction, the company has approached major Android brand customers and submitted samples for verification, and it is currently progressing smoothly, but we believe that as a late entrant in the OLED field, the company needs to continue to track the yield of the new production line and the stability of the product.

Earnings Forecasts and Estimates We slightly raised our revenue for 2019/20 by 3% / 4% to US $ 729.516 billion, mainly because Hanlinhui and other businesses exceeded expectations.

However, we lowered the net profit for 2019/20 by 29% / 32% to 31/41 trillion, mainly due to 1) a significant reduction in gross profit margin for 2019/20 2) a substantial reduction in the company’s non-operating income.

The company’s current consensus corresponds to 1 in 2019.

With a 4x PBR, considering that the supply and demand in the 1H20 panel industry needs to be gradually improved, we maintain our neutral rating and target price of 4.

00 yuan unchanged, corresponding to 1 in 2020.

The 5x P / B ratio has 18% more room for growth than currently expected.

Risks The expansion of terminal TVs and smartphones does not meet demand, resulting in a gradual deterioration of the supply-demand relationship.