BOE A (000725) 2019 Interim Report Performance Review: increasing revenue but not increasing profit in the first half of the year

BOE A (000725) 2019 Interim Report Performance Review: “increasing revenue but not increasing profit” in the first half of the year

A brief evaluation of BOE’s revenue in the first half of 2019 was about 55 billion yuan, a year-on-year increase of about 27%, and net profit attributable to mothers was about 16.

700 million, a year-on-year decrease of about 44%, and net profit after deduction is about 6.

500 million, a reduction of about 57% each year.

Among them, Q2 revenue increased by about 30% each year, net profit attributable to mothers decreased by approximately 36%, and gross profit margin in the single quarter decreased by approximately 1.

7%, revenue and profit as expected.

Operational analysis The new production line was put into operation to drive continued revenue growth. The decline in panel prices dragged the company to “increasing revenue but not increasing profits”: in Hefei10.

Since the 5th generation line was put into production, the company’s revenue growth rate in the past four quarters (3Q18-2Q19) has continued to expand, respectively 5%, 13%, 23% and 30%.It is manifested as “increasing income but not increasing profits”.

As the company currently maintains the world’s largest volume in five major application areas such as smartphone LCD screens, tablet computer screens, notebook computer screens, monitor screens, and TV screens, the company adjusted its product structure for two quarters.Single-quarter gross margin fell by only 1.

7%.

Flexible OLED products have increased in size and increased in size, and new products such as folding mobile phones are gaining momentum: Although the overall price of liquid crystal display panels has shifted downward, taking a 32-inch TV panel as an example, the decline in 2Q is close to 30%, but the company is equipped with Huawei Mate 20 ProAnd P30 Pro’s flexible OLED product output continues to increase, the wholesale volume in the first half of the year exceeded 10 million units.

In addition, as Huawei ‘s core supplier of the foldable mobile phone Mate X, which will be launched in the third quarter of this year, we believe that the new foldable mobile phone products will give the company a leading edge in the competition of differentiated flexible OLED mobile phone panels.

Supply-side production reduction has become the main theme, and panel prices are expected to usher in a rebound in the fourth quarter: starting from mid-2017, the average decline of LCD panels has exceeded 50%. At present, the prices of TV panels 65 ”and below have fallen below that of most panel manufacturers.Cash costs, “closed factories and reduced production” became the main theme of the industry in the second half of the year.

Korean factories Samsung and LG are fully turning to OLED, and it is estimated that the two domestic Koreans will total about 220k / month.

The 5th generation line will be shut down, Taiwanese manufacturers will begin to reduce the production line production rate, and the mainland plant Tap BOE will also be fully production and sales in the first half of the 10th.

The production capacity of the 5th generation line is reduced by about 25%. The clearing of production capacity at the supply 杭州桑拿网 side will help drive panel prices to stabilize and rebound in the fourth quarter. BOE has clearly benefited as a leading LCD panel.

Investment suggestion We maintain the company’s forecast of net profit attributable to the parent in 19-21 years of 4.8 billion, 10 billion and 15.5 billion, respectively, and the corresponding EPS is 0.

14 yuan, 0.

29 yuan and 0.

45 yuan, maintained at 5.

The target price of 78 yuan remains unchanged.

Risk warning: Sino-US trade war repeatedly affects terminal TV demand; panel industry price war continues to affect company profits