TCL Group (000100): 1Q19 meets expected Samsung capacity transfer plan postponed to put pressure on supply side

TCL Group (000100): 1Q19 meets expected Samsung capacity transfer plan postponed to put pressure on supply side

1Q19 results were in line with expectations. TCL’s 1Q19 revenues reached US $ 29.7 billion, an increase of 15 over the same period.

5%, net profit attributable to mothers reached 8 trillion, an annual increase of 6.

6%.

The company has received the entire asset restructuring delivery budget on April 15, 2019. Through the reorganization, the asset-liability ratio of listed companies has dropped from 68% to 59%.

Supported by continuous cost reduction and efficiency enhancement, business expansion and new technological breakthroughs, the company maintains the goal of growth revenue growth and double-digit net profit growth.

Development Trends Large-size panels have sluggish capacity utilization in 1Q19 and are expected to improve since 2Q19: We estimate that the budget for large-size panels in 1Q19 will be $ 5 billion, which can be replaced by 79% from the previous quarter.

Due to the rebound in prices and the start of the stocking cycle, the capacity utilization rate is expected to increase from 2Q19.

1) On the demand side, in the first quarter of 19, the sales area of overseas markets increased while the domestic market declined.

The compensation policy issued by the state is good for the company, but because the existing TV market is already high, the company expects that the increase in demand will not reach the same level as in 2013.

In the long run, the company is still optimistic about the demand of commercial displays, e-sports monitors and other applications.

2) From the perspective of the supply side, the delay in Samsung’s capacity transfer plan has put pressure on the supply side.

The company expects that large-size panel prices will continue to pick up in Q2, while Q3 may remain flat.

The small-size production line maintains full production and sales, and the revenue share has further increased: we expect 佛山桑拿网 the small-size panel to achieve revenue of US $ 2.2 billion, and the revenue share will rise to 31%.

The company believes that the market growth of small-size panels is mainly due to the replacement demand brought by 5G smartphones, the increase in the area of stand-alone panels brought by full-screen / foldable screens, the continued penetration of AMOLED in smartphones, and the use of car screens asRepresenting incremental demand.

The company believes that in the short term, LTPS still has a competitive advantage in the mobile terminal and automotive display fields, and continues to be optimistic about the market potential of flexible AMOLED, but remains cautious about the capacity planning of AMOLED.

Earnings forecast We maintain our 2019 revenue and profit forecasts unchanged.

Estimates and recommendations The company currently has a sustainable response to 20191.

5x P / B.

We maintain 4.

The target price of 00 yuan is unchanged, corresponding to January 2019.

6 times price-to-book ratio, which was 4 earlier.

4% upside.

Maintain Neutral rating.

Risks that terminal TV and smartphone expansion do not meet demand, leading to further deterioration of supply-demand relations