TCL Technology doubled its net profit last year Panel prices are expected to bottom out in the second quarter of this year

TCL Technology (000100.SZ) released a performance forecast on the evening of January 27, revealing that last year's revenue and net profit doubled. Panel prices in the first quarter of this year continued to decline, will bring profit pressure to the display panel industry, analysts expect panel prices in the second quarter to bottom out and rebound.

In 2021, TCL Technology is expected to achieve operating income of 161.6 billion to 165 billion yuan, an increase of 111%-115% year-on-year; net profit attributable to the mother of 10 billion to 10.3 billion yuan, an increase of 128% -135% year-on-year.

Among them, the semiconductor display (panel) business revenue and profit have achieved substantial growth, operating income increased by more than 80% year-on-year, and net profit increased by more than 330% year-on-year. Zhonghuan Semiconductor consolidated in the fourth quarter of 2020, becoming a new driving force for TCL Technology's performance growth in 2021.

Although the price of LCD TV panels has been reduced since the third quarter of 2021, the average price for the whole year of 2021 is still significantly higher than that of the same period last year, so TCL Technology's large-size panel business revenue increased by more than 90% year-on-year last year, the net profit attributable to the mother increased by more than 300% year-on-year, and the shipping area increased by 36% year-on-year, while the high-end strategy of TV (TV) and commercial panels also made the profitability of the large-size panel business stable.

TCL technology small and medium-sized panel revenue increased by 30% year-on-year last year, the profitability of Wuhan 6-generation LTPS LCD panel production line increased, Wuhan 6-generation flexible OLED panel production line phase II and PHASE III production capacity construction steadily advanced, positioned in the production of high value-added IT display Guangzhou 8.6 generation LCD panel line, positioned in the production of vehicle and AR /VR display Huaxing Wuhan second 6th generation LTPS LCD panel production line as planned.

Zhonghuan Semiconductor's photovoltaic material production capacity has increased rapidly, semiconductor material production capacity has steadily expanded, and the 8-12-inch product structure has continued to upgrade, making Zhonghuan Semiconductor exceed its performance doubling plan last year.

At present, the global LCD panel price is still continuing the downward momentum, and it is expected that the display panel industry will face profit pressure in the first quarter of this year. The increase in the concentration of the global LCD panel market will help alleviate the pressure.

According to Lotu Technology data, in November 2021, the sum of the shipment share of the world's top three LCD panel factories was 56.7%, and it will be close to 70% by 2024. According to Witsview statistics, in early January 2022, the quotation of 55-inch and 65-inch medium and large panels fell by $2 or 3 from the end of last month, and the decline was narrowing, and the quotations of 32-inch and 43-inch TV panels were the same as at the end of last month.

Rong Chaoping, senior research manager of Aowei Ruiwo, analyzed to the first financial reporter that the market share of Chinese mainland panel factories will continue to increase in 2022, and TCL Huaxing will rank in the top two of TV panel shipments, which will play a role in the price trend of LCD panels, and the impact of panel price changes will also be deeper. It is expected that after the LCD panel price bottoms out in the first quarter of 2022, the peak stock season in the second quarter will make the panel price bottom out and rebound.