The rise of domestic production ends the huge profits of overseas manufacturers
When Chinese mainland manufacturers have not yet started, the dominant LCD panel market has always been including Samsung, LG, Chimei, AUO and other Companies in Japan and South Korea and Taiwan Province, these industry giants often join forces to manipulate market prices for huge profits, in the early 21st century, nearly 80% of the cost composition of a TV is LCD panels.
According to the book "Inside the Matter":
In 2008, a 70-inch Samsung Sony LCD TV, the retail price can reach nearly 400,000 yuan, and today, only need to spend 4,000 yuan, you can buy the same size and better quality of similar products, the price is only one percent of that year.
Behind the sharp drop in prices, not only the cost of technology iteration has reduced, but also because the rise of Chinese manufacturers has ended the huge profits of overseas manufacturers, one of the more representative relevant domestic enterprises is BOE.
Until 2012, the mainland still needed to import 50 billion US dollars of display panels, but only 8 years later, in 2020, about 40% of the global display panel market has belonged to Chinese mainland companies.
From the brink of closure to the world's first
Many people have heard that boe's predecessor is Beijing electron tube factory, through the acquisition of a Korean company's LCD panel business, got the initial accumulation of technology, and later by working hard to engage in technology research and development to overcome one technical problem after another, breaking the monopoly of overseas giants in the field of LCD panels.
Behind this, not only the unremitting efforts of BOE engineers, but also the strong support from many local governments in the mainland, with the determination of one prosperity and one loss, crazy money and subsidies, and achieved today's BOE.
Because the capital investment required for the LCD panel business in the early stage is very large, and the return cycle is particularly long, it is equivalent to many local governments are accompanying BOE to take risks, but in the end, BOE lived up to expectations and achieved a counterattack.
How much support does the local government have for BOE? According to the book "Inside the Matter":
In 2005, BOE's financing plan to go public in Hong Kong failed, and there was a huge funding gap, the Beijing Municipal Government and China Development Bank guided 9 banks to provide BOE with a loan of 740 million US dollars, the exchange rate ratio of RMB at that time was about 8:1, and the Beijing Municipal Government also provided BOE with 2.8 billion yuan of loans, and then gave nearly 200 million yuan of policy discounts and 50 million subsidies.
In 2008, BOE built a production line in Chengdu, issued 1.8 billion yuan of shares to the Chengdu municipal government investment platform, and obtained a syndicated loan of 1.6 billion yuan with the help of China Development Bank.
Also in 2008, Hefei's budget revenue at that time was 30 billion, of which only half belonged to the locality, but in order to support BOE, of course, it is for the local industrial upgrading, it is said that it promised more than the government's financial resources to invest, and even rumors that for BOE's projects to stop the local subway construction.
According to the performance forecast disclosed by BOE, nearly 220 billion yuan of revenue and nearly 26 billion yuan of net profit were achieved in 2021, and the performance reached a new high since its inception, it is worth mentioning that according to THE FINANCIAL REPORT DATA OF BOE, the net profit of only 1 year in 2021 exceeded the sum of the 21 years from 2000 to 2020 (about 22 billion).
In terms of market share, BOE has achieved the world's largest display shipments in the field of LCD smartphones, laptops, monitors and TVs.
Can BOE's high profits be sustained
BOE achieved its best performance since its listing in 2021, which is very important because telecommuting and online education have expanded the market demand for displays, thanks to the strong demand for LCD panels in the first half of 2021, and the net profit has been greatly improved due to product price increases.
However, BOE's stock price performance does not match the net profit growth rate, the reason is that investors believe that the high price of LCD panels can not be sustained for a long time, of course, although the market price of LCD panels has retraced, BOE still has a lot of profit space, but it is very difficult to maintain a very high net profit growth rate. Compared with past operating conditions, investors prefer to invest in stocks in anticipation of the future performance of the company.
Of course, if BOE's performance growth rate can exceed market expectations, then its stock price may also have a good performance. BoE's current valuation is also at a reasonable level, as of Friday, January 28, BOE A stock price of 4.85 yuan, there is a certain reference significance, several brokers gave the target price from 5.94 yuan to 7.10 yuan, and basically a buy rating, indicating that its stock price still has some room for growth.