Following the continuous rise in automobiles, auto parts and other related sectors, the rising wind is obviously blowing in the direction of in-vehicle display.
html On June 22, the OLED concept sector of the Hong Kong stock market rose by 2.47%; on June 23, the sector rose strongly by nearly 9%, with a cumulative increase of approximately 12% in two days, which was an outstanding performance among many sectors.Among them, BOE Precision Technology (00710), as the industry leader, has been particularly eye-catching - its stock price rose 6.21% on the 22nd, and rose nearly 13% the next day, currently trading at HK$13.88. If we look at it over a long period of time, its stock price has risen by more than 65% in the past month, which is an astonishing rise.
As we all know, it is a tacit consensus in the market that new energy vehicles have benefited from pro-consumption policies and have been rising in recent times. In-vehicle displays are related to the automotive industry chain, so it is obvious that they will rise. As for individual stocks, in addition to external forces, In addition to the benefits of rising prices, one's own strength is also crucial.
Therefore, for BOE Precision Technology, in addition to positive external factors, what other reasons have contributed to its strong rise, and what is the sustainability of the subsequent rise?
Driven by the "trend" of large screen + multi-screen, vehicle-mounted displays are reaching 100 billion Level market
Zhitong Finance APP understands that the vehicle display screen refers to the display screen installed inside the car, and its main functions are driving assistance and entertainment. Depending on the loading position of the vehicle display, the vehicle display can also be an instrument display, a head-up display, a rearview mirror display, a central control display and a rear display.
In recent years, with the continuous evolution of electrification and intelligence of passenger cars, the trend of multi-screen and large-screen in-vehicle displays has become increasingly obvious.
In terms of multi-screen, in the era of smart electric vehicles, users are no longer satisfied with the cockpit display of two LCD screens. From central control, to instruments, to entertainment screen, to function screen, to HUD, etc., users need large-screen display and multi-screen interaction to provide more comprehensive information, complete personalized settings, and improve the smooth operation experience. Against this background, multi-screen will gradually become the main development trend in the era of smart electric vehicles. According to IHS data, the average number of screens on a bicycle in 2019 was 1.75; by 2030, the number of cars equipped with three or more screens will reach about 20%.
In terms of large-screen technology, in addition to the rapid growth in the number of screens in cars, the large-screen characteristics of new energy vehicles are also gradually highlighted. According to data from CINNO Research, in terms of central control screens, the sales volume of new energy vehicles with a size of 12.0" and above accounts for 48%, which is 29% higher than that of traditional fuel vehicles of the same size. In terms of instruments, new energy vehicles are 8.0"-10.0" and 12.0" or above account for 20% and 45% respectively, which are 13% and 20% higher than that of fuel vehicles of the same size.
Based on the above, it is not difficult to find that with the development of multi-screen and large-screen smart cars, they are gradually becoming smart cars. With the development trend of the times, the automotive display industry segment will also usher in greater development opportunities.
On the one hand, driven by multi-screen, global shipments of automotive display panels continue to increase: According to Qunzhi. Consulting statistics from Sigmaintell, in 2020, global vehicle display panel shipments were approximately 135 million units, rising to 164 million units in 2021, a year-on-year increase of approximately 21%. By 2025, vehicle display panel shipments are expected to reach 226 million units. On the one hand, driven by large screens, it is expected that the proportion of large-size automotive display panels will continue to increase, which will also continue to increase the market size of automotive displays: Omdia statistics indicate that the global automotive display market size in 2020 will be approximately US$7.2 billion. .
In view of this, Guosheng Securities predicts that under the trend of multi-screen and large-screen development, the global automotive display market size is expected to exceed US$12.8 billion in 2025.
From the perspective of competition, the current concentration of automotive displays is low. , the market is relatively optimistic that the market share of industry leader BOE continues to rise
Specifically, the H1 global automotive display competition pattern in 2021 is: Shenzhen Tianma (14%), AUO (13%), JDI (12%), BOE (12%). 12%), LG (10%), Innolux (8%), and others (31%). Compared with the concentration of panels in other industries (tablet CR3 reached 74%, laptop CR3 reached 72%, and TV CR3 was 72%). 53%), the current concentration ratio in the automotive field is low, CR3 is only 39%, and mainland manufacturers account for a low proportion, only 31%.
It is worth mentioning that BOE’s market share of vehicle-mounted displays (12%) is far lower than that of tablets (45%), laptops (29%), and TVs (24%). BOE’s market share of vehicle-mounted displays above 8 inches The rate reaches 20%. In the long term, on the one hand, thanks to the trend of large screens, on the other hand, BOE has better investment willingness, comprehensive cost, service capabilities and response speed, and its market share is expected to continue to rise in the future. With BOE Precision being backed by BOE, its development advantages are naturally self-evident.
Based on the above, it can be seen that with the favorable scale of the hundreds of billions-level automotive display market, BOE Precision’s stock price has a certain basis for rising.
Backed by BOE, performance jumped due to "rising volume and price"
It is understood that BOE Precision Electronics was founded in 1978 and was acquired by BOE Group in April 2016. It is a subsidiary of BOE. Currently, the company focuses on vehicle and industrial display and solution business. It is BOE's only vehicle display business platform, providing customers with vehicle display assemblies and smart vehicle display systems.
From the product line point of view, BOE Precision focuses on the development of vehicle display business and basically achieves full coverage of products and solutions. The company’s solutions support digital instrument panel display, central control display, head-up display (HUD), rear Applications include front-view and side-view electronic rearview mirror displays to highly integrated digital cockpit displays (free form), curve design and touch integration. In terms of product size, the company basically covers a full range of sizes from 3 inches to 40 inches.
It should be pointed out that relying on the strong advantages of BOE Group, BOE Precision has certain development advantages in terms of market share, customer voice and technological innovation.
Specifically, BOE, as a global Internet of Things innovative enterprise and semiconductor display leader, relies on BOE’s brand and technological advantages to form certain development advantages in market share, customer voice and technological innovation: on the one hand, the The company is the leader in large-size vehicle-mounted displays. In 2021, the company's shipment area accounted for 15.9% of the market share, ranking first in the world. The shipment area of medium and large sizes (8 inches and above) remains first in the world. On the other hand, the company currently has multiple TFT, LTPS LCD, OLED, and HUD vehicle display production lines, serving more than 100 global mainstream automobile brands.
In view of the above development advantages, BOE Precision's operating capabilities have continued to improve in recent years, with revenue and net profit reaching record highs in 2021.
In 2021, the company achieved revenue of HK$7.738 billion, a year-on-year increase of 71%; profit attributable to shareholders was HK$328 million, a significant year-on-year increase of 378%, with revenue and net profit performance reaching record highs. If we delve deeper into the reasons for the surge in performance, it is not difficult to find that the increase in both volume and price is the main reason for the company's rapid revenue growth.
In terms of "volume", the launch of the mass production TFT project and the growth in demand for new energy vehicles have helped the company's shipments increase significantly. In 2021, BOE Precision's automotive display shipments will reach 21 million pieces, a year-on-year increase of 41%, and the CAGR from 2018 to 2021 will be 46%.
In terms of “price”: display technology upgrades and the launch of high-end products help increase product value. In 2021, high-end display technologies such as OLED, BD-Cell, special-shaped curved surfaces, AR-HUD and exterior mirrors have won project designations from domestic and foreign high-end traditional and new energy vehicle manufacturers, such as NIO and BAIC. Thanks to the increased sales share of high-value products, the company's vehicle display unit price will reach 310 yuan in 2021, a year-on-year increase of 34%, and the CAGR from 2019 to 2021 will reach 20%.
With both volume and price rising, the vehicle-mounted display business has gradually become the main driving force for BOE Precision’s revenue. In 2021, the company's automotive business achieved revenue of HK$6.509 billion, a year-on-year increase of 89%, accounting for 84% of total revenue.
In addition, BOE BOE’s “low net profit margin” performance, which has been criticized by the outside world, has also improved. Thanks to the improvement in demand for automotive displays, the company's revenue has increased significantly, and the scale effect has been highlighted. In 2021, the company's depreciation accounted for 7.7% of revenue, a decrease of 1.7pct from the same period last year, and employee compensation accounted for 2.1% of revenue, a decrease from last year. It fell by 1.2pct during the same period. The company's net profit attributable to parent companies in 2021 reached HK$328 million, a year-on-year increase of 378%, and the net profit margin reached 4.2%, an increase of 2.7pct compared with the same period last year.
Based on the above-mentioned performance, it is not difficult to see that BOE Precision Technology clearly has both external and internal motivations for its stock price to rise.
However, it should be noted that competition in automotive displays is intensifying at present - due to the decline in shipment growth of consumer electronic equipment, it is expected that more panel and display module manufacturers will participate in the automotive display market, so market competition may intensify. Coupled with the factors that product R&D does not meet expectations - since the company's share of display modules is at the forefront of the industry, an important driver of future growth is smart cockpit and system integration products, the mass production schedule of new products may affect future performance growth. Follow-up BOE Precision's upside may be subject to certain resistance.
In summary, BOE Precision Electronics, as the leader in automotive displays, has both internal and external momentum for growth. Although it is limited by factors such as intensified competition in automotive displays and product development that does not meet expectations, the overall performance In other words, the company’s upward momentum is still greater than its resistance. It remains to be seen what kind of upward space it will open up in the future.
