中國(guó)平板顯示器行業(yè)報(bào)告：在可折疊領(lǐng)域快速追趕

1、Why read this report?As foldable phones get ready to go mainstream, a fresh waveof technology innovation is underwayand, while China is still racing to catch up with the leaders in Korea, Chinese display makers have their advantages,tooInitiate coverage of Jingce at Buy and BOE atReduceA shake-up is

2、 under way in the worlds smartphone market as giants like Samsung and Huawei roll out high-tech foldable phones aimed at re-energizing the handset market. But another shake up is also under way, although not quite as high profile or headline grabbing. Chinese display makers are racing to keep up wit

3、h all the new technologies, and are looking to take on the leaders like Korea in producing the very latest in flat-paneldisplays.It should come as no surprise that the flat-panel industry is highly complex, and China has many strengths in many corners of it. But Chinese panel makers still lag behind

4、 Korea and Japanese peers in areas like foldable or large-size organic light-emitting diodes (OLED) panels which are the key ingredients now used in the very latest smartphones and 60” TVs. This technology cannot be understated it improves everything from picture quality to power consumption and we

5、see it revolutionizing the display industry in the comingdecades.The goods news though is that thanks to hundreds of millions of tech-hungry consumers at home, heavy investment in R&D, and a rich history of technology strength, we see a favorable outlook for Chinas domestic display equipment compani

6、es.In this report we look at:How fast the foldable phone industry can grow, and what are therisks.Why large ultra-high-definition TVs are also part of the picture, driving demand forpanels.Why we are taking a cautious view on the LCD panel industry amidoversupply.We initiate coverage of Jingce with

7、a Buy rating, and a target price of RMB62.80, derived from the mid-cycle valuation of 33.3x PE applied to 12-month forward EPS. We also initiate coverage of BOE with a Reduce rating, and target price of RMB3.20, by applying a mid-cycle valuation of 9.0 x EV/EBITDA to the stocks 12-month forward EBIT

8、DA.Contents HYPERLINK l _bookmark0 Why readthisreport?1 HYPERLINK l _bookmark2 China displayrevolution3 HYPERLINK l _bookmark3 Key HSBCstock calls4 HYPERLINK l _bookmark4 Relatedresearch5 HYPERLINK l _bookmark5 Smartphones need HYPERLINK l _bookmark5 smartdisplays6 HYPERLINK l _bookmark6 ChinaDispla

9、y10 HYPERLINK l _bookmark7 CompanySection31 HYPERLINK l _bookmark8 BOE(000725CH)32 HYPERLINK l _bookmark9 Jingce(300567CH)51 HYPERLINK l _bookmark10 Disclosureappendix68 HYPERLINK l _bookmark1 Disclaimer72China display revolutionOrganic light-emitting diode (OLED) is leading the new display revoluti

10、onAddressable market size of displays7%25%2018Total market share of OLED displays Addressable market size of displays7%25%2018Total market share of OLED displays foldable8Kthe next for TVpanels8K8K TV shipments5.4m0.4m8K TV shipments5.4m0.4m2019e2022e5GNetwork will also facilitate 8K content deliver

11、y and extend to VR, AR and eventually mobile devices100%80%60%40%20%0%China should begin to outpace Korea in 2021eKoreaChina7%JapanWe forecast that Chinas OLED capacity share will jump from 7% in 2018 to 63% in 2023eKoreaChina7%Japan201720182019e2020e2021e2022e2023eSource: DSCC, IHS, Sigmaintell, HS

12、BC Qianhai SecuritiesKey HSBC stock callsJingce 300567 CHCurrent price:Jingce 300567 CHRMB50.49Target price:BuyRMB62.80BuyUpside:24% Jingce is Chinas leading display testing and inspection equipment vendor, with key customers including BOE, CETC, TCL, Visionox and BenQc. We believe Jingce is well po

13、sitioned to benefit from Chinas panel makers robust investment in large-size LCD and OLED fabs in the coming years and the secular import substitution trend in Chinas display and semiconductor industry. In addition, product portfolio expansion from display module to cell and array inspection, as wel

14、l as semiconductor automatic test equipment (ATE), should serve as new growth dimensions.BOE 000725 CHCurrent price:BOE 000725 CHRMB4.29Target price:ReduceRMB3.20ReduceDownside:25% BOE is Chinas largest flat panel display maker, with strong exposure to the LCD and flexible OLED panel market segments

15、 We are concerned about the pricing outlook for large TV panels due to oversupply risk in the years ahead, as well as the share loss of a-Si panel capacity against LTPS and OLED going forward. We expect BOE to gain share in flexible and foldable panels for smartphones while the profitability remains

16、 uncertain due to potential aggressive pricing strategy.Priced at close of 25 July 2019Source: HSBC Qianhai Securities estimatesRelated researchRecommended reading .AsiaDisplay:Bracingforanother9 July2019equipment:Revivingordersmomentum15 February2019Koreatech:Weakfundamentalswellknown,andinterestri

17、sing21 January2019Temporaryhiccupratherthansecularweakness7 March2018Foldable Display: Aturningpoint4 January2016Smartphones need smart displaysSamsung and Huawei have launched foldable smartphones. Apple is reportedly looking at foldable iPads. And TVs are taking high-definition to another level. W

18、hat do they all have in common? High-tech panel displays that are used to tap, swipe and watch content on. China has dominated the previous generation of displays but is now racing to catch up with Korea, and to some extent Japan and Europe too, in building the very latest displays. However with hun

19、dreds of millions of tech-hungry consumers at home, heavy investment in R&D, and a rich history of technology strength, we see a favorable outlook for Chinas domestic display equipment companies.OLED already accounts for over 25% of the total display market in 2018, versus 7% in2014.As foldable phon

20、es go mainstream, display suppliers are coming along for the ride Foldable smartphones made their debut this year with Koreas Samsung and Chinas Huawei launching their cutting-edge handsets and drawing huge interest from consumers and investors alike. These devices unfold into a single screen far la

21、rger than a regular smartphone and more like a tablet and the hope is theyll rejuvenate a stagnant handset market.But behind all the glitz of these high-tech launches lies another battle playing out. China is racing to catch up with Korean and Japanese peers in supplying the latest display screens f

22、or not just this new range of foldable phones hitting the market, but also a host of other devices like ultra-high-definition TVs.The technology thats making these devices possible is OLED (aka, organic light-emitting diodes) thats better than previous technology on just about almost every level fro

23、m picture quality to power consumption to form factor, and that we see revolutionizing the display industry in the coming decades.We estimate the display industrys addressable market size to be around USD100bn in 2019 with OLED already taking considerable market share. We see that momentum continuin

24、g with OLEDlikelytocapture53%ofmarketshareinsmartphonepanelshipmentsin2023versus26% in flexible foldable as well as 8K resolution display, will become the key growth areas for the displayindustry.Unlocking the foldable phone industryForfoldablephones,webelievedemandwillseriouslypickupfrom2020,whense

25、veraltechnical asaresolved,andnewdesignsforcriticalcome on line, including protective covers andhinges.Assuming those improvements play out, we forecast foldable phone shipments increasing from 0.5m in 2019 to 53.4m in 2025e, implying a 118% CAGR, with the penetration rate increasingfrom a tiny 0.1%

26、 in 2019e to more than 3% in 2025. Moreover, special manufacturing processes are needed in foldable OLED compared with regular OLED. DSCC expects one of the major measures that the industry uses for foldable panels average yield to increase from 25% in 2019 to 60% in 2021, helping drive OLED panel c

27、osts down.For TVs, its all about the 8KTVs arent just getting bigger; theyre also getting clearer. Today, the 8K TV is the prevailing choice for consumers buying a TV over 65 inches, given its higher resolution and high pixel per inch. Added to that is the upcoming 5G network rollout which we believ

28、e will boost supply of special-enhanced content designed especially for the 8K, and also to other potential mobile devices going forward. We see 8K TV shipments increasing from 0.4m in 2019 to 5.4m units in 2022, implying a penetration rate of 2.3%, according to IHS. We believe LCD will be the prefe

29、rred format for 8K TV in the coming three years due to its cost advantage as OLED cost will not be significantly lowered after ink-jet printing (IJP) is widely adopted beyond 2020.Cautious view on LCD panel supply demand outlookLooking at overall LCD panel area demand we estimate TV, PC, and smartph

30、one accounting for around 70%, 15%, and 7% in 2018, revealing that TV displays broadly determine LCD industry demand. We expect low single-digit growth for the area size of LCD TV panels in 2019-25e, with the proliferation of 55” and above TV sizes to drive the average screen TV size going forward.O

31、n the supply side, there are four new Gen 10.5/11 LCD fabs (fabrication plants) commencing mass production in China in 2019-20 with an aggregate capacity of 390,000 sheets per month. This represents over 20% increase of current large panel capacity, and all of them are assigned to manufacture TV pan

32、els, creating ongoing pressure on large-size TVs pricing outlook.For smartphone LCD panels, they are facing competition from OLED panels, so we expect they continuelosingmarketinthecomingWithinLCDpanelsilicon (a-Si LCD) panel oversupply is likely to persist as LCD is likely to face growing pressure

33、fromlowtemperatureLCD.Onthepositiveside,potentialshutor conversions to OLED panel fabs that could ease theoversupply.Plenty of room for Chinas display equipmentThe LCD and OLED display manufacturing process can be divided into three phases, namely, array, cell, and module (see later in this report f

34、or details of what each phase does). For a typical flat panel display fab investment, equipment spending accounts for 60% of total capex, with array, cell and module generally accounting for approximately 70%, 25% and 5% of the total equipment investment.Japanese, Korea and European vendors are stil

35、l dominating the array and cell manufacturing equipment. Chinese equipment vendors (such as Jingce) now mostly have good exposure to module testing and inspection, which represented only around 1% of the total display equipment spending of in suggests room Chinese to gain share and in the ahead. Per

36、 company data and estimates, Chinas share of total display equipment spending is on the increase, rising from 50% in 2017 to 91% in 2018 and an estimated 92% in 2019e, followed by 81% and 75% in 2020e and 2021e.We see a favourable outlook for domestic display equipment companies.Initiate coverage of

37、 Jingce and BOEJingce (300567 CH, Buy): Jingce is Chinas leading display testing and inspection equipment vendor, with key customers including BOE, CETC and TCL. We believe Jingce is well positioned to benefit from Chinas panel makers robust investment in large-size LCD and OLED fabs in the coming y

38、ears and the secular import substitution trend in Chinas display and semiconductor industry. Moreover, product portfolio expansion from display module to cell and array inspection, as well as semiconductor automatic test equipment (ATE), serve as potential growth drivers.ATE represents around 8% of

39、semiconductor equipment investment, with an implied addressable market size of RMB35bn worldwide and RMB7.2b in China in 2018. We forecast that Jingce will register a 37% revenue CAGR in 2018-21e, driven mainly by a 65% CAGR in OLED inspection systems, a 49% CAGR in flat-panel automation equipment,

40、and a 27% CAGR in automatic equipment. By applying a PE of 33.3x to 12-month forward EPS, we derive our target price of RMB62.80 for Jingce. We expect the near-term share price catalyst to be design wins in display and semiconductor customers. Risks: slowdown in display fab investment, competition,

41、and slower execution in semiconductor business.BOE (000725 CH, Reduce): BOE is Chinas largest flat panel display maker, with strong exposure to the LCD and flexible OLED panel market segments, and with comprehensive product coverage in smartphone, notebook, monitor, TV, IoT, auto, etc. It is now ran

42、ked No. 1 in terms of LCD TV, monitor, and smartphone panel shipments. We believe BOE will continue to gain market share in the LCD panel segment in the coming years, especially in the large-size TV segment, thanks to the capacity ramp-up and rollout of Gen 10.5 fabs in Hefei and Wuhan. Inaddition,w

43、ithoneflexibleOLEDpanelfabunderoperationandthreeeitherunderconstruction or in the planning stage, we expect BOE is set to gain share in flexible and foldable panel in smartphones, with the potential to be qualified by new customers in 2019, overtakingHuawei.On the other hand, we are concerned about

44、the pricing outlook for large TV panels due to oversupplyriskintheyearsahead,aswellasthesharelossofa-SipanelcapacityagainstLTPS and OLED going forward. We are also concerned about profitability at the companys OLED fab given the potential aggressive pricing strategy to gainorders.We use an EV/EBITDA

45、 approach to value BOE. We project BOE will register an 18% EBITDA CAGR over 2018-21e versus its historical average of 21%. We thus apply a mid-cycle valuation of 9.0 x EV/EBITDA to 12-month forward EBITDA. Accordingly, we derive our 12-month target price at Upside risks to our view include panel de

46、sign in flexible OLED panels, and a steeper-than-projected rise in demand for smartphone panels.Where we are different from consensusThe delay in rolling out the first batch of foldable phones from Samsung and Huawei has raised concerns over foldable phones feasibility and supply chain readiness. Wi

47、th the growing maturity in technical know-how, material innovation and optimisation, as well as ongoing cost reductions via yield improvement, we still see opportunities for foldable phones to kick off in 2020, and we are optimistic about flexible/foldable OLEDs long-term growth opportunities. Accor

48、ding to and IHS on 4 July 2019, Apple is in the process of developing foldable iPads, with an unfolded screen size similar to that of a Macbook. This product is likely to be launched in 2020. Moreover, we see that a number of smartphone OEMs have been filing new patents for foldable devices over the

49、 past few months, suggesting that foldable is a trend thats here to stay and will drive the next wave of consumer electronics consumptions in the coming years. Thus, we are constructive on the industry outlook.Valuation and risksValuationmethodologyRisks to ourviewJingce 300567 CHCurrent price:Jingc

50、e 300567 CHRMB50.49Target price:BuyRMB62.80BuyUpside:24%BOE 000725 CHCurrent price:BOE 000725 CHRMB4.29Target price:ReduceRMB3.20ReduceDownside:25%We use a PE approach to value the stock given that Jingce offers strong earnings growth momentum in the coming years. We project a net profit CAGR of 35%

51、 in 2018-21 versus the companys historical average of 42%. We therefore think it is reasonable to apply mid-cycle valuation of 33.3x PE against 12-month forward EPS. Accordingly, we set our target price at RMB62.80.Frank He* | HYPERLINK mailto:frank.fang.he frank.fang.he | +86 755 8898 3136We use an

52、 EV/EBITDA approach to value BOE given that EBITDA excludes the consideration of subsidies, depreciation, amortization, and finance cost due to new fab launches. Also, EV/EBITDA is influenced by the capital structure difference, which is a more reasonable valuation methodology for capital intensive

53、industries such as display panelmanufacturing.We project BOE to register 18% EBITDA CAGR in 2018-21e, versus its historical average of 21%. We therefore think it is reasonable to apply a mid-cycle valuation of 9.0 x EV/EBITDA against its 12-month forward EBITDA. Accordingly, we set our 12-month targ

54、et price at RMB3.20.Frank He* | HYPERLINK mailto:frank.fang.he frank.fang.he | +86 755 8898 3136Key downside risks include (1) an unforeseen slowdown in display fab investment, (2) fiercer-than- expected competition, and (3) slower-than-forecast execution in semiconductor businessKey upside risks in

55、clude (1) higher-than-expected panel prices, (2) design wins in flexible OLED panels, and (3) a steeper-than-projected rise in demand for smartphone panelsPriced at 25 July 2019Source: HSBC Qianhai Securities estimatesEmployedby anon-USaffiliateofHSBCSecurities (USA)Inc,andisnot registered/qualified

56、pursuanttoFINRAregulationsChina DisplayOpportunities are everywhere in the foldable phone supply-chain, from creating the hinge to the cover window to adhesivematerials8K TV are also emerging as the key driver for the TV panelindustryDont forget about micro LED in the far off distant as this technol

57、ogy will also bring advantagestooOn the edge of a new wave of innovationsThe flat panel industry is evolving from using LCD- based screens to OLED that provide better picture quality and power usageThe flat-panel display industry which powers digital screens on everything from TVs to smartphones has

58、 undergone rapid innovation over the past 30 years. Its changed the way we live and work by helping create ultra-thin laptops, smartphones, smart watches and even digital dashboards on high-tech cars.The sector essentially started with the commercial launch of thin-film transistor liquid crystal dis

59、play (aka TFT LCD) panels in the late 1980s, a move that helped replace far larger and more cumbersome cathode ray tubes and plasma display panel, and quickly become the mainstream display technology. A combination of more sophisticated production, performance improvements, and a decline in manufact

60、uring costs means that this technology has been spread far and wide.Looking ahead, the growing proliferation of screens that use organic light-emitting diodes, or OLED, a technology thats even better for picture quality and power consumption is likely to revolutionise again the display industry in t