How does BOCOG and AUO respond to the strong rise of BOE? In early February, the US stocks tumbled triggered a major revision of the global stock market, Taiwan stocks also followed a rapid return. However, the two panels AUO and INNOM held panel meetings respectively. Both companies paid the best earnings report in 10 years, and they were always regarded as the top 4 “miserable†companies, and their stock prices were all over ten yuan. The floating panel industry appears to be turning.
According to the results announced by AUO and Innotech, AUO's EPS after last year was 3.36 yuan per share, and 3.72 yuan for Innolux. Both were the best figures in the past 10 years. Exceeding many stocks with stunning subject matter such as 3D sensing and optical lenses, if we calculate the ultra-low stock prices of the two companies and estimate the ratio of dividend yields of 6 or 7 percent, the two companies will have cash yields this year. Opportunities exceed 15%, becoming the largest industrial stocks with the highest yields in recent years.
Looking back at the past 10 years, the panel industry can be said to have experienced nine deaths. Each company has suffered huge losses and high liabilities. Among them, after the combination of Innosoft and Chi Mei in 2010, the maximum amount of liabilities reached 450 billion yuan, and it has also become a bail-out target for the Executive Yuan to order banks to ban liquidity. Nowadays, the panel industry has gone through the gates of ghosts and once survived so far, leading manufacturers and AUO have all found their own ways of running business, and they have started the next stage of competition with companies such as South Korea and China.
Samsung dominates China to make progress
Observing the global competition in the panel industry, Korean businessmen have mastered their own brands, such as TVs and mobile phones, and have not been affected much since the financial tsunami in 2008. As a result, Samsung and LGD continue to expand TFT-LCDs (thin film transistors). LCD panel production capacity will also be heavily invested in AMOLED (Active Organic Light Emitting Display). Now it has mastered more than 90% of the world's market share, including Apple's iPhoneX and Samsung's most advanced mobile phones, all with AMOLED as the main panel.
As for China, which has relied heavily on the supply of Taiwan's panels 10 years ago, it has also started large-scale investment in recent years and has actively expanded its capacity beyond the 10th generation line. Today, it has surpassed TFT panels to catch up with Korea and become the world's largest producer of capacity.
In contrast, due to the poor financial status of Taiwanese businessmen who suffered large losses from 2009 to 2012, they could only reduce their capital expenditures significantly. In the past three years, depreciation and amortization has decreased, and the annual depreciation and amortization of Innolux and AUO totals 70 billion yuan to 1, Between 10,000 billion yuan, but in the past five years, it has obviously decreased. Among them, AUO has already dropped to between 1 billion yuan and 10 billion yuan; the number of innocent creations is slightly higher, and at most it is between 340 billion yuan. .
After 2013, Innolux, AUO's profitability and financial figures were stable, and there was still only a small increase in capital expenditure. The emphasis was placed on value enhancement and differentiation. Not only did the list of losing money fail, but it no longer played hard on the scale of production capacity. Optimized product portfolio to produce high value-added and cost-effective products, from the panel provider to the display solution factory.
Strategic Transformation Goes Out of Its Own Way
Through this strategy of "pursuing value and not producing capacity," panel tigers have gradually come out of their own way in recent years. Taking the product mix as an example, in the past, the proportion of products in the panel industry was almost the largest in terms of televisions, laptops, and monitors. These were almost standard products with little difference in specifications, and the profits were very thin; With the expansion of industrial control, automotive and consumer electronics, the proportion of these value-added panels has increased significantly.
According to the product ratio of AUO last year, the overall value-added panel revenue accounted for 50% of the total, and it is hoped to continue to grow in the future. Because of the increase in the proportion of value-added panels, the gross profit margin of the Panel Tigers has gradually increased from the early negative numbers to single digits, and it can be raised to about 10% last year, and both tigers have set the highest EPS value in the last year. Best number.
For the new capital expenditures, the two companies are preoccupied, it is important to spend every penny on the knife. In AUO's case, Peng Shuanglang, Chairman of AUO, bluntly stated that investment in 10.5-generation plants and AMOLED plants is now heating up and Chinese companies are actively investing. However, these new plants have low capital recovery rates, and it is difficult to see results in the short term.
AUO needs to improve its capital turnover rate and increase its high-quality production capacity. It will not easily increase capital expenditures without orders. For example, Kunshan LTPS (low-temperature polysilicon) panel plant will be fully loaded at the end of the third quarter of last year, and it will maintain full production this year. In addition, it will take the second half of the year. There are also 8.5 generations of new production lines in production, and the current production capacity is also full.
Peng Shuanglang said that AUO’s technological innovation is more important than productivity improvement, such as the new television 8K panel. This year's CES (Consumer Electronics Show) major brands of 85-inch 8K TV, are using AUO panel, in addition will also expand the LTPS platform, in addition to 18: 9 full-screen mobile phone, but also extend the application to high Orders for laptops, cars, in-flight entertainment systems, etc., are expected to be gradually volume production this year.
In addition, in research and development of the latest technology, dual-Tiger in the popular MicroLED, MiniLED, are also invested in R & D resources. Taking Innolux as an example, MiniLED is currently being announced at this year's CES show and has started cooperation with depots. It is expected that the products can be exported within two years. As the automotive industry is a long-term cooperation order, it is estimated that there will be at least 5 years of steady growth. . Infineon’s executive vice president Ding Jinglong said, “Taiwan has not kept pace with the investment in AMOLED panels. Now it is too late, but if successful in the development of MiniLED and MicroLED, there will be opportunities to send AMOLED panels to the refrigerator in the future.â€
Looking forward, the panel tigers will gradually develop their own characteristics. AUO’s development orientation focuses on the pursuit of value-added in commodities. In addition to the front panel, AUO also provides hardware and software integration solutions to improve the unique value of hardware through software applications.
Peng Shuanglang said that for example, 4K panels will account for more than half of the total TV panel shipments this year. The 18:9 full-screen panel will also be equipped with profile cutting, In-Cell touch, and other commercial panels such as automotive and industrial control. Will increase resources and increase the proportion of revenue.
As for the Innolux group of Hon Hai Group, Hon Hai Chairman Guo Taiming cuts into the upstream panel industry, including Guangzhou's 10.5 generation line and the US panel factory. Expect to become the overlord of the panel that surpasses Korean businessman. In the future, Hon Hai Group will build a panel kingdom and wait until the output of panel components expands, and it is imperative to expand downstream outlets. Innolux is expected to play a more crucial role in the shipment of complete systems.
Foreign investors still have attitudes to keep up
Xiao Zhihong, general manager of Innolux, predicts that Innolux will turn to a one-stop vertical integration of the entire machine. It is expected that this year's monthly production capacity will increase from more than 100,000 units at the beginning of the year to 500,000 units at the end of the year. With the maturity of the Internet of Things, Innolux has become the overall service provider of the system, providing overall services such as PID (Public Message Display Solution), large-scale video walls, and conference systems.
In addition, Innolux has been actively investing in automation in recent years. Its employees have cut 30,000 employees from the top 130,000, and they have achieved 50,000 production through the automation of production automation.
However, the biggest pressure test for the panel industry this year is obviously the active expansion of factories from China. Last year, China's TV panel shipments reached 94.7 million units, accounting for 36.1% of the world's total, surpassing Vietnam and South Korea to become the world's largest; this year also has the BOE 10.5 generation line and the CLP Group 8.6 generation line added Production, how the supply and demand situation of the panel will change, is also an important factor in the operation of the observation panel dual tiger this year.
Because of this, even if the price/net ratio of the two companies is between 0.5 and 0.6 times, the yield rate this year is expected to exceed 15%. However, foreign investors are optimistic about the outlook of Innolux and AUO in the next two years. Not many, the general investors are still stuck in the past "sorrow" impression, whether the panel double tiger can "turn over"? Still have time to verify.
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