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Market Trend

Panel Makers Enjoy Ideal Financial Result and Stay Conservative on Q2
Published May.08 2015, 06:00PM (GMT+8)

According to WistView’s latest survey, MCI declined 81.1 points from 5461 points to 5379.9 points in the period from Apr. 14 to May 7, 2015. The confidence on the U.S. economic recovery has been impacted as the Department of Commerce revealed only 0.2% GDP growth for Q1. The strengthening U.S. dollar dragged down the export figure, which weakens the export competitiveness and boosts trade deficit. The unpredictable factors, such as climate anomaly, also influence GDP growth in the quarter. However, the global economic outlook should be viewed with optimism. IMF recently projects U.S. economy to expand 3% in 2015, the strongest growth since 2005. ECB in mid-April decided to continue the asset purchase program while deflation narrowed. IMF revises up the GDP growth projection for the single-currency zone to 1.5% and 1.6% for 2015 and 2016, respectively. The Greek debt tragedy remains unsolved as the nation, EU, and IMF are tied in a difficult situation. The creditors have no interest in cutting debts, which is IMF’s plan to restore Greece’s debt-payment ability and makes the next bailout possible.

Chinese officials has recently published 7% of GDP growth for Q1, the lowest record since 2009. Moreover, the market believes the actual number was even weaker than the official result. The industrial output playing a key role in Chinese economy shows some signs as the annual growth in March narrowed to 5.6%, the slowest expansion since late 2008, which is resulted from the repetitive problem of insufficient domestic demand. Chinese government holds a conservative view on Q2 GDP growth. Bank of Japan has adjusted its policies as the inflation rate is not yet boosted since the launch of QE, while the GDP growth projection for the current fiscal year is cut from 2.1% to 2%, and the 2% inflation target is delayed by six months to the 1st half of 2016. Overall, the economy in western countries face both opportunities and challenges, especially Greece’s possible debt default. The economic stimulus measures in China and Japan will not show evident effects in the short term, and the demand in Q2 continues to be constrained.  

With panel makers starting to post financial results, LG Display, BOE, AUO, and INX showed relatively strong performance in the slow season Q1. LG display enjoyed net profit of 480 billion Korean won, compared to net loss in the same period last year. BOE attempted to break away from the governmental subsidy and had profit growing 66% YoY. AUO showed better-than-expected EPS with operating profit growing 13 times from the same period last year. INX, as a main rival to AUO, had even stronger result of net profit after tax and EPS. The industry views the Q2 IT market conservatively because there is no sing of rebounding in the short term. The TV sector is an exception and enjoys positive outlook as panel makers’ focus is shifted from shipment volume to average size and UD percentage. Overall, the pressure to panel supply and demand remains as some of shipments are on the way to retailers and cannot instantly reflect the actual inventory. Besides, brands cut shipment on concern of profit and drag down the demand for panels. BOE has announced the plan to build one G8.5 fab and one G10.5, which is shocking news to the industry. Contrarily, Taiwan-based makers have halted investment on equipment, and only INX reveals the investment on G8.6 in the latest investor conference, which is scheduled to MP in Q3 2016. After a temporary adjustment, new fabs should tune yield and operating efficiency in mid/long term, and the new round of elimination of players is inevitable. 


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