Core Viewpoint - BOE has achieved a significant breakthrough in high-end display technology with the mass production of its 6th generation semiconductor display device production line, focusing on LTPO, LTPS, and Mini LED technologies [1][2]. Group 1: Production Line Details - The total investment for the new production line is 29 billion yuan, covering an area of 420,000 square meters, with a designed monthly capacity of 50,000 pieces [1]. - The production line utilizes a 1500mm x 1850mm glass substrate and is equipped with the most advanced production equipment available [1]. Group 2: Technological Innovations - The LTPO technology developed by BOE combines the high mobility of LTPS with the low power consumption of oxide materials, achieving over 1500 PPI ultra-high pixel density while significantly reducing panel power consumption [2]. - BOE has successfully lit up its self-designed ultra-high 2117 PPI Real RGB display, reaching the highest resolution in the current LCD industry [2].

Investment Rating - The report initiates coverage with a "Buy" rating for the company [2][5]. Core Insights - The company achieved a revenue of HKD 13.449 billion in 2024, a significant increase of 25% year-on-year, primarily driven by the rising demand for electric vehicles and improvements in customer service, quality control, and production capacity [2]. - The automotive display segment is the main revenue contributor, generating HKD 12.66 billion, which is a 30% increase from 2023 and accounts for 94% of total revenue [2]. - The company holds a leading market share in the global automotive display module market, serving the top 20 automotive manufacturers in China and major international players [2][3]. Financial Summary - Revenue projections for 2025, 2026, and 2027 are estimated at HKD 16.048 billion, HKD 18.879 billion, and HKD 21.751 billion, respectively, reflecting growth rates of 19.33%, 17.64%, and 15.21% [4]. - The net profit attributable to the parent company is forecasted to be HKD 516.85 million, HKD 715.32 million, and HKD 875.13 million for 2025, 2026, and 2027, respectively, with corresponding growth rates of 32.09%, 38.40%, and 22.34% [4]. - The company’s price-to-earnings (P/E) ratio is projected to decrease from 13.63 in 2024 to 5.28 by 2027, indicating an attractive valuation [4].

Core Viewpoint - BOE has launched two high-brightness HUD display solutions based on COG Micro LED technology, showcasing advancements in display technology and potential applications in various sectors [1][3]. Group 1: Product Launches - The first product is a 6.2-inch P0.2 RGB Micro LED HUD, featuring self-developed Micro LED chips and a brightness of up to 30,000 nits, designed for stability and seamless splicing in high PPI scenarios [1]. - The second product is a monochrome glass-based Micro LED HUD with a pixel pitch of 58μm and a peak brightness of 300,000 nits, ensuring visibility in bright environments [3]. Group 2: Financial Performance - In Q1 2025, BOE achieved a revenue of 50.599 billion yuan, a year-on-year increase of 10.27%, marking a historical high for the company's first-quarter revenue [5]. - The net profit attributable to shareholders was 1.614 billion yuan, reflecting a significant year-on-year growth of 64.06% [5]. Group 3: Business Growth - The revenue from Mini LED backlight devices increased by 215% year-on-year, indicating strong growth in the MLED business segment [6]. - BOE has launched COB small-pitch LED indoor displays in overseas markets and deepened collaborations with key domestic clients, providing customized MLED display solutions [6]. Group 4: Capacity Expansion - In Q1 2025, BOE Huacan Optoelectronics held a product delivery ceremony for the world's first 6-inch Micro LED production line, aimed at large-size commercial displays, AR/VR devices, and wearables [6]. - The production line is expected to reach an annual capacity of 24,000 6-inch wafers and 45,000 KK Micro LED pixel devices upon full production [6].

Core Viewpoint - The global flat panel display industry is transitioning into a supply stock era after two years of market reshuffling, with a focus on on-demand production and high-end product upgrades driven by government policies [1][2]. Industry Overview - The industry is moving from competition based on scale and market share to a focus on high profitability applications, high value-added products, advanced technologies, and strong brands [2]. - The average size of flat panel TVs in China is projected to reach 65.1 inches in 2024, significantly larger than the global average of 51.4 inches [2]. - The compound annual growth rate for shipments of TV panels larger than 65 inches is expected to be 59% from 2020 to 2026 [2]. - The OLED screen market share for Chinese manufacturers reached 50% in 2024, indicating a significant increase in domestic production capabilities [6]. Company Performance - BOE Technology Group achieved a revenue of 198.38 billion yuan in 2024, a year-on-year increase of 13.66%, with a net profit of 5.323 billion yuan, up 108.97% [4]. - In Q1 2024, BOE reported a revenue of 50.599 billion yuan, marking a 10.27% increase year-on-year, and a net profit of 1.614 billion yuan, up 64.06% [4]. - The gross margin for BOE is projected to rise to 15% in 2024, maintaining industry-leading levels [5]. Strategic Initiatives - BOE's "Screen IoT" strategy aims to integrate more functions into screens and establish a diverse ecosystem based on semiconductor displays and IoT innovations [4]. - The company is actively pursuing the automotive display market, with its subsidiary achieving over 10 billion yuan in revenue in 2024, reflecting a 25% year-on-year growth [7]. Shareholder Returns - BOE has implemented a shareholder return mechanism, with a cash dividend of 1.87 billion yuan planned for 2024, representing 35% of the net profit attributable to shareholders [9]. - The company has consistently paid cash dividends for ten years, totaling nearly 22 billion yuan, and has a buyback plan of 1.5 to 2 billion yuan for A-shares in 2024 [9].

Group 1 - The automotive display sector is a significant revenue growth point for panel companies, leading them to integrate more features into automotive displays due to intensified competition in the automotive industry [1][3] - At the SID 2025 event, various new automotive display technologies were showcased, including a 12.3-inch hidden display from Deep Tianma and a 14.3-inch Micro LED projection head-up display from TCL Technology [3][4] - BOE presented a 55-inch OLED transparent sunroof with a 46% light transmittance and an OLED screen in the smart steering wheel that integrates multiple safety features [4][5] Group 2 - In the past year and the first quarter of this year, automotive displays have been a key performance driver for Chinese panel companies, with Deep Tianma's automotive business revenue growing over 30% year-on-year in Q1 2025 [5][6] - Sigmaintell forecasts that global automotive display panel shipments will continue to grow rapidly, with a projected year-on-year increase of 5.4% to 250 million units in 2025 [5][6] - The automotive display market is shifting towards larger and higher-end displays, with Omdia predicting a compound annual growth rate of 3.05% for automotive display module shipments over the next three years [5][6] Group 3 - Companies are focusing on developing new display technologies such as Micro LED for automotive applications, with Deep Tianma's Xiamen Micro LED production line targeting automotive displays as a key application area [6] - The competitive automotive market is driving companies to establish strategic partnerships with leading automotive manufacturers while being cautious about collaborations with emerging automotive startups [6]

Core Insights - The conference held by the China Automotive Industry Association focused on the latest technologies and future trends in the automotive smart display industry, showcasing advancements in OLED and Micro LED technologies by BOE [1][6] - The meeting emphasized the importance of collaboration within the industry to drive the smart transformation of the automotive sector [1][6] Group 1: Industry Trends and Challenges - The automotive smart display industry is experiencing significant growth, with electric vehicle penetration exceeding 35% and smart cockpit installation rates reaching 68%, alongside an annual compound growth rate of over 21% for automotive displays [6] - The industry is facing challenges such as price wars and the need for technological innovation, with a consensus among industry leaders to prioritize product quality and long-term strategies over short-term gains [5][9] Group 2: Strategic Initiatives and Collaborations - The conference highlighted the need for original technology incubation and the formation of industry alliances to share technological achievements and reduce R&D costs [7] - Companies are encouraged to embrace global markets and participate in national standard formulation to enhance competitiveness [7] Group 3: Technological Innovations - Discussions included advancements in display technologies such as Mini/Micro LED and AR HUD, with a focus on overcoming environmental light interference and achieving deep integration with autonomous driving systems [9][10] - The importance of high-end technology to break through price competition and the need for ecological collaboration to address cross-industry competition were emphasized [10] Group 4: Future Outlook - The automotive smart display industry is expected to continue its evolution towards a "China manufacturing" to "global intelligent manufacturing" transition, driven by technological advancements and collaborative efforts [10] - The conference concluded with a commitment to strengthen technology exchange and cooperation, accelerate standard formulation, and promote innovation and industrial upgrades for the prosperity of the Chinese automotive industry [15]

Investment Rating - The report maintains a "BUY" rating for BOE Varitronix, indicating a potential return of over 15% over the next 12 months [10][20]. Core Insights - The management believes that the recent US reciprocal tariffs will have a limited impact on financials due to low US sales exposure, which is only 2.6% in FY23 [9][10]. - BOE Varitronix is optimistic about the ramp-up of capacity in Vietnam by 2025 and has already secured orders from US and South Korean customers [9]. - The company plans to focus on overseas market expansion and adjust its product mix to mitigate tariff risks in the long term [9][10]. - A share repurchase plan announced on April 11 demonstrates management's confidence in the business outlook [9]. Financial Summary - Revenue is projected to grow from HK$10,760 million in FY23A to HK$22,228 million in FY27E, reflecting a CAGR of approximately 14.6% [2][17]. - Net profit is expected to recover from HK$391.3 million in FY24A to HK$738.7 million in FY27E, with a notable growth of 29.4% in FY25E [2][17]. - The company’s P/E ratio is forecasted to decrease from 10.1x in FY24A to 5.4x in FY27E, indicating an attractive valuation [2][10]. Target Price and Upside Potential - The target price for BOE Varitronix is set at HK$9.63, representing an upside potential of 91.8% from the current price of HK$5.02 [3][10]. Share Performance and Market Data - The market capitalization of BOE Varitronix is approximately HK$3,975.8 million, with an average turnover of HK$35.3 million over the last three months [4]. - The stock has experienced a decline of 30.9% over the past month and 17.4% over the past three months [6].

Financial Performance - The company reported a revenue of HKD 13,449 million for the year ended December 31, 2024, representing a 25% increase from HKD 10,760 million in 2023[15]. - EBITDA for the year was HKD 686 million, a decrease of 11% compared to HKD 771 million in 2023[15]. - Shareholders' profit attributable to the company was HKD 391.3 million, down 18% from HKD 475.3 million in the previous year[15]. - Basic earnings per share were HKD 0.496, compared to HKD 0.604 in 2023[13]. - The company declared a final dividend of HKD 0.17 per share, down from HKD 0.19 per share in the previous year[13]. - Operating profit for the same period was HKD 437,000,000, a decrease of HKD 132,000,000 or approximately 23%, attributed to product structure changes, price adjustments, and increased inventory costs[65]. - The group proposed a final dividend of HKD 0.17 per share, down from HKD 0.19 per share in 2023, with a full-year payout ratio of 34% compared to 32% in 2023[19]. - Net profit attributable to shareholders decreased to HKD 391,300,000 from HKD 475,300,000, with basic earnings per share dropping to HKD 0.496 from HKD 0.604[67]. Cash and Debt Management - As of December 31, 2024, the company had total cash resources of HKD 4,122 million, an increase from HKD 3,572 million at the end of 2023[16]. - Bank loans decreased by 39% to HKD 376 million from HKD 620 million at the end of 2023[16]. - The current ratio as of December 31, 2024, was 1.41, down from 1.61, primarily due to investments for future business expansion[70]. - Cash resources increased to HKD 4,122,000,000 from HKD 3,572,000,000, reflecting strict control over working capital[71]. - The net cash generated from operating activities reached HKD 1,457,000,000, an increase from HKD 1,186,000,000 in 2023, primarily due to a decrease in inventory contributing HKD 136,000,000[73]. - The net cash used in investing activities was HKD 1,783,000,000, significantly higher than HKD 224,000,000 in 2023, mainly for property, plant, and equipment purchases totaling HKD 568,000,000[73]. Market Position and Growth - The company is positioned as a leading provider of automotive smart cockpit display solutions, focusing on automotive and industrial display solutions[5]. - The company aims to expand its market share in the automotive TFT display product and large and medium-sized display module markets globally[5]. - The group's revenue growth was primarily driven by the sales increase of TFT products, touch screen display modules, and automotive systems, benefiting from a significant rise in demand for new energy vehicles[17]. - Automotive display business revenue reached HKD 12,660,000,000, a 30% increase compared to HKD 9,710,000,000 in 2023, accounting for approximately 94% of the group's total revenue[20]. - The group maintained the largest market share in the global automotive display market, particularly for displays of 8 inches and above, according to Omdia data[20]. - The group successfully expanded its overseas business, achieving significant revenue growth in the U.S. despite macroeconomic challenges, supported by strategic investments in R&D and marketing[21]. - Revenue from China reached HKD 8,350,000,000, a 35% increase from the previous year, accounting for 62% of total revenue, primarily driven by the automotive display business[90]. - Revenue from the Americas reached HKD 838 million, representing a 47% increase compared to the previous year, driven by orders for TFT display modules from multiple automotive clients[98]. - The European business recorded revenue of HKD 2.444 billion, a decrease of approximately 4% year-on-year, accounting for about 18% of total group revenue, impacted by geopolitical conflicts and economic downturns[97]. - Revenue from Japan reached HKD 1,157,000,000, an increase of approximately 50% year-over-year, accounting for about 9% of the group's total revenue[100]. - Revenue from South Korea amounted to HKD 376,000,000, representing a year-over-year increase of approximately 24%, contributing around 3% to the group's total revenue[101]. Research and Development - The company is investing heavily in R&D to maintain its competitive edge in AI and smart cockpit technologies[37]. - R&D expenditure increased from HKD 237 million in 2023 to HKD 284 million in 2024, with the number of R&D personnel rising from approximately 410 to 450[44]. - The company plans to establish more laboratories in Europe and the US to meet diverse automotive R&D needs[35]. - The company is actively developing a dual-view display technology expected to produce a proof of concept (POC) prototype for market promotion in the first half of 2025[53]. - The company launched the first integrated display group standard for smart cockpits in the Chinese market in 2024, showcasing its technological expertise[36]. - The advanced super dimension switch technology (ADS-PRO) has been recognized for its superior display quality, with multiple projects secured from well-known automotive manufacturers[48]. - Multiple vehicle-mounted f-OLED displays have entered mass production, and the company is developing Tandem OLED technology for improved efficiency and longevity[50]. Environmental, Social, and Governance (ESG) - The company aims to achieve carbon neutrality by 2050 and has set targets for reducing carbon emissions, energy, water usage, and waste by 2025[43]. - The board has emphasized the importance of ESG management and will continue to assess sustainability trends and risks[106]. - The company has set a target for carbon neutrality by 2050 and is developing a roadmap and strategies to achieve this goal[107]. - The company is committed to improving its ESG performance by integrating sustainability factors into all business decision-making processes[114]. - The company has established a comprehensive ESG risk management and reporting mechanism, with the board overseeing the preparation and approval of the annual ESG report[120]. - The company is actively pursuing energy-saving projects and enhancing the use of green energy, including the establishment of photovoltaic power generation projects[117]. - The company emphasizes the importance of integrating ESG into its operations and management, aiming for long-term stability in environmental, social, and corporate value[113]. - The company has identified key sustainability performance indicators to enhance its ESG rating and corporate image, while also reducing operational costs[116]. - The company is committed to regular training for employees on anti-corruption policies and the importance of ethical behavior[131]. - The company has established a whistleblowing channel to report any suspected corruption, ensuring thorough and fair investigations of all allegations[132]. Production and Operational Efficiency - The establishment of a Quality Management Committee (QCC) in 2024 aims to enhance quality control and supplier performance monitoring across different manufacturing plants[24]. - Inventory turnover days improved from 67 days in 2023 to 55 days in 2024, effectively managing procurement delivery times to meet production needs[25]. - The Chengdu factory, established at the end of 2022, has increased production efficiency and capacity to enhance profitability in the automotive display business[25]. - The company maintains a light asset model, leveraging existing production and R&D capabilities to meet market demand with moderate investment[41]. - The company is focused on optimizing supply chain management and enhancing quality control processes to improve overall operational efficiency and customer trust[92]. - The company has implemented various measures to enhance environmental performance, including energy management systems and regular maintenance of equipment to ensure operational efficiency[156]. Sustainability Initiatives - The company is committed to developing green energy resources to effectively reduce carbon emissions and respond to national carbon neutrality policies[179]. - The company has implemented photovoltaic power generation projects in its factories to mitigate climate change risks and enhance sustainable development strategies[141]. - The company encourages employees to use public transportation and direct flights to reduce carbon emissions during business travel[142]. - The company has seen a reduction in direct carbon equivalent emissions to 11,138.60 tons for the Heyuan plant in 2024, with a revenue impact of 828.21 million HKD[145]. - The company has implemented rigorous internal controls to ensure that all related party transactions comply with listing rules and are conducted on fair terms[133]. - The company actively participates in environmental initiatives, such as Earth Hour, to promote energy conservation awareness[191]. - The factory encourages employee participation in environmental activities, fostering a culture of sustainability[192].

Core Viewpoint - The automotive display panel market is expected to grow significantly in 2024, with domestic companies making notable advancements in a competitive landscape [1] Group 1: Market Performance - In 2023, global automotive display panel shipments reached 230 million units, a year-on-year increase of 8.5% [1] - Chinese manufacturers accounted for 51.7% of global shipments, with BOE leading at 40.9 million units and a market share of 17.6% [1] Group 2: Company Financials - BOE Technology Group's subsidiary, BOE Precision Electronics, reported a revenue of HKD 13.449 billion (approximately RMB 12.572 billion) for 2024, a 25% increase year-on-year [1] - The net profit attributable to shareholders was HKD 391 million [1] Group 3: Business Segments - The automotive display business generated HKD 12.66 billion in revenue for 2024, a 30% increase, constituting about 94% of total revenue [2] - The system business is emerging as a new growth point, focusing on smart display systems and intelligent cockpit systems, with significant revenue growth [2] Group 4: Strategic Initiatives - BOE Precision Electronics has implemented a "three-step" strategy in the intelligent cockpit sector, evolving from display components to complete cockpit solutions [3] - The company aims to transition from a secondary operator to a primary operator in the smart cockpit screen system business [3] Group 5: Future Outlook - The global automotive display panel market is projected to grow at a rate of 5.4%, reaching 250 million units by 2025 [5] - The company plans to enhance its overseas market contributions, targeting over 50% of its revenue from international markets [4]

Core Viewpoint - BOE has introduced the industry's first 15.6-inch L-shaped curved OLED vehicle central control screen, showcasing advanced technology in display design and functionality [1]. Group 1: Product Features - The screen utilizes a thermal bending full lamination process, enhancing the 3D shaping capability of OLED displays [1]. - It features a thin design with a thickness of only 2.5mm, achieved through multi-layer integration of display panels and touch controls in a vacuum environment [1]. - The screen's core component is a 15.6-inch concave vehicle display module, designed with a fixed bending angle of 135° and a bending radius of 35mm, accommodating the natural arm extension of drivers [1]. Group 2: Technical Specifications - The resolution of the curved OLED display reaches 2880*1800, with a brightness exceeding 800 nits, ensuring clear visibility under strong light conditions [1]. - It boasts a million-level ultra-high contrast ratio and millisecond-level response speed, allowing real-time feedback of vehicle dynamic information [1].