摩根士丹利中国科技硬件行业大中华区科技硬件行业研究TCL评级为持有维诺信评级为减持201961041

[e-mail]@[e-mail]-LineMORGANSTANLEYTAIWANLIMITED+SharonShihEQUITYANALYST+88622730-2865JamesWeiRESEARCHASSOCIATE+88622730-2860LilyChouRESEARCHASSOCIATE+88622730-2869GreaterChinaTechnologyHardwareAsiaPacificIndustryViewGreaterChinaTechnologyHardwareGreaterChinaTechnologyHardware||AsiaPacificAsiaPacificInitiateonTCLCorpatEW,VisionoxatUWTCL'srecentrestructuringandproductmiximprovementshouldprovidesomedowncycleprotectionamidanuncertaindemandoutlookandrisingtradetensions.VisionoxisapureAMOLEDplay,butithasyettoestablishatrackrecord.OurcautiousviewonTFT-LCDandAMOLEDdevelopment:Webelievepersistentoversupplyislikelytotakeholdin2019-21asaresultofcontinuedcapacityadditionsbyChinesepanelmakers.Underthecurrentexpansionandexitplan,weexpecttheindustry'sglutratiotobeinarangeof10-20%after4Q19–similarto2015'ssupply/demanddynamics,whenpanelpricesdropped30-50%insixmonths.Inthemeantime,Sino-UStradetensionscouldexacerbatetheoversupplyiftariffsareimposedonTVsorproductslikesmartphones,notebooks,andmonitors;grosspanelareademandcoulddecrease3-4%in2019-21,weestimate.Insuchascenario,theglutratiocouldriseto15-25%,andmostpanelmakerswouldlikelyseedeterioratingprofitabilityanddecreasingpanelshipments.Ontheotherhand,webelievetherecentHuaweirestrictionscoulddelayChinesepanelmakers'AMOLEDdevelopment,consideringthatHuaweiwouldlikelybethelargestdriverofAMOLEDadoptionin2019-21.WeinitiatecoverageofTCLCorporationatEqual-weightwithanRmb3.1pricetarget:WeexpectTCLtobenefitfromitsrecentreorganization,asitsoldnon-corebusinesses(e.g.,TCLCommunication,TCLMultimedia,Tonly)backtoTCLHoldings.TherestructuringshouldimproveTCL'sfinancialperformanceasthosebusinessareeitherloss-makingorhavelowmargins.WealsoexpectTCLtoseemeaningfulsharegainsinthehigh-endTVsegment(i.e.,65and75),underpinnedbyitstwonewGen10.5fabs.Webelieveitsimprovedfinancialperformance,aswellasabetterproductmix,willprovidesomedownsideprotectionduringtheindustrydowncycle.TCListradingat1.4x2019eP/B,whichisarounditsdowncyclevaluation.WeinitiatecoverageofVisionoxatUnderweightwithanRmb8.5pricetarget:VisionoxiseffectivelyapureAMOLEDplay,as90%ofitsrevenuein2018camefromtheOLEDbusiness,leavingitlessexposedtooversupplyintheTFT-LCDmarket.However,we'reworriedthatintensifyingcompetitionfromBOEandSamsungDisplayandweakerdemandforflexibleAMOLEDwilldelayVisionox'sAMOLEDramp-upconsideringitslackofrelationshipswithtier1smartphoneOEMs.WebelieveitisunlikelythatVisionox'sAMOLEDbusinesswillturnprofitableinthenexttwotothreeyearsduetocontinuedpricingcompetitionfromSamsungandBOEaswellasalikelylowyieldrate,andweviewitscurrentvaluationof1.1x2019eP/Basunjustified.Exhibit1:RatingsandpricetargetsTCL000100.SZEW3.13.10%Visionox002387.SZUW8.512.7-33%CompoanynameTickerRatingPriceTarget(RMB)CurrentPrice(RMB)PTupside/downsideSource:MorganStanleyResearch.Sharepricesasat6June2019MorganStanleydoesandseekstodobusinesswithcompaniescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanleyResearch.InvestorsshouldconsiderMorganStanleyResearchasonlyasinglefactorinmakingtheirinvestmentdecision.Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.+=Analystsemployedbynon-U.S.affiliatesarenotregisteredwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoNASD/NYSErestrictionsoncommunicationswithasubjectcompany,publicappearancesandtradingsecuritiesheldbyaresearchanalystaccount.1June10,201909:00PMGMTOrderofPreferenceExhibit2:OrderofPreferenceLGDisplayInnoluxAUOTCLBOETianmaVisionox034220.KS3481.TW2409.TW000100.SZ000725.SZ000050.SZ002387.SZRatingEWEWEWEWUWUWUWTradingCurrencyKRWTWDTWDCNYCNYCNYCNYPriceTarget19,000.07.38.93.12.910.68.5CurrentPrice16,650.07.29.13.13.313.012.7Upside/(Downside)(%)14%1%-2%0%-12%-18%-33%MarketCap(inUSDmm)5,044.32,270.02,781.06,141.416,900.33,776.0862.0AvgDailyTradedVol(inUSDmm)32.112.114.959.2303.866.313.4StreetView:RatingsBuy/Overweight||||||||||39%||9%||||15%|||||||||||||||||||75%|||||||||||||||61%|||||||||||||50%0%Hold/Equal-weight|||||||||||44%|||||||||||45%|||||||||||||||60%||||17%|||||||28%|||13%0%Sell/Underweight||||17%|||||||||||45%||||||25%||8%|||11%|||||||||38%0%BullCaseValue24,000.010.011.24.44.018.512.8Upside(%)44%39%23%42%21%42%1%BearCaseValue16,000.04.66.61.81.75.35.3Downside(%)-4%-36%-27%-42%-48%-59%-58%Risk/RewardSkew11.31.10.81.00.40.70.0MorganStanleyEstimatesFY19eKRWTWDTWDCNYCNYCNYCNYSales24,867,428251,886264,52470,177116,82629,4782,918EBITDA5,171,98030,95528,80010,73928,2242,994(1,525)EBIT(78,020)(4,923)(8,200)2,7688,224454(1,626)EPS(298.73)(0.40)(0.62)0.170.090.55(0.29)FY20eSales25,852,316263,109256,15962,109129,91830,7794,063EBITDA6,095,68929,37229,2508,63329,4242,685(1,796)EBIT328,059(6,506)(5,750)3,4249,424447(1,897)EPS517.29(0.64)(0.50)0.180.100.46(0.30)FY19MSevs.ConsensusMeanSales-1.6%-3.2%-7.5%-29.3%-0.9%-6.4%NAEBITDA31.8%1.6%-8.9%-16.7%12.2%-35.9%NAEBIT-72.2%-40.2%12.0%-36.