Morgan Stanley said that TV panel prices may rebound earlier than expected, optimistic about Innolux (3481) and neutral on AUO (2409).

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[Financial Channel/Comprehensive Report] Morgan Stanley (Morgan Stanley, Morgan Stanley) reported that in the first half of February, the prices of TFT-LCD (thin film transistor liquid crystal display) panels, TVs, notebook computers, and monitors were all flat, and TV panels Prices may recover sooner than expected. Related stocks are optimistic about Innolux (3481) and neutral about AUO (2409).

In the first half of February, the prices of TV panels were flat, and the prices of 75-inch, 65-inch, 55-inch, 43-inch and 32-inch panels remained unchanged, in line with Morgan Stanley's expectations.

Morgan Stanley estimates that the price of TV panels should remain at this level in Q1 of 2023, and may gradually rebound from May and June as orders pick up in peak seasons. Given that TV panels are still 10% lower than cash costs, Major panel makers are still quite strict in terms of output control, limiting the utilization rate of Q1 capacity to 60-70%.

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Morgan Stanley believes that panel makers are trying to advance the timing of TV panel price recovery several months earlier. Morgan Stanley also mentioned that smaller panel buyers have relatively weak bargaining power in price negotiations and may face greater pressure , and it remains to be seen whether big brands will embrace it.

If an early rebound in TV panel prices does materialize, panel makers' profitability should have room to rise.

Morgan Stanley estimates that, compared to last year's flat Q4, the average price of TV panels in a single quarter should rise slightly in Q1.

Notebook and monitor panel prices were flat in the first half of February. Morgan Stanley believes that notebook panel prices should bottom out here, and monitor panels may fall by less than 1% in the next few months.

Based on a single-quarter average, Morgan Stanley expects that the price of IT panels will remain flat or drop slightly in Q1, and the decline in Q4 last year reached 4-5%.

The price of TV panels is now significantly lower than the cash cost, while the price of IT panels is also close to the threshold.

Supply chains have been working off excess inventory over the past few months, aided by industry-wide adjustments to capacity utilization since June.

The Morgan Stanley survey shows that inventories are indeed coming off their Q2 highs, but are still several weeks above normal levels.

In terms of related stocks, Morgan Stanley said that the stock prices of AUO and Innolux have the same trend. With panel prices bottoming out and rebounding, Morgan Stanley is more optimistic about Innolux, giving it an "outperform" rating, while AUO gave it a "neutral" rating.

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