Ticonderoga on Tech Supply Chain: Taiwan Panel Sales Fall 10% M/M, the Worst April We Have on Record
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Rating Summary:
4 Buy, 10 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 16 | Down: 11 | New: 13
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Ticonderoga on Tech Supply Chain: Taiwan Panel Sales Fall 10% M/M, the Worst April We Have on Record by Brian White
White said, "April sales for our Taiwan LCD Panel Barometer decreased by 9.8% M/M to NT$83.42 billion and were much weaker than the five-year average increase of 3.1% for the month of April. Over the past year, there have been what seem to be monthly calls by industry observers trying to call the bottom in the LCD TV market and the LCD supply chain at large; however, trends across the industry have remained challenged, and our view remains that the industry is in the midst of a secular slowdown that will only get worse over the next couple of years. At the same time, we believe any cyclical rebound along the way will be modest and looking to panel price rises as an indicator of a turn in the industry will be misguided given that a high percentage of panels are already below cash cost. In the near term, this April print represents the worst April performance we have on record for the LCD Panel Barometer, which goes back through 2006—hardly an encouraging trend, in our view."
"Large Panels Fall 6% M/M, Small & Medium Drop 8% M/M. During the month of April, total large-sized panel shipments decreased by 6.4% month-over-month to 23.2 million units. Shipments of small & medium-sized panels declined by 8.1% to 117.8 million units. Note that large-sized panels are used in TVs, notebooks, netbooks and monitors. As such, total shipments decreased by 7.9% M/M in April to 141.0 million units."
"Sales Cycle Decelerates to Down 20%, the Lowest Level Since May 2009. At the same time, the sales cycle for the leading Taiwan panel makers moved further into negative territory at down 20% in April, the largest Y/Y sales decline since May 2009."
"LCD Industry to Continue to Frustrate Investors. We believe the LCD industry will continue to frustrate investors, as the LCD TV market will grow at a slower rate than in the past, while the PC market continues to struggle. As such, we continue to take a cautious stance on our LCD coverage universe, which includes LG Display (NYSE: LPL)(Sell), Corning (NYSE: GLW)(Sell) and AU Optronics' (NYSE: AUO)(Neutral)."
White said, "April sales for our Taiwan LCD Panel Barometer decreased by 9.8% M/M to NT$83.42 billion and were much weaker than the five-year average increase of 3.1% for the month of April. Over the past year, there have been what seem to be monthly calls by industry observers trying to call the bottom in the LCD TV market and the LCD supply chain at large; however, trends across the industry have remained challenged, and our view remains that the industry is in the midst of a secular slowdown that will only get worse over the next couple of years. At the same time, we believe any cyclical rebound along the way will be modest and looking to panel price rises as an indicator of a turn in the industry will be misguided given that a high percentage of panels are already below cash cost. In the near term, this April print represents the worst April performance we have on record for the LCD Panel Barometer, which goes back through 2006—hardly an encouraging trend, in our view."
"Large Panels Fall 6% M/M, Small & Medium Drop 8% M/M. During the month of April, total large-sized panel shipments decreased by 6.4% month-over-month to 23.2 million units. Shipments of small & medium-sized panels declined by 8.1% to 117.8 million units. Note that large-sized panels are used in TVs, notebooks, netbooks and monitors. As such, total shipments decreased by 7.9% M/M in April to 141.0 million units."
"Sales Cycle Decelerates to Down 20%, the Lowest Level Since May 2009. At the same time, the sales cycle for the leading Taiwan panel makers moved further into negative territory at down 20% in April, the largest Y/Y sales decline since May 2009."
"LCD Industry to Continue to Frustrate Investors. We believe the LCD industry will continue to frustrate investors, as the LCD TV market will grow at a slower rate than in the past, while the PC market continues to struggle. As such, we continue to take a cautious stance on our LCD coverage universe, which includes LG Display (NYSE: LPL)(Sell), Corning (NYSE: GLW)(Sell) and AU Optronics' (NYSE: AUO)(Neutral)."
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