New energy efficiency subsidies will affect TV follow-up demand

Due to the seasonal influence in 2013 and the decrease in the number of working days in February due to the Spring Festival holiday, the demand for panel makers in Mainland China slowed down in January and February as expected. According to the latest monthly LCD market dynamics report of NPD DisplaySearch, the panel purchases of Chinese mainland manufacturers fell by 23% (M/M) in January compared with January, two percentage points lower than expected; while sales of LCD TVs in mainland China were also higher than the same period of last year. Only slightly grows 3-4% (Y/Y). However, taking into account that the last batch of subsidy policies for home appliances to the countryside was completed at the end of January, the withdrawal of the subsidy policy affected short-term demand and other factors, and the market performance was still within the range of the brand factory.

It is estimated that the amount of panel purchases in March will grow significantly due to the preparation for the May 1st, and the first phase of the energy efficiency subsidy policy will end at the end of May. The brand manufacturers are more willing to prepare more inventory in case of uncertain delays and implementation methods. According to a preliminary survey, shipments of LCD TV panels shipped to Chinese brand factories rose by 40% (Y/Y) in March, which is 7 percentage points higher than previously expected; panel shipments remained almost unchanged in April and May. March levels; down to June will be moderately lower. Due to the growth of demand in March, panel makers are not eager to reduce the price of major-size TV panels, and the size of large-size LCD TV panels is also very limited in the second quarter.

The biggest uncertainty factor affecting the subsequent demand is a new round of energy efficiency subsidies. If the new round of energy efficiency subsidies is postponed after the end of May, the possible direction of adjustment is to further increase the energy efficiency coefficient and increase the proportion of subsidies for large-size subsidies, especially for flat-panel TVs with 46′′ and above. If the energy efficiency coefficient is further increased, Increased cost for UHD and direct-lit LED panels poses greater challenges.

Zhang Bing, Director of China Market Research at NPD DisplaySearch, said, “The biggest factor affecting panel purchases after April is the adjustment of the next phase of the energy efficiency subsidy policy. After the end of the first round of subsidy measures at the end of May, will the policy continue and the size structure of subsidies? Whether it changes, whether the energy efficiency coefficient increases, whether the subsidy budget increases, etc. The details There are many different voices in the market, and this uncertainty largely affects short-term plans including panel makers and brand factories. According to a series of policy adjustments and exit experiences from old to new, due to the long-term existence of policies, the impact of policies on the market has weakened, and the long-term demand for flat-panel TVs in mainland China will not show significant fluctuations due to policy adjustments."

The following is a follow-up analysis of NPD DisplaySearch's recent situation with panel makers from mainland China:

In February, LCD TV sales in mainland China grew only 3-4%. This is mainly because the Spring Festival in 2013 is about 15 days later than last year. The 7-day Spring Festival holiday shortens the time for consumers to buy. Together with the last batch of subsidy policies for home appliances to the countryside, they all ended at the end of January. The withdrawal of the subsidy policy affects short-term demand.

Prior to this, the government has increased the subsidy budget for high-efficiency flat-panel televisions, which has greatly promoted the sales of flat-panel TVs. The increased budget will continue to have a positive impact on sales of flat-panel TVs in the second quarter and even in the second half of this year. However, whether the energy efficiency subsidies will be postponed after the end of the first round, or if the delays are immediately postponed, must be formally announced by the government.

Some brand manufacturers tried to talk with panel makers about the second quarter 32" Open Cell's strategic purchases, and the brand tried to exchange for lower purchase prices with larger purchases. But in fact, panel makers also hope to maintain, even slightly increase. 32" panel price, especially for local panel makers. According to our observations, emerging market demand for small and medium sized LCD TVs, including 23.6", 29", and 32", has grown significantly. The two major domestic brands have also increased their purchases of these sizes in order to actively expand the emerging market. Market opportunities for low-cost, small-size LCD TVs. It is worth noting that two major local panel makers have been actively developing large-size LCD TV panels including 46", 48", and 55" to include 32". The main LCD TV panel product portfolio; and the opportunity to maintain the advantage in the next round of possible energy efficiency subsidies, products that benefit more from large-size LCD TVs.

As expected, Huaxing shipped the largest number of LCD TV panels to China's domestic TV brand factories in February this year, followed by Innolux and BOE. The proportion of Huaxing LCD TV panel shipments to its core customer TCL increased from 37% in December 2012 and 39% in January 2013 to 42% in February. Driven by the demand from local Chinese brand factories, China's domestic panel makers' panel stocks have returned to normal, and capacity utilization has gradually rebounded.

Based on current estimates, Innolux returned to the largest panel supplier in mainland China in March. After completion of the sales season for the May 1st sales season and the preparation of new products for mainland brands, the shipment of Innolux's shipments to local Chinese manufacturers will slow down after June; the adjustment of the energy efficiency subsidy policy in the later period will greatly affect this year. In the second half of the year, especially the demand for the panel in the third quarter.