京东方A(000725)

BOE unveiled China’s first, world’s second Gen6 flexible AMOLEDdisplay production line. BOE Technology, a leading display manufacturer,has pulled the trigger on its Chengdu-based Gen6 flexible active-matrixorganic light-emitting diode (AMOLED) line�Cbuilt in the space of lessthan five months, well ahead of schedule. At a delivery ceremony, thecompany handed the first batch of its Gen6 flexible AMOLED panels totop Chinese handset makers such as Huawei, Oppo, Vivo, Xiaomi, ZTE andnubia. The new launch would significantly boost BOE’s standing in theflexible OLED field.

Rising flexible OLED display demands spur and sustain future growth.Some of the world’s prominent smartphone players are jockeying to playthe ace of flexible OLED for their “next big thing”, as witnessed by Apple’spatented iPhone design featuring a bifold or trifold screen thought to hitthe market sometime, and Samsung’s debuting this year of a futuristicOLED panel able to be stretched, scrolled and folded. This, coupled withgrowing flexible OLED demands emanating from other segments likewearables, VR devices, tablets and notebooks, would benefit an industryleader like BOE, which is now in a better position for a potential delugeof bendable and foldable display orders mostly from well-famed mobiledevices and wearables producers.

BOE’s profitability set to shoot up as flexible OLED line yield improves.A single 48,000-unit flexible OLED line is expected to close in on thebreakeven point on a 50% yield, which, when ramps up to 80%, wouldlead to an annual profit of about RMB14bn�Coutstripping BOE’s LCDarm’s 2017 profit�Cand a ROE of nearly 30%, well above roughly 10% forthe company as a whole for the current full year. Hence, BOE looks set tosignificantly shore up its profitability through yield and capacity increaseat its flexible OLED business, in our view.