Skyworth Digital to suffer from bleak TV manufacturing season

Only 10% growth from this segment is expected in FY3/14F.

According to Maybank Kim Eng, TV manufacturers are entering a period of slack in the upcoming months. Therefore, it expects a gradual slowdown in TV shipments growth momentum in the near future. 

For Skyworth Digital, Maybank is projecting FY3/14F TV shipments growth of 10%.

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Additionally, TV shipments in March should be soft given that the company reached its full-year shipments target in February, with an achievement ratio of 101% for the first 11 months of FY3/13.

Looking ahead, we project FY3/14F TV shipments growth of 10%.  

We forecast a sequential improvement in 2HFY3/13F gross margins, thanks to rising demand for large-size TVs that could be fully entitled for the government’s energy-saving subsidies, as well as weakening panel prices during the period.

However, in anticipation of rising contributions from low-margin businesses including the overseas TVs and white goods segments, we expect gross margins to contract from 21.2% in FY3/12 to 20.4% in FY3/13F and 20.1% in FY3/14F.  

We prefer to look at TV shipments from Dec 2012 to Feb 2013 to gauge recent sales performance as it would be misleading to look at monthly shipments in isolation due to the difference in timing of Chinese New Year, which took place in January last year but February this year.

Total LCD TV shipments amounted to 3.4m units in the past three months, up 31% YoY, which shows strong TV replacement demand particularly from lower-tier cities.