BOE: A 'Tailwind' for Panels, But Tariff Clouds Add Uncertainty?

BOE (000725.SZ) released its 2024 annual financial report (as of December 2024) after the A-share market close on April 21, 2025, Beijing time. The key points are as follows:

1. Overall Performance: Revenue and Profit Both Rebound. BOE achieved revenue of 54.6 billion yuan in Q4 2024, a year-on-year increase of 13.8%, mainly driven by higher panel shipments. $BOE(000725.SZ) Net profit attributable to shareholders in Q4 2024 was 2.01 billion yuan, up 32% year-on-year. As the panel industry recovers from its bottom, both revenue and gross margin have improved.

2. Gross Margin and Expense Ratio: Impact of Accounting Policy Adjustments. This quarter saw a sharp decline in the company's gross margin, while sales expenses surprisingly turned "negative", mainly due to changes in accounting policies. The company now records warranty-related provisions under "cost of sales" instead of "sales expenses," impacting this quarter's data by approximately 2.1 billion yuan. Excluding this impact, the gross margin would have rebounded to 15.7%, with sales expenses returning to 860 million yuan, aligning better with operational conditions. Panel price declines at the end of 2024 also contributed to the sequential drop in gross margin.

3. Business Segments: Display devices and IoT innovation remain the company's largest revenue sources, accounting for over 95% combined. Display device sales grew 9.9% year-on-year in H2 2024, driven by higher panel shipments, while IoT innovation revenue fell 22.4% due to economic demand fluctuations.

4. Inventory and Price Trends: BOE's inventory decreased to 23.3 billion yuan in Q4 2024, down 4.7% sequentially. The inventory-to-revenue ratio further declined to 0.43. With improving inventory conditions, panel prices began rising again from late 2024. This upward trend is expected to sustain performance growth next quarter.

Dolphin Research's View: BOE's earnings report is decent.

The company delivered double-digit growth in both revenue and profit this quarter. Although panel demand hasn't surged rapidly, steady price increases have fueled expectations of continued recovery. With rising volumes and prices, BOE's full-year performance maintains a stable upward trend.

Accounting policy adjustments this quarter—mainly reclassifying warranty provisions—had no impact on net profit but affected gross margin and sales expenses. Excluding this, gross margin would remain around 16%, with sales expenses at ~900 million yuan. Operationally, gross margin fluctuations are primarily tied to panel prices, directly influencing profit realization.

Overall, operational trends remain positive: 1) Inventory ratios further declined; 2) ROE% rebounded with net margin improvements; 3) Panel price hikes since early 2025 will boost performance. However, tariff developments warrant attention—nearly half of revenue comes overseas, posing potential risks.

Below are Dolphin Research's charts on BOE: