BOE: Panel prices drop again, can a 1% slim profit margin hold up?

BOE Technology Group Co., Ltd. (000725.SZ) released its financial report for the third quarter of 2025 (ending September 2025) after the A-share market closed on the evening of October 30, 2025, Beijing time. The key points are as follows:

1. Overall Performance: BOE achieved a revenue of 53.3 billion yuan in the third quarter of 2025, a year-on-year increase of 5.8%. The significant rebound in the company's revenue was mainly driven by the recovery in panel prices. Due to relatively weak downstream demand, prices have begun to stabilize, and the company's quarterly revenue remains around 50 billion yuan. BOE's net profit attributable to shareholders in the third quarter of 2025 was 1.36 billion yuan, a year-on-year increase of 32%, mainly influenced by non-operating factors (such as non-operating income).

2. Gross Margin and Expense Ratio:$BOE(000725.SZ) The gross margin for this quarter was 14.4%, a significant year-on-year decline of 3 percentage points. Here, the company adjusted its accounting policy starting from the end of last year (the company included the provision for warranty expenses in "main business costs" instead of "selling expenses"). This operation reduced selling expenses while increasing operating costs.

Due to the company's quarterly provision for warranty expenses of about 400-500 million yuan, if the impact of this operation is not considered, the company's gross margin for this quarter would have rebounded to around 15.3%, still lower than the 17.4% in the same period last year, mainly due to increased costs.

3. Panel Price Changes: The company's main revenue comes from large panels such as TV screens, and changes in panel prices directly affect the company's performance. In the third quarter, large panel prices remained relatively stable, with prices for 65-inch/55-inch/43-inch/32-inch panels remaining at 173/124/64/35 USD, respectively. Due to relatively flat downstream market demand, the rise in panel prices has been "paused".

4. Inventory and Price Changes: BOE's inventory increased to 27.86 billion yuan in the third quarter of 2025, a slight increase of 1.9% quarter-on-quarter. The company's inventory/revenue ratio for this quarter remained at 0.52. The current supply and demand situation is relatively stable, with no signs of significant downstream stockpiling.

Dolphin Research's Overall View: Supply and demand are relatively balanced, and performance is moderate.

BOE's revenue growth this quarter remained in single digits, with profit growth mainly influenced by non-operating factors.

From the perspective of main business operations, BOE's actual gross margin this quarter (considering the impact of asset impairment, according to the original accounting standards) was 13%, still down 1.6 percentage points year-on-year. Combining this gross margin (13.1%) with the company's operating expense ratio (11.4%), it can be seen that the company's main business is actually slightly above the breakeven line (+1.7%).

Dolphin Research processed BOE's profit (processed profit = gross profit - taxes - operating expenses + asset impairment losses) and found that the company's processed profit for this quarter was about 540 million yuan, corresponding to the company's revenue of 53.3 billion yuan, with the net profit margin of the main business being only about 1%.

It can be seen that panel suppliers previously actively reduced capacity to drive price recovery, but there was no significant improvement in demand. When panel manufacturers began to regain profitability, the increase in capacity utilization led the panel market back to a relatively balanced supply and demand state, making it difficult for panel prices to continue rising.

Looking at the trend of panel prices, the price driven by supply-side contraction rose all the way to the middle of last year. However, with the panel market returning to a balanced supply and demand situation, panel prices have remained relatively stable over the past year. From BOE's operating situation, the current price is just above the "breakeven line" for panel companies.

It is worth noting that the latest panel prices in late October have shown signs of decline again. If panel prices continue to decline, the company's main business profits may "return to loss".

In the short term, the recent signs of decline in panel prices reflect the current sluggish market demand, which will directly affect the company's gross margin level and performance. Continue to pay attention to changes in panel prices, which is a leading indicator of the company's performance.

From a medium to long-term perspective, the large panel business is further concentrating on leading manufacturers, such as BOE acquiring a 30% stake in Rainbow Optoelectronics. The top three global manufacturers currently account for more than 60% of shipments, and as industry concentration increases, the cyclical impact on the panel industry will gradually weaken.

As a leader in the panel industry, BOE currently has relatively good loss resistance due to scale effects. Through cycles, BOE's scale continues to grow. However, current downstream demand remains relatively sluggish, and panel prices are still difficult to stabilize above the profitability level. If panel prices continue to decline in the near future, the company's performance may come under pressure again. But from the industry trend, as market concentration further increases, the cyclical nature of the industry will gradually fade, and the company's performance will also become more stable.

The following are Dolphin Research's data charts on BOE: