TCL Electronics (1070.HK) – a rising star in the TV business
Vertical integration and surging emerging market sales have allowed the Hong Kong-listed manufacturer to leapfrog established Korean and Japanese rivals to number 2 position globally
TCL Electronics Limited (1070.HK) (“TCL”), with a market cap of HKD 7.57 billion (USD 968 million), is not your ordinary Chinese TV manufacturer. TCL focuses on mid-to-high end audio/video products like miniLED, QLED, Android, and smart TVs, ranking second in the global TV market behind Samsung. The Company also produces air conditioners, refrigerators, smartphones, tablets, and smart home devices. A recent catch-up with the IR team at TCL’s Shenzhen Industrial Park Headquarters intrigued us and we decided to dig a bit deeper. Currently, we have a trading position open in TCL with average in-price of HKD 2.71. Our personal target range for the stock is HKD 3.71–4.26.
TCL has leapfrogged Japanese and Korean competitors in the TV market, largely by vertically integrating where others haven’t. It is honing in on the more premium large-screen segment – previously the exclusive domain of Korean and Japanese brands. TCL's technological strengths, cost-effective panel production, and leading position in rapidly growing emerging markets should allow for strong ongoing growth despite a challenging macro climate in its home market.
TCL will announce FY23e earnings on 28 March 2024. The stock has limited sell-side coverage, but sell-side expectations are for the Company to return to a 10% topline growth to around HKD 79 billion (USD 10 billion) with a net profit of around HKD 669 million (USD 86 million), in range with TCL’s net profit guidance of HKD 600-700 million (USD 77-90 million).
