TCL Electronics: global leader in the smart screen business
$TCL ELECTRONICS(01070.HK$ is mainly engaged in the research and development, production, and sales of consumer electronic products such as smart screens and mobile communication devices, as well as the independent development of home Internet services. With three major business structures: display, innovation, and internet business, it has become a leading global consumer electronics company.BOC Securities said it is optimistic about its long-term competitiveness in the external market and gave it a "buy" rating.
Key Takeaways：
1. Top three global smart screen businesses, optimistic about the company's long-term competitiveness in overseas markets
According to the company's annual report, TCL shipped 23.58 million units of smart screens in 2021, with a market share of 11.5%, an increase of 0.8 pct. The global ranking is firmly in third place, after Samsung and LG.
(1) Rising market scale in North America, "content leads to hardware" strategy a big success
The business scale in the North American market increased from HK$700 million in 2014 to HK$22.3 billion in 2021, with a CAGR of 65%. 2014 saw the tie-up with Roku, the number one media provider in North America, and TCL Smart TVs were equipped with Roku's content and operating system to jointly develop the US Smart TV market.
(2) Global supply chain helps Europe and emerging markets become new growth points overseas
The company has seen strong growth in the European market over the past three years. According to the company's annual report, sales in Europe will be +52% YoY and sales in emerging markets will be +39% YoY in 2021.
(3) The decline in raw material prices will increase the elasticity of performance
Since July 2021, panel prices have continued to fall, and shipping costs have also entered a high stabilization phase. The trend of upgrading the company's product structure remains unchanged. The increase in the average price of products will be expected to thicken the company's earnings elasticity.
2. Steady growth in the scale of small and medium size and commercial display business
(1) Stable growth in the scale of small and medium-sized screen business
The small and medium-sized screen business mainly cooperates with first-tier operators in European and American markets in a long-term and in-depth manner.
(2) Integration with established supply chain, commercial display business forms cost advantage
According to LOTUS data, shipments of commercial interactive panels in China reached 664,000 units in 2021, up 53.6% YoY. The scale of the Company's intelligent commercial display business continued to expand in 2021, with total revenue increasing by 18.3% YoY to HK$310 million.
3. High growth in internet business, increasing profitability
With the influx of massive multimedia content, combined with the Internet's precise push and personalized customization, coupled with the richer and more detailed audiovisual experience brought by the large screen, the connection between the large domestic smart screen and consumers are being reshaped.
The company's domestic internet business will generate revenue of HK$1.5 billion in 2021, up 64% YoY; with a gross margin of 46% and a profit share of nearly 1/3, it has become an important source of profit for the company.
$TCL ELECTRONICS(01070.HK$
$TCL ELECTRONICS(01070.HK$
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