Investment Rating - The report assigns a "Buy" rating for TCL Electronics, marking the first coverage of the company [12][10][192]. Core Views - TCL Electronics is expected to achieve a breakthrough in high-end market share through its strategic focus on mid-to-high-end products, leveraging its advantages in product quality, channel distribution, and brand strength [2][10]. - The company's profitability is anticipated to improve as panel price fluctuations stabilize, aided by internal resources from Huaxing Optoelectronics [2][6]. - The diversification of TCL's business boundaries is ongoing, with growth driven by market share expansion, operational efficiency improvements, and industry diversification [2][10]. Summary by Sections Company Overview - TCL Electronics, originating from a tape manufacturing background, has evolved into a global leader in display technology, with a projected revenue of HKD 45.494 billion in H1 2024 and a global TV shipment market share of 13.3%, ranking among the top three worldwide [4][10]. Historical Challenges - The TV industry has faced significant profitability fluctuations due to intense competition and price wars initiated by internet brands, leading to a fragmented market and reduced margins for traditional manufacturers [5][28]. Recovery and Growth Prospects - The global TV market is stabilizing, with increasing demand for high-end and large-screen TVs. TCL's strategic focus on Mini LED technology is expected to capture a larger share of the mid-to-high-end market [6][55]. - The shift of panel production capacity to mainland China is likely to shorten price fluctuation cycles, enhancing TCL's ability to manage costs effectively [6][137]. Operational Efficiency - TCL has optimized its mobile and tablet business, focusing on profitable markets in Europe and America, which is expected to improve gross margins in 2024 [7][138]. - The company has also restructured its internet business, which is anticipated to have significant growth potential despite recent regulatory challenges [7][144]. Industry Diversification - TCL's foray into the solar energy sector is supported by favorable policies and a growing market, with significant revenue growth expected from this segment [8][180]. - The company is leveraging its existing distribution channels to enhance its solar business, which has shown rapid growth since its inception [8][181]. Value Reassessment - The 2023 stock incentive plan reflects TCL's confidence in future growth, with projected compound annual growth rates (CAGR) for net profit of 13%-23% from 2024 to 2026 [9][187]. - Compared to industry averages, TCL's valuation appears attractive, suggesting significant investment potential as market share and profitability are expected to improve [9][188]. Investment Recommendations - The report emphasizes that TCL's growth will be driven by market share expansion, operational efficiency, and industry diversification, with projected net profits of HKD 1.328 billion, HKD 1.639 billion, and HKD 2.014 billion for 2024-2026, respectively [10][192].
TCL电子：励精图治，焕发生机