TCL Electronics Records High Sales Volume in the First Three Quarters of 2019 and Several Securities Firms Including CICC Issue Positive Ratings
TCL Electronics (01070.HK, the Company) as a leading TV company in the global market recently released its sales volume data for the first three quarters of 2019. The growth of both overseas and domestic markets of TCL Electronics once again exceeded the expectations of investment institutions.
In November 2019, Essence International, CICC and First Shanghai Group have released research reports to recommend TCL Electronics. Essence International covered the Company for the first time and issued a "Buy" rating with a target price of HK$4.84. Moreover, CICC and First Shanghai Group issued "Outperform" and "Buy" ratings with a target price of HK$5.00 and HK$6.05, respectively. The frequent comments on TCL Electronics in the research reports include high-growth in overseas markets, excellent performance in Internet business and layout on global production capacity.
Overseas Business is an Important Development Engine for TCL Electronics
According to First Shanghai Group, global brand TV sales volume of TCL Electronics recorded significant growth of 21.2% year-on-year in the first three quarters of 2019. Moreover, according to Sigmaintell, the total TV shipment of the Company ranked No.2 globally with a market share of 13.2%, gaining 1.1 percentage points from the same period of last year. For the TCL brand TVs in overseas markets, the growth is obvious and continued with an increase of 33% year-on-year for the first three quarters of 2019, among which the market share in terms of sales volume in the US rose by 3.3 percentage points to 16.5%, ranking top 2 in the US market, and the gap of market share between TCL brand TVs and the first ranked brand has been narrowed significantly.
In addition, TCL Electronics began growing rapidly in Europe and emerging markets. CICC pointed out that in the first three quarters of 2019, TV sales volume of the Company in Europe and emerging markets increased by 24.1% and 36.5% year-on-year respectively. During the period, TV sales in several countries maintained strong growth momentum and increased more than 50% year-on-year, including Spain (+247%), Italy (+236%), France (+108%), Germany (+101%), India (+191%), Argentina (+99%), Australia (+69%) and Indonesia (+55%). From the data above, CICC is firmly positive about the Company's future global development.
According to Essence International, market share in terms of TV sales volume of TCL Electronics achieved No.1 in the US market in March and July of 2019 and the Company is rapidly replicating the successful experience of the US market to the European market and other emerging markets. TCL Electronics has obvious advantages in overseas markets, compared to other domestic competitors. The total TV production capacity layout in overseas of TCL Electronics exceeds 15 million sets per year, which is sufficient to meet its shipment demand in the North American, Indian and Russian markets. Moreover, the Company's turnover is expected to maintain double-digit annual growth in the next three years. Noticeably, a high dividend yield of 5% corresponding to the current stock price is attractive in the stock market.
Sales Volume of TCL Brand TV Remained Increasing against the Downward Trend in the PRC Market
The overall TV market in China is competitive, but in 1H19, sales volume of TVs over 65 inches of the Company has increased by 114.6% year-on-year. With CSOT gradually increasing its production capacity of the T6 large screen, the supply capacity of 65-inch and 75-inch could be further guaranteed, and the efficient synergy between the Company and CSOT has been further enhanced. First Shanghai Group expected that, in the PRC market, the Company will still have an ideal performance in the mid-to-high end product lines such as 4K and super-large screen, which the Company has been focusing on. First Shanghai Group also believes that the Company's differentiated mid-to-high-end product strategy in the PRC market will help the Company maintain profitability in the fierce market environment.
According to Essence International, TCL Electronics has strong shareholders' background, and its display panel is mainly supplied by CSOT of TCL Corporation. Overall, a deep integration of supply chain not only has a great advantage of inventory cycle, but also reduces the price fluctuation of upstream, which further enhances TCL Electronics' competitive advantage on supply chain and cost control when compared with other peers.
As for CICC, since the Company's performance in the PRC market in 2H2018 was in the low side, CICC expected that the Company will improve its profit in 2H2019.
Overseas Internet Business Became the New Focus of TCL Electronics
TCL Electronics has recently announced that it renewed global partnership with Netflix. The cooperation with Netflix will further scale up the Company's overseas Internet business. When the 2019 interim results were released, TCL Electronics already announced its achievement in overseas Internet business. With the newly generated revenue of HK$96.02 million from the overseas Internet business, the Company has become the first Chinese enterprise in the TV industry to have large-scale and sustainable overseas Internet business revenue.
First Shanghai Group expected that, with the market shares of the Company in overseas markets continuously increasing and the scope of cooperation between the Company and streaming media companies such as Google, Roku and Netflix becoming wider and deeper, the overseas Internet business of the Company will grow stably and continuously. Analyst from First Shanghai Group is positive about the rapid growth of TCL brand TV in overseas markets, and believes that the increasing overseas market shares will accelerate the Company's Internet business development.
The overall performance of TCL Electronics in the first three quarters not only reflects the Company's accurate market outlook, but also reflects consumers' increasing recognition on the Company's product quality, user experience and brand reputation.
28/11/2019 Dissemination of a Marketing Press Release, transmitted by EQS Group.
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