China Times (chinatimes.net.cn) reporter Sui Bingping Yang Shisheng Shenzhen report
"A company annual report that has just experienced the longest and deepest decline in the history of the panel industry" was born. On March 31, at the 2019 annual performance online exchange meeting of TCL Technology, the company's chairman and CEO Li Dongsheng called this annual report. This is also the first annual report after TCL completed its asset restructuring, divested its smart terminal business, and transformed into focusing on the semiconductor display industry.
TCL Technology's current business layout
annual report shows that according to the test preparation caliber, TCL Technology's revenue in 2019 was 57.27 billion yuan, a year-on-year increase of 18.7%; net profit was 3.56 billion yuan, a year-on-year increase of 0.53%. The net profit of its main business TCL Huaxing dropped from 2.32 billion yuan to 964 million yuan, a year-on-year decrease of 58.5%.
TCL Huaxing, which has always been "prosperous", has achieved such results, and investors obviously do not buy it. What's more, the company has just announced that it plans to increase its capital by 5 billion yuan to TCL Huaxing with its own funds. In response, Liao Qian, vice president and secretary of the board of directors of TCL Technology, said at the online performance exchange meeting: "Profits are mainly impacted by the sharp drop in the prices of large-size panels, and the prices of large-size panels fell to historical lows in Q3 2019."
. Faced with many investors' complaints about TCL Technology's stock price, Liao Qian responded with the saying that "the company's valuation after restructuring is still at a low level in the industry, which is affected by the epidemic." As of the close of April 1, TCL Ji Technology's stock price was 4.14 yuan, with the latest total market value of 57.9 billion yuan.
The main business is weak and it is hard to hide. Industrial finance "filling the leaks"
When it comes to TCL Technology, we have to mention the company's restructuring history.
At the end of December 2018, TCL Group launched a major restructuring plan, intending to sell equity in eight companies to TCL Holdings for a total of 4.76 billion yuan. In April 2019, TCL Group completed its reorganization and divested its smart terminal and supporting businesses. Since then, TCL Group has changed from diversified operations to focusing on the semiconductor display and materials industry, and has developed industrial finance and investment businesses to support and empower the development of its main business.
In February 2020, in order to accurately reflect the company's situation, TCL Group was officially renamed "TCL Technology Group Co., Ltd.", and the company's securities abbreviation was also changed from "TCL Group " to "TCL Technology".
htmlOn March 30, TCL Technology released its first annual report after its reorganization and name change. According to the annual report, as of December 31, 2019, TCL Technology's test preparation caliber (i.e. excluding the impact of restructuring business data, the company prepared the financial reports for the reporting period and the same period last year according to the scope of post-restructuring merger) and completed operating income of 57.27 billion yuan, a year-on-year increase of 18.7%; the annual net profit was 3.56 billion yuan, a year-on-year increase of 0.53%. But the reporter found that the company plans to use financial investment income to cover up the fact that the semiconductor business is sluggish.of TCL Technology's 3.56 billion yuan net profit, 2.62 billion yuan was attributable to ordinary shareholders of listed companies, a year-on-year decrease of 17%. After deducting non-recurring gains and losses , this figure was only 235 million yuan, a year-on-year decrease of 85.19%. In other words, although TCL Technology's revenue has both increased, the difference between attributable net profit and non-net profit is too large, and the growth rate is diverging from each other, and the net profit is mainly contributed by non-recurring gains and losses.
So, where do these non-recurring gains and losses come from? The reporter found that in 2019, TCL Technology relied on investment activities such as issuing loans and debt investments to add a large number of illiquid assets, thus balancing the losses caused by the decline in semiconductor business. Liao Qian said at the performance exchange meeting that the industrial finance and investment business achieved a profit of 999 million yuan at the end of 2019, "ensure the overall profit stability of the group during the trough period of the homepage."
TCL Technology's second largest business "Industrial Finance and Investment" has added non-current assets to the company
In fact, maintaining performance through investment has also exposed TCL Technology's weakness, namely over-reliance on the panel industry. Taking 2019 as an example, the semiconductor industry's sluggish demand in that year led to a halving of TCL Huaxing, which assumed the main source of profits of TCL Technology, a net profit of halved, down 58.5% year-on-year to only 964 million yuan; gross profit margin decreased by 8.42% year-on-year to 10.34%.
The development of the epidemic in 2020 continues to affect panel prices.Senior home appliance industry observer Liu Buchen believes: "Affected by the epidemic globally, the expected growth in demand for panels in smart terminals this year may not come, or be postponed, and the expected price increase is also likely to not rise properly."
, and Liao Qian also admitted in his answer to investors that the improvement of the industry structure will be a long cycle. "Affected by the epidemic, the production and insurance rate of some panel factories has declined, the new line capacity climbing plan slowed down, the production time was delayed, the overall panel supply decreased year-on-year, and the short-term panel supply was tight."
He also said: "Although panel prices have seen a significant cumulative increase in 2020, due to the falling prices in the previous period, the industry's gross profit margin has not yet returned to normal levels. At the same time, when the industry's profits fell to the historical bottom in 2019, overseas production capacity began to exit significantly, including South Korea's Samsung and LCD. TV. "
However, Zhao Jun, senior vice president and general manager of the large-size business group, used a set of data to give investors a reassurance: "In 2019, TCL Huaxing rose from fourth to third in TV shipments, and is also the only panel factory with positive shipments and increased market share (accounting for 14%) among the top six panel factories. "
seems to be precisely because of seeing the strength of TCL Huaxing, TCL Technology disclosed on the day of its release of its 2019 annual financial report that it plans to increase its capital by 5 billion yuan to TCL Huaxing with its own funds. After the capital increase is successful, TCL Technology's share of TCL Huaxing will increase from 88.82% to 90.72%.
TCL Technology, a stock increase that is considered to be a call to the capital market, does not answer the questions that have long been around the company: Since its strength is good, why has TCL Technology's valuation not been released?
stock price is calm and valuation release is to be determined
At this online performance exchange meeting, many small and medium-sized shareholders expressed their thoughts on TCL Technology's stock price: "Why hasn't solved the two major problems with stock prices been slow? One is the weak valuation, and the other is that the big ups and downs have caused many retail investors to be trapped at high levels." There is no reason for the complaints of small and medium-sized shareholders. In 2004, TCL Technology (then "TCL Group ") was listed at an issue price of 4.26 yuan, but the stock price did not exceed 4 yuan in the ten years after its listing, and even became a "1 yuan stock" during this period. At the beginning of this year, the company's stock price generally rose and reached its highlight moment on February 25, with a stock price of 7.36 yuan, and then continued to fall to the issue price.
Trend of TCL Technology's stock price change in the past five years
In response to this, Liao Qian's response is that the group's current development path is clear and will fully release its growth potential. The positive effect of restructuring will continue to be reflected in the future. "But currently affected by the panic mentality of the epidemic, the company's valuation is still at a low level in the industry." He also said that the company will continue to improve its competitiveness and improve shareholder returns.
Li Dongsheng emphasized at the end of the performance exchange meeting: "Although TCL Technology's stock pressure has been relatively high recently, TCL Technology is still a low point in the valuation of the technology sector in the entire market, so I hope to have confidence in us."
But in Liu Buchen's view, TCL Technology does not have a "value depression". He believes that although TCL Technology Capital has been much optimized compared with TCL Group a year ago and its overall competitiveness has been significantly improved, after horizontal comparison of peer companies, TCL's competitiveness is not very obvious. "If compared with white electricity giants such as Haier, , Midea, and Gree, I think TCL has a considerable gap in terms of industrial layout, corporate profitability and brand influence." He told the reporter of the China Times.
"TCL Technology has released its valuation through last year's asset restructuring and this year's company name rename. Before major positive news appears, the reason for a significant increase in valuation is not sufficient." Liu Buchen believes.
reporter observed that at this performance exchange meeting, many small and medium-sized investors hope that TCL Technology can launch a long-term mechanism for stock repurchase to boost the confidence of investors.In response, Liao Qian responded that since the implementation of share repurchase on February 14, 2019, TCL Technology has repurchased a total of 565 million shares through centralized bidding transactions through repurchasing special securities accounts, accounting for 4.18% of the company's total share capital, with an average transaction price of 3.42 yuan per share, and a total transaction amount of 1.934 billion yuan (excluding transaction fees).
TCL Technology did not respond to the repurchase plan for the new year.
bet on inkjet printing OLED may encounter technical challenges
After seeing the development prospects of OLED panels, many panel companies have announced to the public that they have developed related products, including BOE , TCL Huaxing, AUO Optoelectronics , etc. TCL Huaxing has announced that printed OLED and mini LED will be the two main routes of the company's next generation technology.
's advantages over OLED panels. Zhang Bing, marketing director of DisplaySearch American Display Information Management Consulting Co., Ltd., once expressed his opinion on electrical magazines that OLED panels are regarded by the color TV industry as the next generation of display technology that replaces LCD panels with their self-luminous, does not require a backlight, and can be bent at will.
However, since the price of OLED panels is three times that of LCD TVs, and the supplier is only LG Display, the production capacity is limited, and its share in the color TV market is still very small. Therefore, price is a key factor hindering the large-scale application of OLED panels. Zhao Jun, senior vice president and general manager of the large-size business group of TCL Huaxing, also said that the overall cost of printing OLED and mini LED debut business is relatively high. "Printed OLEDs are still focusing on high-end displays in the early stage and have not yet entered mainstream displays. We expect products under these two technologies to gradually enter commercial applications in 2023," he said.
Zhang Bing predicts that once the inkjet printing OLED panel is successfully applied on a large scale, the production cost of each OLED TV will drop by 15%-25%. But he also said bluntly: "Although panel companies such as BOE , Huaxing Optoelectronics , AUO Optoelectronics have announced the development of related products, the inkjet printing OLED panel technology is still not mature enough, and there are still many technical difficulties that need to be broken through. It is still difficult to say when it can be applied on a large scale."
Obviously, the new technology is still full of challenges, and it is difficult to guarantee when it can be mass-produced. "The later the mass production, the more uncertainty it is." Liu Buchen believes.
Editor in charge: Xu Yunxi Editor-in-chief: Qinling
