TCL’s performance increased significantly

On the evening of August 9, TCL technology disclosed the financial results of the first half of 2021. During the reporting period, TCL technology achieved an operating revenue of 74.3 billion yuan, a year-on-year increase of 153.3%; The net profit was 9.25 billion yuan, a year-on-year increase of 765%; The net profit attributable to shareholders of listed companies was 6.78 billion yuan, a year-on-year increase of 461.5%.

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The performance is good, but many investors are still worried about TCL technology’s share price and are not optimistic that its share price can turn red.

As of press time, TCL technology’s share price fluctuated around 7.88 yuan.

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Tortuous development

Through the operating revenue and net profit of TCL technology in recent 5 years, it can be found that the company’s performance has not always maintained a growth trend.

In the first half of 2016, TCL technology’s net profit was 788 million yuan, a year-on-year decrease of 62.3%; The net profit attributable to the parent company was 606 million yuan, a year-on-year decrease of 62.6%. TCL technology is attributed to: first, the price of LCD panel is quite different from that of the same period last year, resulting in a year-on-year decrease of 54.9% in the net profit of Huaxing optoelectronics; Second, affected by the sluggish demand in overseas markets and the business restructuring in China, the net profit of TCL COMMUNICATION TECHNOLOGY decreased by 94.7% year-on-year during the reporting period.

In the first half of 2018, TCL technology’s net operating revenue was 52.5 billion yuan, a year-on-year increase of only 0.67%. TCL technology believes that there are two reasons for the slowdown in the growth of operating revenue: first, the average price of main size panels is significantly lower than that in the same period last year, and the revenue of Huaxing optoelectronics is affected; Second, the reform of communication business, streamlining business structure and organizational processes, and shrinking the business scale.

In the first half of 2019, TCL technology’s operating revenue was 26.12 billion yuan, a year-on-year decrease of more than 50%.

Under the impact of the epidemic in the first half of 2020, TCL technology’s net profit attributable to the shareholders of the listed company was 1.21 billion yuan, a year-on-year decrease of 42.3%.

In the first half of 2021, both revenue and net profit hit new highs.

TCL technology pointed out in the report that benefiting from the upward trend of the industry boom, the superposition of the company’s own rapid growth of production capacity and the improvement of product structure, the company’s semiconductor display business realized an operating revenue of 40.8 billion yuan, a year-on-year increase of 93.6%, and a net profit of 6.61 billion yuan, a year-on-year increase of 6.75 billion yuan.

In addition, relying on the advantages of technology accumulation, leading capacity improvement and supply chain coordination, TCL technology stimulated organizational vitality through mechanism and system reform. The company’s semiconductor photovoltaic and semiconductor business revenue and profit increased significantly year-on-year. Zhonghuan semiconductor achieved an operating revenue of 17.64 billion yuan, a year-on-year increase of 104.1%, and a net profit of 1.89 billion yuan, a year-on-year increase of 160.6%.

Semiconductor trump card

Lack of core is still an inseparable topic in global industries, automobiles, consumer electronics and other fields. IHS Markit, a research firm, said that the production of cars due to chip shortage decreased by 672000 in the first quarter of this year and about 1.3 million in the second quarter.

Previously, insiders of new forces told reporters that “it is difficult to find a core” is a common problem in the industry and has become a major factor restricting production capacity.

At present, the shortage of automotive chips is mainly concentrated in vehicle specification MCU chips, which mainly rely on imports. The global sales of new energy vehicles have surged, the demand for chips is greater, and the order backlog of automotive chips is serious. Domestic main engine manufacturers are also seeking new cooperative manufacturers to promote import substitution.

At the same time, in the field of consumer electronics, Sony and Microsoft have launched new game consoles. As the release of new flagship products of mobile phone manufacturers such as apple is approaching, high-end chips have also joined the chip market.

Goldman Sachs analysts expect the global chip market to remain tight until 2023.

TCL technology ushered in a development opportunity.

Combing the financial report, we can find that the semiconductor revenue is 40.8 billion yuan, accounting for 55% of the operating revenue. During the reporting period, TCL Huaxing T1, T2 and T6 production lines were sold at full capacity, and T7 production capacity climbed. In the field of small and medium-sized business, T3 production line actively expands emerging businesses such as high-end notebook, tablet and vehicle, T4 flexible AMOLED production line expands production as planned, and flexible folding screen continues to expand new brand customers.

It is worth noting that TCL technology also disclosed in the financial report that 6-inch products have increased the EPI route and began to plan the end customer certification; Continuous certification increment of 8-inch products for domestic customers, logic, CIS and other products, and accelerated certification of new products for international customers; 12 inch products are fully benchmarked with international leading products.

Semiconductor panel business is developing rapidly, but Huaxi Securities raised concerns. It is estimated that the overall gross profit margin of TCL technology is expected to decline slightly in H2, mainly due to the off-season correction of large-size panel prices.

However, the life cycle of LCD technology is lengthened. New display technologies such as large-size OLED and micro led cannot replace LCD in the short term due to factors such as cost and technology. LCD can still meet some high-end market needs through technological evolution.

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