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TCL Electronics' 1H 2020 Net Profit Down 60%, TV Sales Enter Global Top 2
COVID-19 and China
Will 5G bring new lives to traditional industries? Image credit: EqualOcean

TCL Electronics' (01070:HK) interim report does not present encouraging financial numbers, though the sales performance in the second quarter of 2020 to some extent compensated for the revenue downslope.

The total revenue of the first half of 2020 reached HKD 17.28 billion, with a year-on-year decrease of 3.1%. The net profit excluding the discontinued operations suffered from an approximately 60% year-on-year decrease, falling to HKD 523 million from HKD 1,303 million in 1H 2019. Though the second quarter brought an over 100% annual growth in net profit, the severe sales decline and operating expenses increase during China's first-quarter pandemic still posed the threat of a long-lasting negative impact on the company.

The interim business data is more encouraging. In terms of global rankings, Chinese rankings and future trends are all on the firm's side. According to IHS, TCL brand TV market share in terms of sales volume in the second quarter of 2020 jumped to second place in global terms, accounting for 12.7% of the total. The first place is taken by the Korean vendor Samsung (005930:KR). In the Chinese market, TCL's ranking is the second as well with 14.6% market share, following Xiaomi (01810:HK).

Besides the TV business sector, the company further addressed its Internet business, as nowadays TV is going smarter with the connection to the Internet rather than cable TV. In the first half of 2020, its global Internet business revenue increased by 126.9% year-on-year, which was primarily driven by the Falcon Network Technology's (for the development and operation of TCL’s smart TV OS) business expansion in China.

As the company forecasts for the whole year of 2020, the speedy development of 5G technology will lead to a comprehensive intelligent upgrade of the display industry. Based on the firm's core display technology, it will further implement smart tech integration and globalization strategies and drive its TV sales volume up – from 20 million in 2019 to 23 million in 2020.

Editor: Luke Sheehan
ANALYST
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