Recently, TCL Multimedia Technology Holdings Limited (01070, hereinafter referred to as "TCL Multimedia") announced that the board of directors intends to change the company name from "TCL Multimedia Technology Holdings Limited" to "TCL Electronics Holdings Limited" to better Reflect the business expansion of TCL Multimedia.
At the same time, TCL Multimedia intends to raise more than HK$2 billion in a “three-for-one†approach to deploy funds for future expansion plans. Among them, about 350 million Hong Kong dollars will be used to implement the first phase of the Wuhu project, about 750 million Hong Kong dollars will be used for future joint ventures and mergers and acquisitions opportunities.
In order to further consolidate the color TV business and accelerate globalization, TCL’s rights-supply move can be described as “one stone with two birds.†In the first three quarters of 2017, thanks to the raw material cost advantage granted by China Star Optoelectronics, TCL Multimedia has grown in a contrarian direction and overseas markets have also become an important source of its overall revenue.
However, with the panel price correction in the fourth quarter, there are doubts that the advantages of TCL may be greatly reduced. In this regard, TCL Multimedia Corporate Finance and Investor Relations Department Director Yin Guoting responded to reporters, said: "Our cooperation with China Star Optoelectronics is close, while reporting to the channel business machine prices, Huaxing Optoelectronics also reported to us At the price, the cost is locked, so there is no fear that price fluctuations will bring risks."
He also revealed that TCL is very optimistic about overseas emerging markets and will continue to establish new joint ventures in overseas markets in the future. "At present, TCL is negotiating cooperation projects with a number of companies, but it is uncertain whether or not it can be specifically discussed and when it will be announced."
"Three for one" raised more than 2 billion Hong Kong dollars
It is understood that TCL Multimedia’s vision has always been to become a leading integrated brand for consumer and home appliance products, and to enhance its advantages by strengthening its existing TV business and increasing product diversity. On November 28, TCL Multimedia announced that the board of directors intends to change the company name to "TCL Electronics Holdings Limited."
Indian Court told reporters that this is to better reflect the business expansion of TCL Multimedia. "The future TCL Group's multiple terminal products business will gradually be integrated into the Hong Kong listed company platform. However, 'TCL Multimedia' reflects only a single TV business, and 'TCL Electronics' just means that the products are diversified such as consumer electronics."
"This is conducive to TCL Multimedia to improve its performance," said Zhang Yanbin, senior advisor at Ove Cloud Network. "The so-called enhanced product diversity of TCL Multimedia is actually increasing the number of white goods, and White's profitability is higher than that of Black Power."
Hong Shibin, an industry observer, believes that TCL Multimedia is planning ahead and seeking stable growth in future sales. "Because of the rapid development of technology and replacement, it is imperative for TCL Multimedia to expand its product line."
At the same time, TCL Multimedia also announced that the company intends to perform not less than 582,253,403 on the basis of one rights issue for every three shares held on the record date and at a subscription price of HK$3.46 per rights share. Rights shares and not more than 596,378,593 rights shares for the Rights Issue raised not less than approximately HK$2.0146 billion and not more than approximately HK$2.0635 billion.
As for the use of the net proceeds from the Rights Issue, TCL Multimedia will use approximately HK$750 million for future joint venture and M&A opportunities. Among the rights issue, approximately 350 million were used to play a synergistic effect with Huaxing Optoelectronics, and 350 million more to invest in R&D. The focus was on panel and smart display terminals.
Overall color TV market downturn
It is worth noting that the "Lugu Lake Project" referred to in the plan is the TCL Group's intelligent display terminal and assembly project. It will form an integrated smart manufacturing industrial base with the Huaxing Optoelectronics high-generation panel module project. "Lugu Lake Base").
“This will allow seamless integration of the television's 'screen-core-terminal' production process, linking the TCL Group and China Star Optoelectronics' supply chain system, and integrating data from the entire process to provide solutions for continuous production optimization. "TCL Multimedia emphasized in the announcement.
Now, with the advancement of TCL Multimedia Fundraising, the Wuhu project is accelerating, which means that the synergy between TCL Corporation and China Star Optoelectronics will be further strengthened. In fact, behind this movement of TCL Group, or closely related to the performance of China Star Optoelectronics.
According to the "2017 China TV Market Summary Report for the Third Quarter of 2017" released by AVC, the total retail volume of the domestic color TV market in the first three quarters of 2017 was 10.41 million units, down 12.9% year-on-year, and the overall situation was relatively low. On the other hand, TCL Group sold 16.476 million LCD TVs during the same period, an increase of 10.5% year-on-year, and China's sales decreased by approximately 10.1% year-on-year, outperforming the industry average.
In India’s view, through the cooperation with China Star Optoelectronics, TCL Group can timely and adequately supply LCD panels with sufficient customization, while improving product quality and cost control.
As for the downtrend of the color TV market, Indian Court explained to reporters that “In recent years, the domestic market has indeed fluctuated, especially in 2015, some Internet companies hit the market with low prices, and used content to subsidize hardware, and consumed the market share in advance in 2016. "The Indian court expects the overall improvement in 2017 and 2018."
However, in the context of expansion of major panel makers, the price of TV panels began to decline from June. International market research firm IHS released data showing that panel prices are still in a downtrend channel in October, especially 40-inch and 43-inch, with a maximum drop of 7%. The prices of large-size panels such as the 55-inch and 65-inch models are even lower than the lowest prices in the second quarter of last year.
The downward price of the panel may bring some impact to the company, but Indiana believes that the good synergy between Huaxing and Optoelectronics is sufficient to cope with market fluctuations.
Speed ​​up to sea
Despite the year-on-year decline in sales of LCD TVs in the TCL Multimedia domestic market in the first three quarters, the growth momentum of its overseas markets continued. Data shows that in the first three quarters of 2017, sales of LCD TVs in TCL Multimedia overseas markets increased by approximately 29.5% year-on-year to approximately 10.07 million units, and turnover increased by approximately 45.7% year-on-year to approximately HK$14.79 billion. Among them, North American market and emerging market sales increased by approximately 97.4% and 22.8% respectively.
This is not unrelated to TCL's frequent overseas deployment in recent years. To date, TCL has established business locations in Southeast Asia, Europe, North and South America, South America, the Middle East and Africa. Taking Brazil as an example, in July 2016, TCL Group and Brazilian appliance appliance leader SEMP announced the establishment of a joint venture company.
Recently, TCL Multimedia and Argentina’s home appliance giant RADIO VICTORIA (hereinafter referred to as “RVâ€) formally signed a joint venture company with a total investment of US$150 million to produce televisions, air conditioners, mobile phones and small household appliances. Distribution.
“TCL has leading technology that RVs cannot match. Its China Star Opto-electronics, as a screen manufacturer, can also bring advantages to the joint venture company in the supply chain. RV provides TCL with more favorable production and sales channels.†Indiana Indicated.
According to the TCL Multimedia Program, approximately HK$750 million from this fundraising will be used for future joint ventures and M&A opportunities. Iguoting told reporters that the funds may still be used to establish joint ventures in overseas markets, especially in emerging markets. “Overseas emerging markets have great potential. With the improvement of economic conditions in some countries, their market demand will gradually be released.â€
“At present, most TVs in emerging markets are mainly small screens and 2K. In the next wave of replacement, the big screen and 4K will definitely become the dominant ones. At the same time, consumers still need lower prices, and this is exactly It is the biggest advantage of Chinese companies.†Indiana Guo said that TCL is currently negotiating cooperation projects with several companies, but it has not yet been determined whether or not it can be specifically discussed.
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