The company's revenue in 2021 was + 46.9% compared with the same period last year, and the net profit of continuing operation was-35.9% compared with the same period last year. The company's global business expansion is smooth, full-size shows full-scale power, but subject to the impact of panel prices, profitability is under pressure. Internet business continues to maintain rapid growth, with ARPU + 43.4% year-on-year and Mau + 11% year-on-year, and global Internet revenue + 49.9% year-on-year. In addition, the company actively expand business boundaries, around the full category of smart things ecological layout, the formation of smart connectivity, smart home and full-category marketing three emerging businesses, is expected to open up long-term growth space. The company is expected to have a 2022-2023 EPS of HK $0.47, respectively, with a 2022 8X PE, corresponding to a target price of HK $3.80, maintaining a "buy" rating.
Steady growth in revenue and short-term pressure on profits. The company's 2021 revenue was HK $74.85 billion, + 46.9% compared with the same period last year, and the net profit of continuing business was HK $1.18 billion,-35.9% compared with the same period last year. The income in the second half of 2021 was HK $39.91 billion, + 18.5% compared with the same period last year, and the net profit of continuing business was HK $140 million,-89.6% compared with the same period last year. Company, revenue growth is basically in line with expectations, but subject to the drag of panel prices, profit end short-term pressure.
The global share continues to increase, showing full-size strength. (1) in terms of large-size display, the company's 2021 revenue was 49.27 billion Hong Kong dollars (year-on-year + 24.3%), and its global share increased from 10.7% to 11.5%, ranking firmly in the top three in the world (Omdia caliber). Specifically, the growth of overseas markets against the trend reached 36.03 billion Hong Kong dollars, achieving a double increase in volume. Sales and sales were + 7.6% and 34.7% respectively compared with the same period last year. Among them, sales in North America, Europe and emerging markets were + 24.8%, 52.2% and 38.7% respectively compared with the same period last year. The Chinese market achieved HK $132.4 in revenue based on price compensation, with ASP + 36.0% year-on-year, driving sales + 2.9% year-on-year. In addition, the company's high-end display, QLED, Mini LED smart screen domestic omni-channel sales first (in Yikang caliber).
(2) in terms of small and medium-sized display, the company mainly focuses on the channels of first-tier operators in Europe and the United States, with annual revenue of + 29.5% compared with the same period last year.
With the rapid growth of Internet business, ARPU has further increased. The company's Internet business revenue reached HK $1.85 billion in 2021, a year-on-year increase of + 49.9%. The domestic market ushered in an explosion. Internet revenue was + 63.7% compared with the same period last year. Thunderbird technology software products were further enhanced, incubating innovative business forms and improving user stickiness. ARPU reached HK $76.2, year-on-year + 43.4% mau reached 19.88 million, year-on-year + 11.0%. In overseas markets, the new share comes from the operation of the Google platform and the commercialization of TCL Channel, driving Internet revenue to + 11.2% compared with the same period last year. The profitability of the Internet business is excellent, and overseas cooperation upgrading is expected to lead to the release of profits.
High panel prices are a drag on performance and profitability has been greatly impacted. Under the impact of the global panel price increase, the company's cost pressure is highlighted. The company's overall gross profit margin in 2021 is 16.7%, year-on-year-2.3 pcts; continuing operation return net profit margin of 1.6%, year-on-year-2.0 pcts. In order to cope with the cost pressure caused by raw materials, the company actively controls the period expenses, of which the sales expense rate is 9.4%, year-on-year-1.6pcts; the management expense rate is 5.6%, year-on-year + 1.1pcts, slightly increased; the R & D expense rate is steadily increasing, reaching 3.3%, year-on-year + 0.1pcts, continuously increasing investment in high-end display and intelligent interaction technology. With the commissioning of the new production line, the panel has declined rapidly since the fourth quarter. As of February 2022, the prices of panels of all sizes have fallen by more than 50% since the middle and high point in 2021. It is expected that the company's profitability inflection point has reached, and the subsequent improvement is expected.
Innovate the diversified layout of business and open up the space for long-term growth. Based on its own channels and brands, the company diversified to expand its business boundaries, laid out around the full-category intelligent IoT ecology, and formed three emerging businesses: smart connectivity, smart home and full-category marketing. Power smart glasses, smart wear and routers and other products.
In 2021, the company's sales of intelligent connection products reached 5.25 million (year-on-year + 33.5%), and new AR/VR products were launched one after another. at the same time, the company announced that it planned to set up a joint venture company to jointly expand AR display technology.
Risk factors: panel prices are rising rapidly, product prices are falling sharply, and overseas demand is lower than expected.
Investment advice: due to the impact of panel prices, the company's profitability is under pressure, and we have adjusted our EPS forecast for 2022-2023 to HK $0.47max 0.57 (previous value: HK $0.75max 0.88). From a long-term perspective, the company has the advantage of integrated supply chain, the global TV share continues to increase; Internet business profitability is strong, based on the advantage of television to achieve steady growth, and gradually transform into an Internet company; diversified business layout is expected to open up long-term growth space. Given the sharp fall in panel prices, profitability is expected to recover in 2022, with a 2022 8X PE, corresponding to a target price of HK $3.80, maintaining a "buy" rating.