TCL Technology released its annual report for 2021 and quarterly report for 2022. The company achieved operating income of 163.541 billion yuan in 2021, an increase of 113.28% over the same period last year, and a net profit of 10.057 billion yuan, an increase of 129.20% over the same period last year, in line with previous expectations. In the first quarter of 2022, the company achieved operating income of 40.567 billion yuan, an increase of 25.81% over the same period last year (adjusted), a net profit of 1.353 billion yuan, a decrease of 43.89%, and a non-return net profit of 612 million yuan, down 71.29% from the same period last year. The gross profit margin in the first quarter was 12.26%, down 4.12% from the previous quarter; the net profit rate was 5.78%, up 1.57% from the previous quarter, mainly due to more impairment losses on assets in the fourth quarter of last year.
Event comment
TV prices dropped greatly compared with the same period last year, taking into account that Huaxing Optoelectronics TV revenue accounted for more than 60%, obviously affected by the prosperity of the industry. In the first quarter, Huaxing Optoelectronics had a revenue of 20.04 billion yuan, with a sales area of 1124.1 million square meters, an increase of 15.3 percent over the same period last year, and a net profit of 340 million yuan, down 85.8 percent from the same period last year.
The production capacity of the company will maintain high growth this year and next, and the company's Shenzhen T7 line will continue to climb production. We expect to achieve full production in 2022, which will contribute to a certain increase in revenue. Flexible OLED T4 line will be fully produced at 15K in 2021, Phase II and Phase III will be in climbing production, and customer models such as XIAOMI and Samsung will continue to be imported. We expect shipments to double this year. The company's fixed growth project T9 Guangzhou G8.6 line positioning high-end IT products is expected to make great breakthroughs in notebook, high-end merchant display and vehicle applications. We expect the T9 project to be put into production by the end of 2022, and the production capacity to climb to 100Kscape T5 line by the end of 2023 is also under intensive construction, the company's LTPS high-end product advantages will be further expanded. T9 and T5 lines will significantly increase the company's IT revenue share and optimize the semiconductor display revenue structure from 2023 to 2024.
The company's new energy photovoltaic and semiconductor materials business continues to grow at a high speed, gradually forming the second growth pole. In the first quarter, the operating income of TCL Central was 13.37 billion yuan, up 79.1% from the same period last year, and the net profit was 1.46 billion yuan, up 96.2% from the same period last year. At the end of the first quarter, the single crystal production capacity increased to 95GW, of which G12 production accounted for 72%, ranking first in the global market share. 8-inch polished wafers and epitaxial wafers had a production capacity of 800,000 pieces per month, and 12-inch production capacity reached 170,000 pieces per month. At the same time, TCL Central mixed reform has achieved remarkable results, the company expense rate continues to decline, and profitability continues to improve.
We continue to be optimistic about the long-term growth of the company's two-wheel drive, and fundamentals are expected to be repaired as panel prices pick up in the third quarter. It is estimated that the return net profit of the company from 2022 to 2024 is 5.132 billion yuan, 6.969 billion yuan and 10.061 billion yuan respectively, and the corresponding PE is 11.43,8.42,5.83 times respectively.
Risk hint
1. The demand for IT products is weakening and the competition pattern is deteriorating.
2. The price recovery of TV in the second quarter was affected by the epidemic slower than expected.