TCL Technology announced that its subsidiary, TCL Huaxing, became the preferred bidder for LGD Guangzhou factory, and the market expects that the acquisition price will exceed 10.5 billion yuan. Analysis believes that if the acquisition goes smoothly, Korean factories will fully withdraw from the competition for LCD TV panels, and the market will further shift towards China.
When facing thousands of listed company announcements every day, which ones should you read? What are the key points to take away from the dozens or hundreds of pages of material announcements? Are the many professional terms in the announcements bullish or bearish? Check out Caixin's "Quick Read Announcement" column, where our reporters across the country will provide you with accurate, fast and professional interpretations on the night of the announcement.
On the evening of August 1, the financial news platform Cailian Press reported that TCL Technology announced that its subsidiary, TCL Huaxing, recently participated in the bidding for 70% equity of LG Display China and 100% equity of LG Display Guangzhou. On August 1, 2024, TCL Huaxing received a letter from LG Display CO., LTD. confirming that it has been identified as the preferred bidder for this equity bidding. The ownership dispute of LGD Guangzhou factory for nearly a year has finally come to an end.
TCL Technology did not disclose the final bid price for this bidding, only saying that TCL Huaxing is expected to use its own or self-raised funds for the acquisition. However, the announcement showed that as of the end of 2023, LG Display China's net assets were about 11.8 billion yuan, and LG Display Guangzhou's net assets were about 2.83 billion yuan. According to previous reports, the acquisition price may exceed 2 trillion Korean won, which is equivalent to 10.5 billion yuan.
Since the second half of last year, the head companies of the domestic industry chain such as BOE Technology Group, TCL Huaxing, Skyworth, Shenzhen MTC, HKC, and others have been rumored to acquire LGD Guangzhou factory, but there has been no conclusion yet.
The attention paid to the ownership of LGD Guangzhou factory by the market is related to the significant impact it has on the market structure.
Starting from 2022, Samsung and LGD have successively withdrawn from the market competition for LCD TV panels. After that, the production capacity of LCD TV panels began to tilt towards mainland China. According to Omdia data, by 2023, the combined shipment area of television panels from mainland China manufacturers such as BOE, Huaxing, and HKC reached 62%, and if Rainbow Optoelectronics is included, the proportion of television panel shipments from mainland manufacturers reached 68.5%. LGD Guangzhou factory's 8.5th generation production line has become the only major production line for LCD TV panels for Korean factories.
"If the LGD Guangzhou LCD panel production line is acquired, it will mean that LGD will completely withdraw from the LCD TV panel supply from 2025. Thus, Korean panel manufacturers will completely withdraw from the market supply of LCD TV panels," said Zhang Hong, Vice President of the Large Size Business Unit of Sigmaintell.
It is reported that LGD's Guangzhou LCD factory is its first overseas production base. The largest production capacity of its LCD panel equipment is 220K/month, and its production capacity area accounts for about 6% of the world. The production capacity investment in 2024 is about 180K/month. It mainly produces products of 55" , 65"+32", and 86" sets. The annual shipment volume exceeds 10 million pieces, and customers include Samsung, LGD, and Skyworth.
"If this acquisition can proceed smoothly, TCL Huaxing's overall production capacity, market share, and voice in the large-size panel market will be further enhanced," said Zhang Hong.
According to Sigmaintell's predictions, taking into account the technological characteristics and economic benefits of the production line, if TCL Huaxing can acquire LGD Guangzhou production line, the global LCD TV panel supplier's Top3 production capacity area ratio is expected to increase from 63% in 2024 to 72%, and the share of supply quantity will increase from 60.3% to 64.3%, and the LCD TV panel market will move towards higher concentration and stronger bargaining power of head panel manufacturers.
Zhang Hong further stated that for TCL Huaxing, this transaction is expected to have a joined effect on multiple applications, enhancing cooperation with brands such as IT; With the boost in production capacity, cooperation with downstream outlets of the group, such as TCL brand and Moka OEM manufacturing, is expected to be further strengthened, promoting the global competition of TCL brand and Moka.
However, Zhang Hong believes that this acquisition is both an opportunity and a challenge for TCL Huaxing, "as the large and still diversified outbound port requires balancing the interests of the group brand and external customers in the increasingly severe competition in the terminal market."