Introduction to this report:

The company's global competitiveness improved; the company improved quality and efficiency, reduced overall costs, and achieved high performance growth in the first half of the year; the company as a whole entered the profit improvement channel. Increase your holdings.

Key points of investment:

Investment suggestions: The company improved quality and efficiency, reduced overall costs, achieved a high increase in 24H1 performance, and entered the profit improvement channel as a whole. We maintain our 24-26 profit forecast and expect EPS of HK$0.56/0.68/0.76, respectively, or +90%/+21%/+13% YoY. Maintain an “Overweight” rating.

The increase in performance was high, in line with expectations. The company 24H1 achieved operating income of HK$45.494 billion, +30.3% YoY, net profit to mother of HK$0.65 billion, +146.5% YoY, and adjusted net profit to mother of HK$0.654 billion, +147.3% YoY. The 24H1 results announced this time are close to the center of performance forecasting and are in line with expectations.

The large screen shows impressive overseas growth rates, and innovative businesses are growing rapidly. By business module: 1) 24H1's global TV shipments were 12.52 million units, +9.2% year over year; revenue was HK$25.914 billion, +23.15% year over year. The Q2 company shipped 6.68 million TVs, +12.9% year-on-year, and growth was further accelerated. The estimated overseas color TV revenue growth rate in the first half of the year was Europe > Emerging Markets > North America; 2) HK$3.76 billion for the small to medium business, +10.7%, with a significant gross margin of +3.3 pct to 16% for the mobile phone business. The company focused on the main business of core European and American operators, and the gross profit repair effect was remarkable; 3) Benefiting from the expansion of TCL white power, the company's distribution business achieved a high increase of about 60% in the first half of the year; 4) 24H1 Internet business achieved a high increase of about 60% in the first half of the year; 4) 24H1 Internet business achieved a high increase of about 60% in the first half of the year; 4) 24H1 Internet business reached a high growth rate of about 1.21 billion HKD, +8.9% YoY, of which overseas revenue is around +50% YoY. Overall gross margin is expected to remain flat year over year, and overall profitability is steady. Its Internet business in China is affected by relevant policies regulating the regulation and regulation of OTT paid content, and it is expected that the average payment value per household will decrease.

The cost rate dropped sharply during the period, and gross margin declined slightly due to panel prices. Benefiting from increased quality and efficiency, the company's cost level dropped sharply by about 2 pct during the period. It is expected that, benefiting from the reuse of TCL's global white power distribution and black power sales network channels, and the reuse of related brand marketing expenses, there is still room for downward sales expenses. The significant increase in the price of 24H1 panels has suppressed the gross margin of the TV business, and high-end implementation has to a certain extent hedged the impact of panel price increases on gross margins.

The company announced a goodwill impairment of HK$0.126 billion for the current period, which is expected to be reflected in other operating expenses in the income statement. If the impairment of goodwill for the current period is excluded, 24H1 can actually obtain net profit of HK$0.776 billion to the mother, +194% over the same period.

Risk warning: Fluctuating panel prices, increased industry competition, indicating a decline in overseas business demand.