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On August 23, 2024, the company released its 2024 mid-year report. In the first half of 2024, the company achieved operating income of HK$45.494 billion, an increase of 30.3% over the previous year, and realized net profit to mother of HK$0.65 billion, an increase of 146.5% over the previous year.

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The mid-to-high-end and global strategies have achieved outstanding results, and the operation has achieved high-quality growth. In the first half of 2024, with accurate marketing in various fields such as important sporting events, e-sports, film and television, and exhibitions, the company's brand reputation increased significantly. Combined with product structure optimization, the share of high-end TV sales continued to increase. At the same time, in line with the scale effect brought by the rapid development of new business, the company's gross profit increased 19.2% year on year to 7.748 billion HKD. The overall cost ratio (administrative expenses, sales and distribution expenses) decreased by 2.0 percentage points to 13.7% year on year. The company's profit after tax increased 106.6% to 0.653 year on year In HK$ billion, net profit to mother increased 146.5% year over year to HK$0.65 billion, and adjusted net profit to mother increased 147.3% year over year to HK$0.654 billion, achieving high-quality development with net profit growth rate > revenue growth rate.

It shows that the business has performed well and is significantly superior to the industry level. In 2024 H1, the company's TV shipments reached 12.52 million units, up 9.2% year on year, and revenue increased 23.2% year over year to HK$25.914 billion, significantly outperforming the industry average. According to Omida's latest report, TCL TV's global shipment market share reached 13.3%, an increase of 0.9 percentage points over the previous year, ranking second in the world. Global shipments of TCL's high-end products, quantum dot TVs and mini LED TVs, increased by 64.4% and 122.4% year-on-year, and the scale of mini LED TVs remained at the leading level in the world. In 2024 H1, the company's small to medium size display business increased 10.7% year-on-year to HK$3.761 billion, and gross margin increased 0.4 percentage points to 16.7%. In the second half of the year, with the advent of the “Black Friday Promotion Season” in the US market and the implementation of the 300 billion domestic “large-scale equipment renewal and consumer goods trade-in” policy, the company indicated that the business will achieve higher quality growth from month to month.

The innovative business grew significantly, and linkages were formed within the group. Thanks to the company's brand influence and rich channel system, TCL Group's capacity building in the field of photovoltaics and white electricity was further demonstrated. 2024H1's photovoltaic business increased sharply by 212.7% to HK$5.269 billion year on year, white power distribution revenue increased 27.7% year on year to HK$7.753 billion, and various businesses within the group formed an efficient linkage.

Investment advice: First coverage, giving a “buy” rating. The company's revenue for 2024-2026 is estimated to be HK$97.382/115.359/HK$131.223 billion, and net profit to mother is HK$1.353/1.647/HK$2.192 billion, respectively, and the corresponding PE is 8.70/7.15/5.37, respectively.

Investment advice:

Risk warning: Downstream TV sales fall short of expectations, and increased market competition has led to a decline in gross margin