TCL electronically publishes the 2024H1 interim report. The company's 24H1 revenue was HK$45.494 billion, +30.3% YoY; net profit to mother was HK$0.65 billion, +146.5% YoY; adjusted net profit to mother was HK$0.654 billion, +147.3% YoY.

The results of the fee reduction have been highlighted, boosting the effective release of net interest rates. 24H1's overall gross margin was -1.59pct to 17.03%, and the adjusted net profit margin was +0.68pct to 1.44% year over year; R&D/sales/administrative expenses ratio was -0.74pct/-0.86pct/-1.15pct to 2.4%/9.6%/4.09% yoy, respectively, and the overall cost ratio was -2pct to 13.7% yoy.

By business: 1) 24H1 showed business revenue of HK$30.135 billion, +21.3% year over year, and gross margin -1.9pct to 16.9% year over year. Among them, the large size showed revenue of HK$25.914 billion, and gross margin of -2.22pct to 16.98%; the small to medium size showed revenue of HK$3.761 billion, +10.75% year over year, and gross margin +0.42pct to 16.75%; and smart business showed revenue of HK$0.46 billion, +11.38% year over year. 2) Internet business revenue of HK$1.212 billion, +8.9% year over year, gross margin was 54%, which was basically the same as the previous year. 3) Revenue from innovative businesses was HK$13.953 billion, +60.6% year over year, and gross margin -0.3 pct to 14.4% year over year. Among them, PV revenue was HK$5.269 billion, and gross margin was +2.66pct to 10.25%; marketing revenue for all categories was HK$7.753 billion, +27.66% YoY; and smart connectivity and smart home revenue was HK$0.931 billion, +0.11% YoY. 4) Revenue from other operations was HK$1.095 billion, +8.6% YoY.

By region, the company's 24H1 domestic/overseas revenue was HK$19.064/26.429 billion, respectively, or +38.06%/+25.21%; of these, overseas Europe/ North America/ Emerging Markets revenue was HK$5.54/7.46/13.43 billion, respectively, or +47.14/ +4.32%/+31.77% year-on-year.

Global operations are well laid out, and the amount of black electricity performance is far superior to the industry level. 24H1's global shipments of TCL TV were +9.2% to 12.52 million units, and the global market share was +0.9pct to 13.3% year-on-year, ranking among the top two global TV brands. The company's TCL TV was +11.1% to 92 in the 24H1 global brand index (Omdia's 24H1 global brand TV sales market share divided by shipment market share). At the same time, the group continued to expand and deepen the coverage of key channels in various regions such as North America, Europe, and emerging markets. By region, 1) 24H1 TCL TV shipments in the Chinese market bucked the trend and increased 5.4% year on year, revenue +21.1% year over year to HK$8.353 billion, and gross margin -2.4 pct year on year to 19.8%. Overall, it was relatively stable. 2) TCL TV shipments in the North American market were -2.7%. Among them, the US retail market share was +0.5pct to 12.5% year over year, ranking second in the market, ranking third and fifth in Canada and Mexico respectively. 3) The European market benefits from hosting major sporting events such as the European Cup and Olympics. TCL TV shipments were +40.1% year-on-year, ranking second in retail market share in France, Sweden, and Poland, and third in the Czech Republic and Spain. 4) TCL TV shipments in emerging markets were +4% year-on-year, with retail market share in Australia, the Philippines and Myanmar maintaining the highest retail market share in the industry.

MiniLED promotes product structure upgrades, and the mid-to-high-end strategy is progressing steadily. The 24H1 global MiniLED TV industry's shipment volume was +74.3% year-on-year. Structural upgrades and display technology innovation have become the main trend in the current development of the global TV market, and demand for mid-range and high-end TVs, including large-size TVs and miniLED TVs, is growing further. Global shipments of TCL MiniLED TV increased 122.4% year-on-year in 24H1, maintaining the leading global level. In the Chinese market, TCL MiniLED TV shipments increased 120.1% year on year, and the share of shipments increased sharply by 4.5 pct to 8.6%, and the retail sales volume of TCL MiniLED TVs steadily ranked first in the Chinese market; in overseas markets, TCL MiniLED TV shipments increased 124.7% year on year, and the product structure was further optimized.

Investment advice. The company shows that its business brand power and product strength continue to improve, its market position is leading the world. The Internet and innovative business channels are deepening the second growth curve. The results of the middle, high-end and global strategies are outstanding. Mini LED shipments have maintained a high increase and overseas business volume has risen sharply, and it is expected that the company's profit margin will continue to expand. We expect the company's net profit to be HK$1.33/1.62/1.98 billion for 24-26, an increase of 79%/22%/22% year-on-year, giving the company a 24-year 12-15x PE valuation with a corresponding reasonable value range of $6.36-7.95, giving it a “superior to the market” rating.

Risk warning: risk of macroeconomic fluctuations, risk of increased industry competition, European market expansion falling short of expectations, rapid rise in panel prices, etc.