TCL Tech.: Net Profit Attributable to the Company's Shareholders Up by 67.6% Year-on-year to RMB4.39 Billion in 2020; Samsung Suzhou acquired to be Consolidated in Q2 2021

 TCL Technology Group Corporation (000100.SZ) recently published its ANNUAL REPORT 2020. In 2020, the Group recorded a revenue of RMB76.68 billion, up by 33.9% year-on-year; a net profit of RMB5.07 billion, up by 42.1% year-on-year; a net profit attributable to the company's shareholders of RMB4.39 billion, up by 67.6% year-on-year. The Group's substantial growth was mainly driven by the remarkable performance of its holding subsidiary, TCL CSOT. In particular, the net profit of TCL CSOT in Q4 2020 stood at RMB1.86 billion resulting from the rise in panel price along with the growth of TCL CSOT's production capacity.

On 1 April, TCL Tech. issued an announcement on the completion of the equity acquisition of the panel plant and module plant of Samsung in Suzhou. According to the announcement, TCL Tech. completed the acquisition of 60% equity of Samsung Suzhou LCD Co., Ltd. and 100% equity of Samsung Display Suzhou Co., Ltd. on 31 March, 2021, while Samsung Display acquired a stake in TCL CSOT. Samsung Suzhou is estimated to be consolidated in the second quarter of this year. Since Samsung Suzhou will be included in the consolidated financial statements and the self-built t7 production line will continue its production ramp-up, the production capacity of TCL Tech. in 2021 will increase by over 50%, continuously promoting the drastic growth of earnings.

Globally, TCL CSOT Rose to Second Place in the Ranking of Market Shares in TV Panels Through Endogenous Growth and M&A Deals

With TCL CSOT as the platform, the semi-conductor display business is a core business of the Group. The year 2020 witnessed the recovery of the semiconductor display industry and the start of a rising panel price cycle. TCL CSOT demonstrated excellent anti-recession and anti-risk capabilities in a down cycle, and improved its scale, market share, and profitability against headwinds, attributable to maximized lean management and business synergy. In 2020, TCL CSOT recorded a product sales area of 29,097,000 square meters, up by 31.2% year-on-year; a revenue of RMB46.77 billion, up by 37.6% year-on-year; and a net profit of RMB2.42 billion, up by 151.1% year-on-year.

TCL CSOT further promoted the market position of its main products. In the field of large-size panels, globally, the Company rose to second place in the ranking of market shares in TV panels. Besides, it was ranked first, second, and second regarding the market shares in 55-inch, 32-inch, and 65-inch & 75-inch products respectively; In terms of commercial displays, the shipment of interactive whiteboards jumped to the top across the world; For the small-size panel business, the shipment of LTPS mobile panels took third place globally. The flexible OLED fordable screens and double-curved screens for brand manufacturers were mass produced and delivered. The Company successively introduced global first-class brand customers; For the medium-sized panel business, product and customer structures were optimized. Multiple brands of high-end notebooks, tablets, and vehicle displays were introduced to the medium-size panel business, thus quickly developing the business. The shipment of LTPS notebook panels was ranked second in the world.

During the historically low ebb of the semi-conductor display, TCL CSOT achieved counter-cyclical expansion, and adopted multiple measures to enhance its strengths: First, it acquired Samsung Suzhou. Second, it acquired a 39.95% non-controlling interest in the t3 plant. Third, it acquired a stake in JOLED Inc. in Japan to accelerate the industrialization of printed display technologies.

The Takeover of Samsung Suzhou to be Completed, Bringing Quality Progress for TCL CSOT

The announcement shows that Samsung Suzhou has an existing generation 8.5 LCD panel production line with a production capacity of 120K/month. This means that after the completion of the acquisition, TCL CSOT will have three generation 8.5 lines producing at full capacity in the large-size field, with a total monthly production capacity of 440K; one generation 11 line producing at full capacity, with a current capacity of 98K/month; another generation 11 line ramping up its capacity, which is expected to operate at full capacity by the second half of 2021.

It is reported that the current product structure of Samsung Suzhou's production line included high-end TV and Monitor products, which mainly meet the needs of Samsung's large and medium-sized terminal products. After TCL CSOT's takeover, its layout of high-end TV and high-end commercial displays will be further improved. TCL CSOT will constantly raise the proportions of high-end products, such as 8K products and 120Hz products. Product structure will be continuously optimized and market share of large-size high-end products will be furthered so as to enhance the profitability.

At the same time, with a higher market concentration of the downstream terminal brand, TCL Tech. is expected to strengthen the market advantage and further open up room for growth with the help of the existing industrial chain of Samsung Suzhou. With the continuous penetration of new technologies and high-end products in the display industry, TCL Tech. will also further explore the high-end value-added market promoted by terminal manufacturers to boost development.

With changes in production capacity and market situation, the cyclical features of panel price have gradually weakened, and the panel industry will embrace long-term prosperity. TCL Technology Group Corporation will continue to intensify its scale advantage through endogenous growth and M&A deals and join hands with upstream suppliers and downstream customers to create an industrial ecosystem featuring closer cooperation, ushering in a period of development with the strongest growth momentum.