Huachuang Securities: Initiate with a "Strong Buy" rating for TCL Electronics(01070), target price HKD 16

CITIC Finance APP learned that Huachuang Securities issued a research report stating that industry chain empowerment enhances TCL Electronics’ (01070) competitiveness, with overseas market share expected to continue increasing. The company is seizing the trend of industrial structure upgrading, and profits are expected to grow thicker. The bank forecasts EPS for 2025–2027 as HKD 0.95/1.12/1.31. Using the DCF valuation method, a target price of HKD 16.0 is given, corresponding to 2025–2027 PE ratios of 13/11/10 times. The initial coverage assigns a “Strong Buy” rating.

Huachuang Securities’ main points are as follows:

Structural Opportunities in the Existing TV Market

The global TV industry has entered an era of stock competition driven by structural upgrades. The core drivers in the future are large screens and display technology upgrades. Consumer demand for large-screen TVs is increasing, with Oviyou data showing the global average TV size rising from 42.5 inches in 2017 to 52 inches in 2023. In terms of display technology iteration, Mini LED TVs have become a definitive mainstream upgrade direction, with market penetration rapidly increasing. According to Display, Mini LED shipments in 2024 reached 8.2 million units, a year-on-year increase of 100%, surpassing OLED TVs’ 7 million units.

Consolidation in the Upstream Industry Chain Enhances Chinese Companies’ Competitiveness; Industry Competition Enters a Hot Stage

From the upstream perspective of TVs, global LCD panel capacity has been concentrated in mainland China. With Samsung, LG, and other Korean companies withdrawing completely, Chinese panel manufacturers have gained industry chain dominance. In 2024, the shipment area of mainland Chinese LCD panel factories exceeded 70%. The demand-driven production strategies of leading panel manufacturers will reduce the volatility of panel prices, creating a more stable profit environment for downstream device manufacturers. Regarding downstream demand, although global TV demand remains stable around 200 million units, concentration has increased. Oviyou data shows that the global TV CR4 rose from 45% in 2018 to 57% in the first half of 2025. Looking at market share composition, Samsung’s share remains around 19%, while from 2018 to 2023, Hisense Visual and TCL Electronics’ shipment shares increased from 6.7%/8% to 13.2%/13%. LG’s shipment share decreased from 12.3% to 10.95%. As a result, the gap between Chinese and Korean companies is further narrowing.

TCL Electronics is Transforming into a Global Leader Driven by Profit and Market Share

In terms of product structure, TCL TV’s average shipment size has continued to increase from 52.4 inches in 2021 to 63.3 inches in 2024. In the large-size segment, the shipment proportion of 65 inches and above TVs increased from 11.1% in 2021 to 29% in 2025. Regarding Mini LED TVs, TCL’s global Mini LED TV shipments accounted for a 28.7% market share in the first half of 2025, up 4.1 percentage points year-on-year, ranking first in the market. In the high-end market, TCL TV’s market share has increased from less than 10% to 20% in less than two years, continuously encroaching on Korean companies’ shares. Globally, TCL Electronics’ overseas market share has been steadily increasing. According to Tonglian and Ovi data, North American market share rose from 4.5% in 2016 to 18% in 2023; during the same period, Western Europe market share increased from 2% to 6%. The bank believes that with channel expansion and product strength enhancement, overseas market share will further grow.

Leveraging Group Industry Resources to Build a Second Growth Curve

The company leverages its brand influence and global distribution network to empower innovative business development. Among them, the distributed photovoltaic business, backed by TCL Zhonghuan, saw revenue grow 104% year-on-year to HKD 12.87 billion in 2024. Meanwhile, the full-category marketing business, through the distribution group’s white goods products, forms efficient synergy with the core black goods business, becoming a stable growth point. Additionally, the AI+AR glasses business incubated by the company, according to CINNO Research data, saw Thunderbird hold a 45% market share in China’s AI+AR glasses market in the first quarter of 2025, maintaining industry leadership.

Risk Warning: Sharp increase in panel prices; intensified market competition; exchange rate fluctuations.