TCL Technology's net profit in the first three quarters exceeded 13 billion Li Dongsheng talked about the transformation of manufacturing industry

China Times (www.chinatimes.net.cn) reporter Lu Xiao reported from Beijing

Panel giant TCL Technology (000100.SZ) released its report card for the first three quarters of this year.

On the evening of October 26, TCL Technology announced that from January to September this year, its operating income of 120.93 billion yuan increased by 148.3% year-on-year, the net profit of 13.16 billion yuan increased by 538.5% year-on-year, and the net profit attributable to shareholders of listed companies was 9.1 billion yuan, an increase of 349.4% year-on-year.

While continuing to grow, after 40 years of development, TCL has started from a local enterprise that produces audio tapes, and currently forms three major industries of intelligent terminals, semiconductor displays, semiconductor photovoltaics and semiconductor materials. Li Dongsheng, founder and chairman of TCL, also reviewed TCL's past 40 years on October 26. He said that the development of Chinese enterprises is from imitation, following, to catching up, surpassing, "in the past, the highest success rate was to learn and copy, but in the past ten years this article has not worked." If the industry cannot achieve transformation and upgrading in the true sense and cannot build its own core capabilities, it is difficult to go far. ”

Proactively respond to panel price adjustments

Panels are an important source of TCL Technology's revenue. In the first three quarters of this year, TCL Huaxing's operating income was 66.56 billion yuan, more than half of TCL Technology's total revenue.

The panel is the profit pillar of TCL Technology. According to the financial report, the net profit of the semiconductor display business in the first three quarters of this year was 9.74 billion yuan, an increase of 16.2 times year-on-year, accounting for 74% of the total net profit of TCL Technology. In the first three quarters of 2020, the figure of TCL Huaxing was 566 million yuan.

However, after more than a year of upward cycle, the inflection point of LCD panel prices appeared in the third quarter.

Yi Xianjing, deputy general manager of Di Xian Information, told the "China Times" reporter that the price of LCD panels "dived down" across the board in August and September. The 32-inch panel, which saw the biggest decline, ended at about $50 in September, down more than 40 percent from its $86 price high. He believes that the price of LCD panels will continue until the beginning of next year.

In fact, TCL Technology also said in the announcement that in the first half of this year, the supply and demand relationship and the supply of upstream materials are tight, mainly showing that product prices continue to rise, and in the third quarter, affected by maritime logistics and market demand in some parts of the world, TV panel prices are high and adjusted.

Large-size panels are TCL Huaxing's housekeeping business. According to the financial report, in the first three quarters of this year, TCL Huaxing's large-size LCD panel shipped an area of 27.218 million square meters, which is 21.6 times that of small and medium-sized sizes. In addition, the net profit of 10.97 billion yuan of large-size LCD panels in the current period increased by 810% year-on-year.

However, it should be mentioned that although the price of LCD panels has retraced, its price is still higher than that of the same period last year. According to the financial report, in the third quarter of this year, TCL Huaxing achieved a net profit of 3.13 billion yuan, an increase of 347% year-on-year. In August this year, Li Dongsheng also admitted in the semi-annual report released by TCL Technology that the price of color TV screens may have downward pressure in the second half of the year. Increasing the proportion of mid-to-high-end color TV screens and increasing sales of non-color TV screens were all countermeasures he proposed at the time.

According to the financial report, the current shipment area of TCL Huaxing 65-inch and above size products accounts for nearly 50%, while the proportion of non-mobile phone products shipped in TCL Huaxing's T3 production line in the first three quarters of this year increased to 30%. Recently, TCL Huaxing also acquired the remaining 30% of Suzhou Huaxing's shares for 2.45 billion yuan. TCL told the "China Times" reporter that this will enhance its competitive advantage in the market of curved e-sports displays and special displays.

In addition, in July this year, TCL Technology's fixed increase of not more than 12 billion yuan has been accepted by the CSRC. TCL Technology announced in April this year that this fixed increase plan will be used for the construction of its planned T9 production line project. According to the "China Times" reporter, TCL Huaxing plans to invest a total of 35 billion yuan to build the T9 project in Guangzhou, mainly producing and selling high-size high-value-added IT displays.

Build a symbiotic ecology

Zhonghuan Semiconductor, which TCL Technology acquired in July last year, has also become an important source of profit in the third quarter of this year.

According to the financial report, the operating income of Zhonghuan Semiconductor in the first three quarters of this year was 29.09 billion yuan, an increase of 117% year-on-year, accounting for 24% of the total revenue of TCL Technology. The net profit of 3.28 billion yuan increased by 190% year-on-year, accounting for about 25% of the total net profit of TCL Technology.

At present, TCL Electronics has not yet released the third quarter report of this year. However, the "China Times" reporter learned on October 26 that TCL's overseas sales of smart terminals have accounted for 52%, and the proportion of overseas profits may be higher.

It should be mentioned that in the past four decades since its establishment, TCL has established the above three major industries in the process of gradual adjustment. The most recent adjustment was on September 27, when TCL Technology announced that it would transfer its 17.54% stake in Fantasia to TCL Industrial (Hong Kong) for 526 million yuan.

According to the "China Times" reporter, at the end of 2013, TCL transferred its real estate business to Fantasia Holdings, and at the same time subscribed for its additional shares. TCL Technology showed in its reply to the CSRC's announcement in August this year that as of June 30 this year, it held 1.012 billion shares of Fantasia Holdings, accounting for 17.54% of its total share capital. At present, Fantasia Holdings is in suspension.

In fact, at the new book tasting meeting of "All Things Are Born - TCL Dares to Be 40 Years" on October 26, Li Dongsheng also said in his speech that the most critical factor for TCL to get to where it is today is its transformation and innovation genes, "which enables us to seize opportunities and stand at the forefront of the tide at every stage of China's economy and the development of Chinese enterprises." Dare to act is the most important basis for the success of enterprises. ”

He recalled on the same day that when TCL was first founded, it was 1981, when China's reform and opening up had just started, and it was at the time of the shortage economy and the market was huge. As long as you dare to do it, the probability of success is very high. But the Chinese market is bigger, and the global market is bigger. From a small workshop of local enterprises to the current beginning of the scale of the global enterprise, this process of enterprise competitiveness, team ability and entrepreneur requirements, have a great change.

"At least doing business in China, especially in manufacturing, you must think eloquently, and your success must be with the success of stakeholders, which may be a little different from investment." In manufacturing enterprises, this symbiotic ecology is very important. Li Dongsheng said this on the same day.