As a domestic old-fashioned home appliance company, TCL Group's huge losses, business restructuring and other events have attracted more attention. Since 2016, TCL Group's smart terminal performance has declined significantly, with a loss of 440 million yuan; in 2017, TCL Communication even fell into the quagmire of a cumulative loss of 1.5 billion yuan, and there was a lot of collapse for a while.

At the end of 2018, TCL Group CEO Li Dongsheng proposed a restructuring plan that shocked the market: he decided to divest the terminal business including color TV and home appliance business. .

Until January 7, TCL Group held the first extraordinary general meeting of shareholders in 2019, and the TCL restructuring plan was passed with a high vote. In order to give investors confidence in the company's performance after the reorganization, Li Dongsheng immediately issued a military order: "If the goal of performance growth is not achieved, the staff of the core team will not receive bonuses."

In 2019, TCL must fight back...

2018 results are released, stop huge losses!

On March 19, TCL Group released the 2018 Annual Report. Data shows that in 2018, TCL Group achieved operating income of 113.36 billion yuan, a year-on-year increase of 1.60%; net profit of 4.07 billion yuan, a year-on-year increase of 14.7%; of which the net profit attributable to shareholders of listed companies was 3.47 billion yuan, a year-on-year increase of 30.2%. The Group's net profit margin from sales has increased from 2% in 2016 to 3.59%, and the return on equity has increased from 7.2% to 12%.

Obviously, the huge loss of TCL's revenue has been suppressed, and the overall revenue performance has recovered.

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Image source: TCL Group Annual Report

It is worth noting that the annual report data is still managed and accounted for according to the industrial structure of the four major businesses. After excluding the debt-laden terminal business, TCL Group's overall financial indicators improved more significantly.

After excluding the target assets for restructuring, TCL Group achieved a net profit of 3.55 billion yuan for the whole year, the net profit margin of sales increased from 3.59% to 7.35%, the asset-liability ratio decreased from 68.4% to 64.1%, the number of personnel decreased from 89,750 to 31,645, and the per capita profit The rate increased from 38,600 yuan to 9.96 yuan.

In addition, on the day the annual report was released, TCL Group closed at 3.83 yuan, up 1.86%; since 2019, TCL Group's cumulative increase has been close to 60%.

The semiconductor business has made great achievements, and CSOT has become the jewel in the palm

For such achievements, Li Dongsheng expressed his basic satisfaction, "full achievement of the annual business objectives, and firm determination to continue to deepen the reform and transformation."

For more than two years from 2017 to 2018, TCL Group sold or closed 63 non-core business enterprises, and adjusted its business structure to four businesses including semiconductor display and materials business, smart terminal business, industrial finance and investment business, and other emerging businesses. The number of loss-making enterprises has been greatly reduced.

In 2019, with the divestiture of the smart terminal business, TCL Group was reduced to three business groups, of which the semiconductor display business has become the mainstay of the group.

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Image source: TCL Group Annual Report

The annual report pointed out that, affected by the cyclical downturn of the global industry, the semiconductor display industry has experienced a sharp decline in product prices since 2018Q2, the market size has dropped year-on-year, and the gross profit margin has narrowed significantly.

Despite the poor industry conditions, China Star Optoelectronics, a subsidiary of TCL's semiconductor business, achieved continuous growth in sales of various products throughout the year, and has undoubtedly become the business group with the largest profit contribution of TCL Group. During the reporting period, CSOT achieved an operating income of 27.67 billion yuan and a net profit of 2.32 billion yuan, accounting for more than 57% of the group's overall net profit.

Such gratifying results are due to the fact that Huaxing Optoelectronics has maintained full sales and production throughout the year. It is reported that in addition to two 8.5th-generation and one 6th-generation LTPS production lines, the world's highest-generation 11th-generation line has been put into production, and the 6th-generation AMOLED production line has also been lit. In addition, there are 8K production lines. And the 11th generation line of large-size AMOLED has started construction. It is believed that the construction and commissioning of multiple production lines in the future will bring about significant growth in scale and efficiency. We are confident that revenue will increase significantly in 2019 and profits will achieve double-digit growth.

In addition, in the field of new semiconductor display technology, Guangdong Juhua has built the world's most advanced printing display public platform, and successfully developed 31-inch 4K printing OLED products and the world's first 31-inch 4K printing H-QLED display products. In terms of OLED material development, the red and green light materials of vapor-deposited OLEDs independently developed by Huarui Optoelectronics are at the leading domestic level; the Group's QLED R&D team has solved key issues such as the service life of red and green materials, and the performance of the self-developed blue light materials The world's leading.

Looking forward to 2019, in the semiconductor display business, TCL will strive to develop new display technologies and materials, expand upstream and downstream businesses, and continue to carry out mergers and acquisitions to enhance the synergy of the industry group.

Mobile phone is the "culprit", TCL reluctantly cut off his arm to survive

Although the divestiture of the smart terminal business group has become a fact, we can see from the 2018 annual report that in addition to the mobile phone business, the segmented business segments such as color TV, air conditioners, refrigerators, and washing machines have returned to the growth track. In other words, the smartphone business is the "culprit" in this restructuring case.

In general, the performance of the smart terminal business group has improved in 2018, from a huge loss in 2017 to a current profit, with an annual profit of nearly 300 million yuan.

First, the color TV business grew strongly. During the reporting period, TCL Electronics achieved sales revenue of 38.57 billion yuan, a year-on-year increase of 9.25%, and net profit attributable to the parent company of 801 million yuan, a year-on-year increase of 14.4%. The cumulative sales volume of LCD TVs for the year was 28.606 million units, a year-on-year increase of 23.1%. According to Sigmaintell's data, TCL Electronics' global TV shipment market share in 2018 was 11.6%, ranking second in the world.

Secondly, the home appliance group and smart speaker business developed steadily. The annual sales revenue of the home appliance business was 17.46 billion yuan, a year-on-year increase of 9.87%. Among them, the sales volume of air-conditioning products was 9.197 million units, a year-on-year increase of 0.3%; the sales volume of washing machines was 2.368 million units, a year-on-year increase of 23.5%; the sales volume of refrigerators was 1.77 million units, a year-on-year increase of 14.6%. The smart speaker business achieved sales revenue of 6.18 billion yuan, a year-on-year increase of 21.8%.

Finally, in the mobile communication terminal business, the loss narrowed sharply. During the reporting period, TCL Communication Technology achieved product sales of 33.87 million units, a year-on-year decrease of 23%. At present, TCL Communication Technology operates the three major brands of TCL, Alcatel and BlackBerry around the world, but due to low profit margins and rapid product technology upgrade iterations, profitability and growth momentum are obviously insufficient, so that TCL Group chooses to "survive with broken arms".

In 2019, opportunities and challenges go hand in hand. From the perspective of the general environment, the environment facing my country's development is still complex and severe, and there are still many predictable and unpredictable risks and challenges in the future. Nevertheless, TCL Group is very optimistic about the development process after the reform and reorganization, especially the semiconductor display and materials business.

"With the rapid development of informatization and intelligence, display demands, new products, and new applications are emerging around commercial, home, mobile and other application scenarios. Industrial display, commercial display, educational whiteboard, e-sports display, tablet, vehicle, The vigorous development of products such as VR/AR has improved and enriched the efficiency and user experience of human work, entertainment, learning, life and other activities, and will also bring about the continued growth of the display industry."