Affected by the epidemic in the first half of 2020, the global semiconductor display industry has been under varying degrees of operational and performance pressure, and TCL Huaxing Optoelectronics, which has intensive production capacity in Wuhan, the epicenter of the epidemic, has been hit beyond imagination. So in the past six months What are the results of TCL Huaxing and its parent company TCL Technology (000100.SZ)?
Recently, TCL Technology released its 2020 mid-year financial report. The report shows that based on the same caliber after the reorganization, TCL Technology achieved operating income of 29.33 billion yuan in the first half of the year, a year-on-year increase of 12.3%; net profit attributable to shareholders of listed companies was 1.21 billion yuan, a year-on-year decrease 42.3%. It is worth noting that TCL Technology has a one-time gain of 1.15 billion yuan in the first half of last year due to the restructuring of its terminal business. If the asset restructuring gains are excluded, the net profit attributable to shareholders of listed companies in the first half of this year will increase by 7.6% year-on-year. Among them, the profit growth in the second quarter was significant, and the net profit attributable to shareholders of listed companies was 800 million yuan, an increase of 96% from the first quarter .
In the first half of 2020, the political and economic environment is complex and changeable. The impact of the epidemic has suppressed consumer demand and the external business environment is severe. In this context, TCL Technology is driven by extreme cost efficiency , promotes lean management, and superimposes the growth of production capacity, and its profitability in the second quarter has been greatly improved.
In the semiconductor display business sector where TCL Huaxing is located, 2020 is the period of recovery after the end of the three-year downward cycle. Although the market rebound is slowing down due to the impact of the epidemic, long-term outlook on the industry trend, the continued growth of TCL Huaxing is almost unstoppable .
Overcome the impact of the epidemic and improve operational efficiency
In horizontal comparison, TCL Huaxing survives at the cost of extreme efficiency and still maintains the industry’s relatively leading operational efficiency and benefits. In the first quarter of this year, TCL Huaxing’s net profit reduced losses by 159 million yuan from the previous quarter, leading the industry to usher in the pace of improvement; in the second quarter, profitability was quickly restored, with a substantial improvement of 215 million yuan from the first quarter.
TCL Huaxing’s large-size production line continued to maintain full production in the first half of the year. The shipment area of 55-inch and above products accounted for more than 70%, and the total sales area of large-size products reached 13.67 million square meters, an increase of 52.9% year-on-year; operating income was 12.16 billion Yuan, a year-on-year increase of 32.3%. With the substantial increase in sales area, TCL China Star’s share in the TV panel market rose to the second place in the world in the second quarter of this year. The share of 55-inch products is the first in the world, the share of 65-inch products is the second in the world, and the share of 75-inch products is the second in the world; the commercial display business is growing rapidly in the field of high-end gaming displays and interactive whiteboards, and the 86-inch interactive whiteboard shipments are second in the world.
In terms of small and medium sizes, the t3 and t4 production lines are concentrated in Wuhan and are greatly affected by the epidemic. However, TCL Huaxing’s small and medium-sized businesses have overcome the impact of lack of materials and personnel resumption during the epidemic, and continued to ensure safe production. In the first half of the year, TCL Huaxing achieved operating income of 7.35 billion yuan in small and medium size, a year-on-year increase of 3.80%. TCL Huaxing’s small and medium-sized business LTPS smartphone panel shipments are the third in the world. LTPS notebook panels have been imported to many international brand customers, and the annual shipments have sprinted to the world’s second place; flexible AMOLED smartphone panels have been stably supplied to brand customers’ flagship machines. The volume ranks fourth in the world.
In general, TCL Huaxing’s large-size production line has achieved profitability in the first half of the year. At present, the price of large-size panels has stabilized and rebounded, and small and medium-sized panels have improved rapidly. The overall performance of the second half of the year will continue to improve.
Layout in the future shows good market prospects
TCL Technology’s semi-annual report shows that in the first half of the year, TCL Technology increased its digital investment in R&D and smart manufacturing, and built strategically integrated technologies and products. The R&D investment was 2.88 billion yuan, a year-on-year increase of 28.9% on the same scale.
On the other hand, in March, TCL Huaxing and Sanan Semiconductor established a joint laboratory to focus on the development of Micro-LED display technology; in June, TCL Technology announced that it intends to conduct research on Japanese JOLED at 30 billion yen (approximately 2 billion yuan). Strategic investment: In August, TCL Huaxing acquired Suzhou Samsung for 1.08 billion U.S. dollars to continue to expand its competitiveness in display manufacturing. Actively seeking win-win opportunities in the industry, many parties have joined hands to invest in technological and process breakthroughs. These operations have laid a solid foundation for TCL Huaxing to harvest more performance breakthroughs in the future.
At the communication meeting in the mid-year report, TCL Technology Chairman Li Dongsheng introduced that the world’s first 8.5-generation printed OLED production line will be built in Guangzhou next year. This will be China’s strong voice in the field of OLED display manufacturing. It will be an important evolution in TCL Huaxing’s transformation from an industry chaser to a leader.