The TCL Group has received particular attention recently. First, its performance has been affected by the communications business. Second, the company recently announced that it will aggressively enter the Internet TV industry.
On April 9th, TCL Group released its 2016 earnings report and 2017 first quarter performance forecast. The company expects to realize operating income of 106.4 billion yuan in 2016, an increase of 1.79% year-on-year, and a net profit of 2.1 billion yuan, of which net profit attributable to shareholders of the listed company is 1.6 billion yuan, a year-on-year decrease of 38%.
According to the announcement, the decline in net profit of TCL Group for the full year 2016 was mainly weighed down by the sharp decline in communications performance. The staff of the company's directorate office told the “Investor†reporter: “The major markets of TCL's communications business in Europe and Latin America, due to political and economic factors, business decline, in addition to the impact of exchange rate factors, TCL also took the initiative to shrink some in Latin America. business."
Things are changing. In the first quarter of 2017, its China Star Optoelectronics Co., Ltd.'s investment volume and average price of its products increased substantially year-on-year, financial and investment businesses also achieved better returns, and overall TCL Group's overall profit increased significantly year-on-year. In the future, TCL will enter the Internet TV industry. What opportunities will this bring to investors?
There is contraction and expansion. In the aspect of Internet transformation, by the end of the first quarter, accumulatively activated users operating through TCL intelligent network TV terminals had reached 19.087 million, and the average number of active users per day had reached 8.641 million, an increase of 49.5% year-on-year; The cumulative number of active users of smart network TV terminals reached 31.585 million, and the average number of active users per day is 12.265 million.
Mobile phone business declined
Last year, TCL Group’s 100 billion revenue was only a net profit of 2.1 billion yuan, which is unsatisfactory.
According to the performance report, TCL's home appliance business maintained positive growth, with sales of air conditioners, refrigerators and washing machines increasing by 43.8%, 22.7% and 11.8% respectively year-on-year. In terms of color TV business, last year, TCL's sales of multimedia LCD TVs increased by 15.1% year-on-year. According to IHS Technology data, TCL's 2016 global LCD TV market share was 9.0%, ranking third.
Communication business is another scene. According to IDC data, the total global smartphone sales volume in 2016 was 1.47 billion units, up only 2% year-on-year, and the competition was fiercer and the overall profitability of the industry was affected.
Specific to TCL, TCL's communications business fell sharply due to the sluggish overseas mobile phone market, significant increase in the cost of key components, and the full restructuring of China's regions. During the reporting period, TCL communications sales, communications equipment and other products were 68.766 million units, a year-on-year decrease of 17.7%.
In the sales volume of nearly 70 million units, there are only 38.98 million smart phones, which is 18.79% lower than that of 2015, when the market share of smart phones was relatively small.
For this reason, Yang Tuo, who had just joined TCL for a year from Huawei, was also dismissed. The industry has questioned this: One-year time hopes to boost the decline of mobile phone business, TCL seems even more impatient.
TCL Communication (2168.HK) has already withdrawn from the market at the end of the third quarter. The company plans to make major adjustments to its mobile phone business. Liang Zhenpeng, an expert in the home appliance industry, believes that TCL's adjustments to communications are correct. There are many mistakes in the original management team. Otherwise, TCL will not remove the person in charge of communication from any one year.
Because the mobile phone business could not substantially reverse losses at a time, CICC lowered its expectations for TCL to 2018.
As early as the first half of 2016, TCL's telecommunications business was already showing signs of fatigue. According to the 2016 financial report, the company’s first-half turnover was HK$10.9 billion, a year-on-year decrease of 17%. In the first half of the year, it achieved a net profit of HK$11 million, a year-on-year decrease of 98%.
In 2015, TCL Communications sold more than 83.55 million mobile phones globally, making it the fifth-largest mobile phone manufacturer in the world and capturing the top spot for overseas sales of domestic mobile phone manufacturers. According to the reporter's understanding, TCL Communications was the group's major profit holder and it is now dragging down the company's performance.
TCL Communications CEO Yang Tuo has said that he hopes TCL Communication will make a profit in 2016. However, this hope did not come true, and he also resigned.
Liang Zhenpeng, an analyst in the home appliance industry, told Investor that: “The drop in mobile phone business has a substantial impact on net profit. Therefore, TCL still thinks of ways to improve the profitability of mobile communications. TCL’s focus on operator business resulted in a drop in net profit. Now After operators changed their subsidy policy for mobile phone manufacturers, TCL's communications business began to decline. TCL also wanted to establish an excellent R&D and marketing team, which is a top priority."
Fortunately, the new changes in 2017 gave the TCL Group some confidence. The company expects to achieve a net profit of 650 million to 750 million yuan in the first quarter of 2017, an increase of 83% to 111% year-on-year, and a net profit of 400 million to 450 million yuan attributable to the shareholders of the listed company, a year-on-year increase. 54% to 73%.
Looking beyond Xiaomi Leshi
After LeTV and Xiaomi led the trend of Internet TV, TCL also couldn't resist loneliness and entered the industry.
In March of this year, Xiaomi TV released 4A new products; immediately after that, while LeTV launched a full-screen split TV nique65/55, TCL also launched a new Internet brand "Thunderbird" and a new Thunderbird TV.
The industry is skeptical that the current Internet TV has passed a period of rapid development, and even millet, LeTV as the Internet giants of this kind of Internet are not good enough, leaving the opportunity and space for TCL exactly how much?
However, TCL is bent on sharing a share in this field. The relevant executives stated to the public that “The target set by Thunderbird in 2017 is to compete with Internet TV manufacturers, including LeTV, Xiaomi, and Xiao Wei, etc., hoping to exceed them.â€
According to public statistics, LeTV and Xiaomi’s Internet TVs have a considerable market share. From 2014 to 2016, LeTV sold 1.5 million units, 3 million units and 6 million units, respectively; this year, LeTV proposed a target of 8 million units, and TCL would find it difficult to exceed LeTV in a short period of time.
According to data from Ove Cloud Network, the retail volume of color TV in the Chinese market was 50.89 million units, up 7.8% year-on-year; retail sales volume was 156 billion yuan, down 1.8% year-on-year. Judging from the overall business situation, the color TV market runs counter to the amount, and the intense competition in the industry has reduced the concentration of brands. This is not good news for TCL's TV business.
According to financial reports, TCL Group's annual revenue exceeds 100 billion yuan, but the market value is only 400 billion yuan, far lower than annual income, but its PE more than 20 times, the stock price is not low, if TCL wants to boost the stock price, then Need to increase profit margins.
Liang Zhenpeng believes that TCL's entry into the Internet TV industry is to seek new growth points, but also to compete with LeTV, Xiaomi and other companies for the market. However, Internet TV is mostly sold on the Internet, and the price is low. Generally, it is low-end products. This one has limited impact on the growth of business performance. In any case, TCL still has to make up for shortcomings to get out of the trough.
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