20180827-东英亚洲证券-TCL电子-01070.HK-1H18_earnings_clean_beat_8页_1mb
报告摘要
TCL Electronics (1070 HK) Equity Research Summary
Core Information
- Company: TCL Electronics, a leading TV manufacturer with a vertically integrated business model.
- Market Position: Ranked among the top 3 in the Global LCD TV market and No. 3 in the PRC.
- Current Price: HK$3.56
- Target Price: HK$5.80 (+63%)
- Major Shareholder: TCL Corp (52.82%)
- Market Cap: HK$8,307.70 million
- Issue Share: 2,333.63 million
- 3M Avg Daily Vol.: 3.42 million
- 12M High/Low: HK$4.93 / HK$3.34
- Rating: BUY (unchanged)
- Analysts: Yuji Fung, Dallas Cai
1H18 Earnings Highlights
- Revenue: Increased by 23.7% YoY to HK$21,050 million, driven by 37% shipment growth and ASP improvements.
- Net Profit: Rose by 279% YoY to HK$572 million, or 176% YoY to HK$417 million excluding a one-off gain of HK$155 million.
- GPM: Flattish at 15.3%, slightly lower than 15.4% in 1H17 due to higher ODM business contribution.
- Expenses Ratio: Dropped by 1.1ppts to 12.6%, the lowest since 2003, thanks to economies of scale and efficiency gains.
- Interim Dividend: Proposed at HK$9.80 cents, implying a 40% payout ratio.
Earnings Revisions
- FY18E Revenue: Revised down by 0.9% to HK$46,499 million to reflect latest ASP.
- FY18E Net Profit: Revised up by 28.9% to HK$1,074 million.
- FY19E Revenue: Revised down by 3.7% to HK$52,518 million.
- FY19E Net Profit: Revised up by 3.6% to HK$1,174 million.
- Diluted EPS: Revised up by 28.7% to HK$0.443 (FY18E) and 3.4% to HK$0.484 (FY19E).
Financial Summary
| Metric | FY16R | FY17A | FY18E | FY19E | FY20E |
|---|---|---|---|---|---|
| Revenue | HK$33,361m | HK$40,822m | HK$46,499m | HK$52,518m | HK$57,505m |
| Gross Profit | HK$5,816m | HK$6,301m | HK$7,121m | HK$7,977m | HK$8,596m |
| Net Profit | HK$183m | HK$815m | HK$1,074m | HK$1,174m | HK$1,209m |
| Net Margin | 1.05% | 2.0% | 2.3% | 2.2% | 2.1% |
| Diluted EPS (HK$) | 0.114 | 0.466 | 0.443 | 0.484 | 0.499 |
Key Drivers for BUY Rating
- Asset Injections: The parent company's asset injections plan is expected to provide further value accretion for existing shareholders.
- Market Growth: Robust growth in both domestic and overseas TV markets.
- Alliances: Strong partnerships with Internet giants (Tencent and JD.com) supporting smart TV business.
Risks
- ASP Erosion: Potential faster decline in average selling prices than expected.
- Exchange Rate & Execution Risks: Challenges in overseas expansion due to currency fluctuations and operational execution.
- Smart TV Growth: Possible underperformance in the smart TV platform business.
Peer Comparison
| Company | Price (HK$) | Mkt Cap (US$m) | 3-Month Avg T/O (US$m) | P/E (x) | P/B (x) | EV/EBITDA (x) | ROE (%) | Net Debt/Equity (%) |
|---|---|---|---|---|---|---|---|---|
| TCL Electronics | 3.56 | 1,058 | 1.7 | 8.5 | 0.91 | 3.9 | 12.2 | 15.4 |
| HSI | 27,671.87 | - | - | 10.6 | 1.25 | - | 11.9 | - |
| HSCEI | 10,779.71 | - | - | 8.1 | 0.94 | - | 13.1 | - |
| CSI300 | 3,325.34 | - | - | 12.5 | 1.63 | - | 13.4 | - |
| Skyworth Digital | 2.72 | 1,061 | 6.1 | 15.2 | 0.45 | 5.8 | 3.2 | 47.1 |
| Hisense Elec-A | 10.43 | 1,999 | 16.6 | 14.5 | 0.97 | 13.0 | 6.9 | 47.3 |
| Sichuan Chang-A | 2.74 | 1,852 | 12.0 | 35.5 | 0.93 | 25.8 | 2.9 | 31.0 |
| Leshi Internet-A | 2.53 | 1,478 | 52.9 | N/A | 33.16 | -1.0 | -196.1 | -37.5 |
| TCL Corp-A | 2.8 | 5,556.5 | 27.0 | 12.9 | 1.22 | 9.6 | 2.4 | 102.6 |
| Skyworth Digit-A | 7.03 | 1,106 | 24.1 | 78.1 | 2.55 | 31.5 | 1.3 | 51.6 |
| Amazon.Com Inc | 1,910.79 | 931,971 | 7,421.2 | 302.3 | 26.59 | 61.0 | 1.7 | 47.5 |
Financial Ratios
| Ratio | FY16R | FY17A | FY18E | FY19E | FY20E |
|---|---|---|---|---|---|
| Gross Margin (%) | 17.43 | 15.44 | 15.31 | 15.19 | 14.95 |
| Net Margin (%) | 0.7% | 0.5% | 2.06% | 2.24% | 2.1% |
| ROE (%) | 3.4 | 11.6 | 12.1 | 11.1 | 10.6 |
| P/E (x) | 8.5 | 8.9 | 7.3 | 7.1 | - |
| P/B (x) | 0.91 | 0.91 | 0.91 | 0.93 | - |
| EV/EBITDA (x) | 3.9 | 3.6 | 3.5 | 3.6 | - |
| Net Debt/Equity (%) | 15.4 | 14.8 | 10.3 | 10.7 | - |
| Current Ratio (x) | 1.3 | 1.2 | 1.3 | 1.3 | 1.3 |
| Quick Ratio (x) | 1.0 | 1.0 | 1.0 | 1.0 | 1.0 |
Summary of Key Points
- TCL Electronics reported strong 1H18 earnings, beating expectations.
- The company revised its FY18/19E earnings estimates upward.
- The target price was fine-tuned based on a 12x FY19E PE.
- The growth in shipments and ASP were key drivers of the revenue increase.
- The company's financial leverage is improving, with a lower net debt/equity ratio.
- Strong alliances with internet giants support the smart TV business.
- Risks include potential ASP erosion, exchange rate issues, and smart TV growth concerns.
Conclusion
TCL Electronics continues to show strong performance, supported by robust growth in both domestic and international markets and strategic alliances. Despite some risks, the analysts reiterate their BUY rating, citing potential value accretion from asset injections and solid financial performance.
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