20181016-东英亚洲证券-TCL电子-01070.HK-3Q18_shipments_set_record_high_5页_1mb

报告摘要

TCL Electronics (1070 HK) Summary

Core Content

TCL Electronics is a leading TV manufacturer with a vertically integrated business model, ranking among the top 3 in the Global LCD TV market and No. 3 in the PRC. The report provides an update on its 3Q18 performance, financials, and valuation, with a BUY rating and an unchanged target price of HK$5.80.

Key Highlights

3Q18 Performance

Shipments: Reached a quarterly historical high of 7.95 million units, up 22.1% yoy.
Domestic Shipments: Grew by 23.7% yoy to 2.70 million units.
Overseas Shipments: Increased by 21.3% yoy to 5.25 million units.
Smart/4K TV Penetration: Flat QoQ at 80.9% in China and 49.9% globally, compared to 79.5% and 53.0% in 2Q18.
Internet TV Business: Accumulated active users and DAU grew by 34.7% and 40.7% respectively to 29.3 million and 13.9 million.

9M18 Shipments

Total Shipments: Reached 21.1 million units, up 31.1% yoy.
Performance vs. Guidance: Surpassed management’s full-year shipment guidance, with 82.5% of the full-year target achieved.
PRC Shipments: Grew by 25.5% yoy to 7.59 million units, representing 79.6% of the analyst’s estimate.
Overseas Shipments: Increased by 34.5% yoy to 13.54 million units, accounting for 84.0% of the estimate.
North American Market: Successful penetration into core distribution channels with a high C/P ratio against Korean competitors.

Valuation and Investment Outlook

Current Price: HK$3.38.
Target Price: HK$5.80 (+72%).
PE Ratio: Currently at 7.6x (FY18E) and 7.0x (FY19E), below the 5-year historical average of 10x.
Yield: 5.2%.
Investment Return: Expected to offer a 29% return in 6 months based on a 9x fair valued PE.
Valuation Upside: Includes valuation of smart TV ecosystem and potential value from parent group’s asset injection under restructuring.

Risks

ASP Erosion: May be faster than expected.
Exchange Rate and Execution Risks: In overseas expansion.
Smart TV Platform Growth: May fall below expectations.

Financial Summary

Revenue

FY16R: HK$33,361 million
FY17A: HK$40,822 million
FY18E: HK$46,499 million
FY19E: HK$52,518 million
FY20E: HK$57,505 million
Yoy Growth: 22.4%, 13.9%, 12.9%, 9.5%

Adjusted Net Profit

FY16R: HK$351.8 million
FY17A: HK$649.6 million
FY18E: HK$956.5 million
FY19E: HK$1,175.1 million
FY20E: HK$1,212.8 million
Yoy Growth: 473.4%, 84.7%, 47.3%, 22.8%, 3.2%

Diluted EPS

FY16R: HK$0.114
FY17A: HK$0.466
FY18E: HK$0.442
FY19E: HK$0.485
FY20E: HK$0.500
Yoy Growth: 310.0%, (5.0)%, 9.5%, 3.2%

Net Profit

FY16R: HK$183 million
FY17A: HK$815 million
FY18E: HK$1,073 million
FY19E: HK$1,175 million
FY20E: HK$1,213 million
Yoy Growth: 497.0%, 310.0%, (5.0)%, 9.5%, 3.2%

Net Margin

FY16R: 1.05%
FY17A: 1.59%
FY18E: 2.06%
FY19E: 2.24%
FY20E: 2.11%

Operating Profit (EBIT)

FY16R: HK$296 million
FY17A: HK$1,050 million
FY18E: HK$1,299 million
FY19E: HK$1,351 million
FY20E: HK$1,396 million
Operating Margin: 0.89%, 2.57%, 2.79%, 2.57%, 2.43%

EBITDA

FY16R: HK$513 million
FY17A: HK$1,003 million
FY18E: HK$1,405 million
FY19E: HK$1,594 million
FY20E: HK$1,620 million
EBITDA Margin: 1.5%, 2.5%, 3.0%, 3.0%, 2.8%

Cash Flow

Operating Cash Flow: FY16R: HK$1,310 million; FY17A: HK$910 million; FY18E: HK$1,471 million; FY19E: HK$1,501 million; FY20E: HK$1,556 million
Net Cash from Operations: FY16R: HK$1,097 million; FY17A: HK$746 million; FY18E: HK$1,232 million; FY19E: HK$1,232 million; FY20E: HK$1,261 million
FCF: FY16R: HK$944 million; FY17A: HK$515 million; FY18E: HK$111 million; FY19E: HK$1,063 million; FY20E: HK$1,078 million

Balance Sheet

Total Net Assets: FY16R: HK$6,452 million; FY17A: HK$7,629 million; FY18E: HK$10,137 million; FY19E: HK$11,034 million; FY20E: HK$11,791 million
Shareholder's Equity: FY16R: HK$6,452 million; FY17A: HK$7,629 million; FY18E: HK$10,137 million; FY19E: HK$11,034 million; FY20E: HK$11,791 million
BVPS: FY16R: HK$3.22; FY17A: HK$3.72; FY18E: HK$4.37; FY19E: HK$4.34; FY20E: HK$4.72

Key Financial Ratios

Gross Margin: FY16R: 17.43%; FY17A: 15.44%; FY18E: 15.31%; FY19E: 15.19%; FY20E: 14.95%
Operating Margin: FY16R: 0.89%; FY17A: 2.57%; FY18E: 2.79%; FY19E: 2.57%; FY20E: 2.43%
Net Margin: FY16R: 1.05%; FY17A: 1.59%; FY18E: 2.06%; FY19E: 2.24%; FY20E: 2.11%
Payout Ratio: FY16R: 0.0%; FY17A: 40.7%; FY18E: 40.0%; FY19E: 40.0%; FY20E: 40.0%
Effective Tax Rate: FY16R: 12.1%; FY17A: 16.6%; FY18E: 20.0%; FY19E: 20.0%; FY20E: 20.0%
Total Debt/Equity: FY16R: 21.0%; FY17A: 38.4%; FY18E: 4.9%; FY19E: 4.5%; FY20E: 4.2%
Net Debt/Equity: FY16R: Net cash; FY17A: Net cash; FY18E: Net cash; FY19E: Net cash; FY20E: Net cash
Current Ratio: FY16R: 1.3; FY17A: 1.2; FY18E: 1.3; FY19E: 1.3; FY20E: 1.3
Quick Ratio: FY16R: 1.0; FY17A: 1.0; FY18E: 1.0; FY19E: 1.0; FY20E: 1.0
Inventory Turnover (days): FY16R: 58; FY17A: 53; FY18E: 53; FY19E: 53; FY20E: 53
AR Turnover (days): FY16R: 87; FY17A: 92; FY18E: 92; FY19E: 92; FY20E: 92
AP Turnover (days): FY16R: 111; FY17A: 106; FY18E: 106; FY19E: 106; FY20E: 106
Cash Conversion Cycle (days): FY16R: 34; FY17A: 39; FY18E: 39; FY19E: 39; FY20E: 39
Asset Turnover: FY16R: 1.7; FY17A: 1.8; FY18E: 1.7; FY19E: 1.8; FY20E: 1.8
Financial Leverage: FY16R: 3.6; FY17A: 3.3; FY18E: 3.1; FY19E: 2.8; FY20E: 2.9
ROE: FY16R: 3.4%; FY17A: 11.6%; FY18E: 12.1%; FY19E: 11.1%; FY20E: 10.6%

Peer Comparison

TCL Electronics (1070 HK): Price: HK$3.38; Mkt Cap: HK$1,007 million; 3-Month Avg T/O: HK$1.0 million; PER Hist: 7.3x; PER FY1: 5.5x; PER FY2: 5.2x; EPS FY1 YoY%: 32.6%; EPS FY2 YoY%: 4.8%; P/B Hist: 0.77x; P/B FY1: 0.75x; EV/EBITDA Hist: 2.9x; EV/EBITDA Cur Yr: 1.6x; Net gearing Hist: 32.1%; Gross margin Hist: 24.2%; Net margin Hist: 4.8%; ROE Hist: 7.0%; ROE FY1: 7.4%; Sh px 1-mth %: -15.2%; Sh px 3-mth %: -4.8%

Historical Recommendations and Target Price

10 Jun 2015: BUY, TP: HK$7.00, Close: HK$5.85
13 Aug 2015: BUY, TP: HK$7.20, Close: HK$4.06
14 Apr 2016: BUY, TP: HK$5.85, Close: HK$5.02
15 Aug 2016: BUY, TP: HK$6.10, Close: HK$4.32
25 Oct 2016: BUY, TP: HK$5.80, Close: HK$4.08
24 Jan 2017: BUY, TP: HK$4.14, Close: HK$3.60
22 Mar 2017: BUY, TP: HK$5.20, Close: HK$3.75
28 Apr 2017: BUY, TP: HK$5.20, Close: HK$3.85
09 Aug 2017: BUY, TP: HK$5.70, Close: HK$3.75
23 Nov 2017: BUY, TP: HK$6.40, Close: HK$4.57
06 Apr 2018: BUY, TP: HK$4.60, Close: HK$3.53
18 Jul 2018: BUY, TP: HK$5.60, Close: HK$3.98
25 Aug 2018: BUY, TP: HK$5.80, Close: HK$3.47

Disclaimer

The report is intended for institutional investors only.
The information is for informational purposes and not an offer to buy or sell.
Oriental Patron accepts no liability for any loss arising from the use of this report.
Independent financial advice should be sought before making investment decisions.

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