Globally TCL sales are booming which is a real threat for both Samsung and LG Electronics, they are also up in Australia despite losses in 2021, while their local mobile division has become a major problem for ther business with sales falling 60% last year.
While the mobile division in Australia had seen their sales halved after Chinese management moved to run the local business their TV business is slowly taking share off rivals as a brutal TV price war unfolds.
Now speculation has it that the shares of parent Company Hong Kong listed TCL Technology are being purchased back with a view to taking the business private.
According to OMDIA’s Global TV Design and Features Tracker report, TCL was named the number one bestselling Android Smart TV brand in the world last year with the Chinese Company seriously threatening both Samsung and LG at the top end of the TV market.
For the third consecutive year, TCL Electronics has been confirmed as the second-best selling LCD television brand globally, according to OMDIA’s Global TV Sets report 2021.
The report confirms that the global smart TV set shipment during 2021 was 189 million units, during which the Android-based (including AOSP/Android Open-Source Project) smart TV shipment accounted for 73.2 million units.
TCL claimed the moniker of the number one selling Android OS smart TV brand after the company shipped 15.1 million total TV units, representing 20.7% global market share.
This success coupled with the financial and business problems in China has seen the business under a new chairwoman move to buy up shares.
Earlier this month the Hong Kong-listed maker of TVs mobiles and appliances, announced a series of purchases of its publicly traded shares by its parent, its employee share ownership plan, and its new chairwoman Du Juan.
Those purchases raised insider control of the company to at least 60%, with some observers claiming it’s already closer to 70%.
Analysts claim that the rapid buy up of shares raises the question of whether TCL Electronics might be inching towards privatisation with some speculating that they could get out of the mobile business altogether as LG Electronics did last year due to poor sales.
The company shot to global fame in 2003, when its parent, TCL Technology, struck a $560 million deal to take over the TV assets of France’s Thomson SA, making it the world’s largest TV maker, they also acquired the brand name Alcatel which under Australian management saw the brand snatch the #3 volume slot in Australia.
Credit: TCL
At the time the local business was run by Sams Skontos, who despite opposition was told to jettison the Alcatel brand for low-cost TCL mobiles. Skontos quit, Chinese management took over and the strategy of replacing the Alcatel brand failed with carriers replacing the Alcatel brand with models manufactured by banned Chinese Company TCL.
TCL formed a joint venture operation with France’s Alcatel but balked at paying a licence fee to the French Company.
Neither of those tie-ups was particularly smooth, with the Thomson deal unravelling in three years, and the Alcatel deal in just one.
Both deals were driven partly by elements of politics as well as corporate pride, as China urged its companies to “go global” and TCL answered that call. Two decades later, it appears that TCL is heralding to become a privately owned Chinese technology Company with a stranglehold in the TV market.
On Oct. 12,
In 2020 and 2021 TCL’s TV and appliance business felt the impact of disruptions from the global pandemic and China’s “zero-Covid” policy,
Today TCL Technology is doing its best to follow Beijing’s latest directives calling on tech companies to innovate and stay at the leading edge of their fields.
TCL Technology’s other units have moved into solar energy through a $1.9 billion polysilicon joint venture; the purchase of a China-based LCD plant from South Korea’s Samsung; and boosting its semiconductor business through the 2020 purchase of Zhonghuan Electronics’ core assets for about 11 billion yuan ($1.5 billion).
A report in Chinese publication Benzinga, claims that TCL’s parent company’s shareholding in Hong Kong-listed TCL Electronics held steady at 51% until the recent share repurchases, which leads to our assessment that the buybacks could presage a bid to take the Hong Kong-listed TCL Electronics private.
Analysts claim that this makes sense as TCL management is getting little benefit from its publicly traded status and instead is being subject to recent market volatility.
The stock is currently languishing around the HK$3 level, after briefly spiking to as high as HK$5.20 in mid-August after releasing first-half results.
TCL’s shares today are down about 24% over the last year.
The company is grappling with rising costs as a percentage of revenue, and its debt to total capital ratio exploded from 2.65% in 2020 to 30.43% in 2021.
TCL Electronics currently counts TV Displays and monitors as its biggest breadwinner, accounting for up to 65% of revenues.
Observers claim that TCL is gaining ground in the TV market with archrivals South Korea’s Samsung and LG Electronics, which together control half of the global market.
In September, the head of TV Product Planning for LG told the Korea Times: “By companies, Chinese maker TCL is now very close to the Korean makers. Though LG has the second-largest share, I think we have to be humble because I can imagine how we looked 10 years ago when I see Chinese makers like TCL.”
TCL’s recent rise as a highly regarded global player comes as it tries to fill a void created by Japanese veteran Panasonic, which decided to stop selling TVs in Australia before COVID.
Around the same time, TCL signed a deal to produce budget models under the Panasonic brand name.
Benzinga said that Du’s background as CFO of TCL Technology may come in handy if she is planning a restructuring for Hong Kong-listed TCL Electronics to take some excess fluff from the company.
Outside its core smart screen business, the company still derives 35% of its revenue from other businesses like white goods and a TV streaming service. To trim the fat, Du might want to take the company private temporarily, perhaps before re-launching it on Shanghai’s young Nasdaq-style STAR market as a more focused tech play.
Or she might simply leave the Hong Kong-listed company as it is. As one of China’s oldest tech names, the company is profitable and probably not under any big financial pressure at the moment. Unlike its younger peers, it actually pays dividends, most recently giving out HK$16.70 per share for 2021. That could amount to an additional HK$16.7 million for Du, based on her recent personal purchase of 1 million TCL Electronics shares, if the company continues to pay dividends at a similar level this year.
