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Behind TCL's popularity: Samsung and LG have to guard against Li Dongsheng's "gambling" for ten years

via:博客园     time:2021/1/25 20:42:41     readed:538

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Wen / a share channel

Source: node Finance (ID: jiedian2018)

According to the company's performance forecast released on January 12, the net profit of the company's parent company in 2020 will be 4.2-4.46 billion yuan, an increase of 60% - 70%. In this positive stimulus, on January 18, the company's share price once reached 10.25 yuan / share, with a market value of more than 140 billion yuan, a record high.

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A lesson from the past

Before turning to liquid crystal panel (LCD) production in 2009, Li Dongsheng bet on CRT (cathode ray picture tube). This kind of display technology was used in the flat panel large color TV that the post-90s saw as children.

In the 1990s, CRT display technology was sought after by domestic manufacturers such as Changhong, TCL and Hisense, and the capacity of CRT display increased year by year.

In 2000, China became the world's largest producer of color TV sets. Domestic manufacturers pay more attention to CRT and continue to invest heavily. At that time, TCL, already one of the domestic color TV giants, went further and started a series of ambitious cross-border mergers and acquisitions.

In 2002, TCL acquired Schneider, a century old German store. In 2004, TCL, which has been listed on the market as a whole, continued to make full use of its power and directly pointed to Thomson's global color TV business in France.

However, at the same time that Li Dongsheng was honored, a revolution initiated by liquid crystal display technology (LCD) is quietly subverting the original huge market of CRT.

Li Dongsheng has seen the trend of technology iteration for a long time, but he didn't expect the change to come so fast. In 2005, the fourth year of Li Dongsheng's life, TCL's two acquired enterprises suffered huge losses. The company suffered its first loss in 20 years, with a loss of more than 2 billion yuan.

Suddenly in trouble, Li Dongsheng lost more than 20 jin in half a year.

For the reason of the original loss, Li Dongsheng believes that the main reason is that he did not judge the speed of the replacement from CRT to LCD in the color TV industry, and at the same time, he made mistakes in bets on LCD and PDP (plasma).

However, the reason why Li Dongsheng is now Li Dongsheng is that he has not been defeated, but has achieved Nirvana and rebirth. In the widely circulated article "the rebirth of the eagle", Li Dongsheng expressed such a view: either wait for death, or complete the transformation through a very painful renewal process.

As a result, Li Dongsheng chose to catch up with the technological change of LCD panel. In 2009, TCL adjusted its business structure and jointly invested 24.5 billion yuan in TCL Huaxing 8.5 generation LCD panel project with Shenzhen municipal government. By 2012, TCL's LCD TV sales reached 15.781 million units, ranking among the top three color TV sets in the world.

图片来源:信达证券

Photo source: Xinda securities

Because, compared with the CRT of that year, the LCD, which has been developed for 20 years, is now facing similar problems. Although the eagle is strong, it can only be reborn once.

Korean enterprises retreated and their performance increased greatly

After getting rid of the crisis and gaining a firm foothold, TCL's performance is not stable and its net profit growth fluctuates.

数据来源:同花顺

Data source: tonghuashun

Especially after 2015, TCL's main business mobile phone and TV market competition intensified, squeezing TCL's profit margin.

From the end of 2018, TCL launched a major asset sale plan, divested the then popular intelligent terminal business with 4.76 billion yuan, and began to bet on the panel industry.

In early March 2020, TCL Huaxing, the core subsidiary of TCL, signed a strategic cooperation agreement with San'an semiconductor, announcing the joint establishment of a laboratory to develop micro LED display technology and its key technologies of chip, transfer, detection, repair and other engineering manufacturing. It is reported that the two sides will jointly invest to set up a joint laboratory with a registered capital of 300 million yuan, and TCL Huaxing's contribution accounts for 55% of the registered capital.

In May of that year, TCL capital, a subsidiary of TCL, announced the acquisition of 39.95% equity of Wuhan Huaxing with 4.2 billion yuan, introducing HENGJIAN holdings, a strategic investor, to accelerate the independent technology research and development of Wuhan Huaxing in the field of high-end smart phones and mobile PC display panels.

In June of that year, TCL Huaxing announced that it planned to invest 30 billion yen (about 2 billion yuan) in Japan's joled company to carry out in-depth technical cooperation and bet on the new printed OLED circuit. In July, TCL technology invested 10.974 billion yuan to acquire 100% equity of Zhonghuan group, officially entering the field of semiconductor silicon materials.

Then, in August 2020, TCL Huaxing invested 7.6 billion yuan to acquire 60% equity of Suzhou Samsung Electronic LCD Technology Co., Ltd. and 100% equity of Suzhou Samsung display Co., Ltd. At the same time, Samsung increased its capital to TCL Huaxing and became the second largest shareholder of TCL Huaxing. After the completion of the transaction, TCL Huaxing and Samsung will carry out closer strategic cooperation.

According to rough statistics, TCL has spent about 24.8 billion yuan (including the value of issued shares and convertible bonds) on multiple investments and mergers and acquisitions since 2020.

图片来源:华泰证券研报

Photo source: Huatai Securities Research Report

At present, the two leading domestic LCD panels are TCL and BOE.

Compared with the latter, TCL has no advantage in revenue scale.As of the third quarter of 2020, BOE's total revenue reached 101.688 billion, while TCL's revenue in the same period was 48.833 billion. However, TCL's advantage is obvious, that is, excellent cost control ability. For example, in terms of net interest rate, TCL Huaxing has been higher than other companies in the same industry all the year round.

数据来源:西部证券

Data source: Western securities

With the price of global LCD panel falling continuously in 2018, TCL's net profit in that year decreased significantly less than that of its competitors. As a result, TCL still maintained the momentum of expansion under the overcapacity of LCD panel, and its ranking rose from the fifth in the global LCD panel market to the second in one fell swoop.

At the end of 2019, with a number of manufacturers in Japan and South Korea successively announcing that they will withdraw from the LCD market, the oversupply of global LCD panels has ended, and the market vacancy will be filled by Chinese manufacturers such as BOE and TCL.

QQ data show that from the LCD TV panel production capacity, starting in 2020, Chinese mainland manufacturers accounted for more than 50%, and will account for nearly 70% share in the future, and the capacity of the Korean companies will be highly concentrated. The proportion of Korean manufacturers will shrink to 20% within the year, or even further shrink to 5%. The share of Taiwan and Japan manufacturers will be stable at around 30%.

数据来源:国联证券

Data source: Guolian securities

At present, TCL's high generation line has production advantages in super large size and high specification products. The 55 inch market share continues to be the first in the world, the 32 inch market share is the second in the world, and the 65 inch and 75 inch market share has risen to the second in the world. Large size has become the driving force of TV panel growth, gradually becoming the mainstream of TV market, and is expected to continue to pull up demand growth.

Take a look at our living room and the ubiquitous outdoor screen, this feeling will be more intense.

As TCL has chosen high-quality vertical alignment (HVA) technology in the technical route of large panel, which is consistent with the technical route of Samsung display's closing production line, TCL will undertake more orders for high-end and flagship TV display panels from Samsung Electronics as Samsung display exits the LCD market.

With such an advantage, TCL's performance has grown significantly as the LCD panel cycle bottomed out.

However, this does not guarantee that TCL can rest easy.

The battle between giants is uncertain

At present, LCD technology is facing the similar situation of CRT display technology. Although the LCD market demand is still very large, and the downstream demand also has great room to improve, judging from the technology trend, the impact brought by OLED is hard to stop.

In 2018, OLED panels accounted for more than 60% of the global smartphone display market. Another data shows that from 2014 to 2019, the global mobile phone OLED panel shipment area increased from 1227800 square meters to 4650800 square meters, with a compound growth rate of 30.52%. OLED will become the mainstream of panel display technology in the future, which has almost become the industry consensus.

The full name of OLED is organic light emitting diode. Different from LCD, OLED has the characteristics of self illumination. Because of its light emitting layer, flexible materials can be used for the base layer instead of rigid materials. At the same time, OLED screen is thinner than LCD, with high brightness, low energy consumption and high definition. Because LCD is not used, it has large wide angle and will not transmit blue light, which affects vision.

Of course, OLEDs are not perfect. Because the technology is not mature enough, it also faces many problems such as mass production and performance. For example, OLED screen has a relatively short service life and is easy to burn.

At present, small and medium-sized monochrome, multicolor and color OLED devices have reached the level of mass production, while large-scale full-color devices are still in the stage of research and development. In terms of market share, South Korean companies Samsung and LG account for 90% of the global market. Samsung's orientation is in small and medium size OLEDs, and LG's orientation is in large size OLEDs.

Therefore, although South Korean enterprises are losing money in this field, they have to pay attention to another factor, that is, shrinking the front line and focusing on the more promising OLED.

This is also the reason why some investors think that once Samsung controls the production cost of OLED, it will have a significant impact on domestic panel manufacturers.

图片来源:社交平台

Image source: social platform

Of course, TCL, which has learned from the past, is also learning from the future.

For example, TCL is the first enterprise to carry out the research and development of mini LED technology and realize the mass production of mini LED TV.

Mini LED (sub millimeter light emitting diode) is a comprehensive upgraded version of LCD. It adopts LCD with mini LED backlight, which can greatly improve the effect of existing LCD screen. However, this technology is still a screen display technology, compared with the real OLED display, the display effect is still far behind.

In August 2020, Li Dongsheng also revealed that the 8.5-generation printed OLED production line in Guangzhou will start construction in 2021, and it is expected that the production line will light up in 18 months, which is expected to become the first 8.5-generation printed OLED production line in the world.

图片来源:TCL

Photo source: TCL official website

In addition, TCL's research on qled (quantum dot technology) started earlier. At present, Samsung is the only competitor in this field, but the mass production of qled is still very far away. We set up a joint laboratory with San'an to focus on the development of microled technology, strategically invest in joled, accelerate the industrialization and mass production of printed OLED, and plan to build a new printed OLED production line in 2021.

At present, TCL also has the qualification to compete with Korean enterprises in the panel field.After 2018, Samsung and LGD have suspended the new investment plan of OLED mobile phone panel to maintain the current production capacity. TCL has been catching up. TCL Huaxing plans to continue to invest in the T5 project on the basis of the current optical valley T3 and T4 projects, which will be the second flexible OLED production line of Huaxing in Wuhan.

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