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"Can't say that there is no such consideration." Li Dongsheng, chairman and CEO of TCL Corporation, said in an interview with reporters yesterday that the additional issuance will make TCL's finances more stable and will facilitate the launch of new projects.
Li Dongsheng admits that although TCL has a good cash flow and ample cash, there are some abnormal factors, mainly entrusted wealth management deposits, used to hedge the exchange rate risk. After deducting this part of the account, TCL’s cash is on hand. Not as much on the books. In addition, TCL sales revenue increased by 31% in the first half of the year, total assets are improving, and asset-liability ratio has also increased. TCL's shareholding in Huaxing Optoelectronics has to use 3.2 billion yuan in cash, and it is still a little difficult to rely solely on its own funds. Therefore, it is necessary to properly issue additional funds to improve the financial structure of the company.
He also said that after increasing the 30% stake in Huaxing Optoelectronics, the capital reserve and net profit of TCL Group will increase accordingly, and the increase will be greater than the dilution of the earnings per share.
Huaxing will introduce new technology
Last week, TCL Group ushered in the best semi-annual report in history. In the first half of 2013, revenue was 39.06 billion yuan, up 31.5% year-on-year; net profit was 1.07 billion yuan, up 122.2% year-on-year. Huaxing Optoelectronics has become the largest source of profit, creating a profit of 890 million yuan.
In this regard, Li Dongsheng believes that the current panel industry is a cycle in which supply and demand tend to be balanced, without much risk. The second half of the year is the peak season. He is cautiously optimistic about the sales revenue and profit of Huaxing Optoelectronics in the second half of the year.
Li Dongsheng revealed that Huaxing Optoelectronics is still exploring the possibility of a second factory. It has been researched for half a year. If it is launched, it will introduce new technologies such as metal oxide and AMOLED.
In the second half of this year, 4K (Ultra HD) LCD TVs will usher in an explosive period, while South Korea's Samsung and LG will also launch OLED TVs. Li Dongsheng believes that the current price of OLED TV is too expensive to constitute a threat to LCD TVs. 4K technology will expand the coverage of LCD (liquid crystal) TV and extend its life. Huaxing Optoelectronics has produced a 55-inch 4K panel, aiming to launch a 48-inch 4K panel early next year to enhance competitiveness.
Color TV mobile phone strives for balance
In the first half of the year, the performance of TCL Group also had hidden concerns. In the case of multimedia business revenue growth of 20.3%, net profit decreased by 38.5% year-on-year; although the communication business had turned losses in the second quarter, the overall loss in the first half of the year was about 200 million Hong Kong dollars.
This year, TCL plans to achieve 18 million LCD TV sales, 18 million LCD panels and modules, and 18 million smartphones. At the same time of scale growth, how to balance quantity and profit has become the biggest challenge for TCL Group.
Li Dongsheng said that although the sales of domestic color TVs declined in June and July after the end of the policy of energy saving and benefiting people in June this year, the market has gradually recovered in August. He is cautiously optimistic about the market after September. "Some research companies predict that the domestic color TV market will have a 10% to 20% decline in the second half of the year. I am not so pessimistic."
For TCL Multimedia, Li Dongsheng said that profit growth is a big challenge. The product form and business model of smart TV are different from before, and hope to become a breakthrough in profit growth. However, he did not respond positively to the rumors that TCL and Iqiyi would jointly launch a smart TV.
Increasing the proportion of smartphones has become the key to improving the profitability of TCL's communications business. In the first half of the year, TCL sold more than 4 million smartphones. Li Dongsheng hopes that the global sales of TCL smartphones will reach more than 13 million in the second half of the year, and the domestic market will strengthen cooperation with e-commerce channels such as Jingdong.
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Li Dongsheng: TCL issuance is beneficial to the new project of Shangma
TCL Group (000100.SZ) recently proposed to issue additional financing of 2 billion yuan, of which 1.54 billion yuan will be used to pay for the repurchase of the remaining 30% equity of Huaxing Optoelectronics, and the remaining funds will be used to supplement the company's working capital. In the first half of this year, the cash flow of TCL Group's operating activities increased by 150% year-on-year to nearly 3.8 billion yuan. In this case, is there any additional financing, is it prepared for Huaxing Optoelectronics to launch the second 8.5 generation line?