TCL Electronics (1070) H1 2024 earnings summary

Executive summary

• Revenue for H1 2024 rose 30.3% year-over-year to HK$45,494 million, with profit attributable to owners up 146.5% to HK$650 million and adjusted profit up 147.3% to HK$654 million, driven by strong performance in display, internet, and innovative businesses.

• Market share increased, with global TV shipments up 9.2% to 12.52 million units and significant breakthroughs in China, US, and Europe.

• Operational efficiency improved, with expense ratios reduced and a net gearing ratio of 0.0% as of 30 June 2024.

• Maintained a high dividend payout policy, with a 50% payout ratio in 2023, though no interim dividend was declared for 2024.

• Strategic focus on mid-to-high-end products, globalisation, and innovation led to brand index improvement and operational gains.

Financial highlights

• Gross profit increased 19.2% year-over-year to HK$7,748 million, with gross margin at 17.0%, down 1.6 percentage points.

• Profit after tax surged 106.6% to HK$653 million, and basic EPS rose to HK26.69 cents from HK10.92 cents.

• Expense ratio reduced by 2 percentage points to 13.7%.

• Inventory turnover days improved to 69 days, and cash conversion cycle shortened to 36 days.

• Gearing ratio remained at 0%, with cash and cash equivalents at HK$9,851 million.

Outlook and guidance

• Continued focus on mid-to-high-end strategy, global branding, and technological innovation to capture market share and drive sustainable growth.

• Plans to expand all-category marketing, innovative businesses (including photovoltaic and AR/XR), and overseas markets.

• Emphasis on operational efficiency, cost control, and data-driven operations.

• Market environment expected to remain steady in H2 2024, with ongoing competition in certain segments.

• Operational goal: net profit growth to outpace gross profit and revenue growth.