TCL Group: 2019 Q1 Results Announcement, CSOT is in the midst of transformation and transition

TCL Group released its first quarter 2019 performance announcement.

During the reporting period, TCL Group achieved operating revenue of 29.6 billion yuan, a year-on-year increase of 15.5%; of which main business revenue was 29.33 billion yuan, a year-on-year increase of 15.2%; net profit was 1.01 billion yuan, a year-on-year increase of 27.7%; of which net profit attributable to shareholders of listed companies was 779 million yuan, a year-on-year increase of 6.6%.

During the reporting period, TCL Group's net profit margin increased to 3.40%, its expense ratio decreased by 1.88 percentage points year-on-year, its return on net assets increased by 0.16 percentage points year-on-year, and its debt-to-asset ratio decreased to 68.1%.

In mid-2018, TCL reorganized and divested its terminal and supporting businesses to optimize its industrial and capital structure, focus on the development of its core businesses, and transform itself into a high-tech industrial group.

The restructuring plan was reviewed and approved by the company's first interim shareholders' meeting in 2019 on January 7, 2019, and the full transaction price of the restructuring was received on April 15, 2019. The restructuring target will no longer be included in the accounting scope of TCL Group (out of the table) from the second quarter of this year. Excluding the target assets, TCL Group's pro forma net profit in the first quarter was 925 million yuan, a year-on-year increase of 21.6%, of which the net profit attributable to shareholders of the listed company was 769 million yuan, a year-on-year increase of 5.18%, and the net profit margin reached 7.76%. The asset-liability ratio dropped to 59.1%, the capital structure was greatly optimized, and profitability was significantly improved.

It is worth mentioning that during the reporting period, Huaxing Optoelectronics achieved a shipment area of ​​5.56 million square meters, a year-on-year increase of 17.1%; operating income of 7.25 billion yuan, a year-on-year increase of 12.1%; EBITDA rate of 28.2%, and net profit of 683 million yuan, a quarter-on-quarter increase of 35.2% compared with the fourth quarter of last year. Affected by the global economic downturn and the trough of the industry cycle, the prices of Huaxing Optoelectronics' main products have dropped significantly compared with the same period last year.

TCL Group stated that CSOT has vigorously promoted reform and transformation and continued to maintain its global industry-leading operating efficiency and benefit advantages: (1) further optimized organization and processes, and continued to reduce costs and increase efficiency; (2) improved product technology capabilities, optimized product structure and increased profits; (3) the two large-size and small-size industrial bases took advantage of intensive production to reduce industrial structural costs; (4) the T3 factory was fully sold and fully produced, with the shipment area increasing by 5.29 times year-on-year and sales revenue increasing by 3.95 times year-on-year, achieving good operating profits.