Huaxi Securities has issued a research report maintaining an "Overweight" rating on TCL Electronics (01070). TCL Electronics has signed a memorandum of understanding with Sony to establish a joint venture, in which TCL Electronics will hold a 51% stake and Sony will hold 49%. The joint venture will primarily take over Sony's home entertainment business.
Through this strategic collaboration with Sony, both parties can leverage complementary business strategies to enhance TCL's overall competitiveness. The main viewpoints of Huaxi Securities are as follows.
The event overview states that according to the company's January 20th announcement, TCL Electronics has reached a memorandum of understanding with Sony to form a joint venture. TCL Electronics will hold 51% and Sony 49%. The venture will primarily take over Sony's home entertainment business and conduct integrated global operations—from R&D, design, and manufacturing to sales, logistics, and customer service—for products including TVs and home audio systems. Furthermore, the joint venture's products will be empowered by the Sony and BRAVIA brands.
The strategic collaboration with Sony is expected to achieve complementary advantages. The joint venture will integrate Sony's advanced technologies accumulated in audio and video, brand value, and operational capabilities like supply chain management. It will also fully leverage TCL's strengths in advanced display technology, global scale advantages, comprehensive industrial layout, cost efficiency, and supply chain. By forming this strategic partnership and consolidating both parties' superior resources to jointly create new growth drivers, it is beneficial for leveraging strategic business complementarity to enhance TCL's comprehensive competitiveness.
The collaboration may assist TCL in accessing the global high-end TV market. According to Sigmaintell statistics, TCL's global TV shipment volume is projected to reach 30.7 million units in 2025, representing a brand market share of approximately 13.9%. Sony's global TV shipments are 4.1 million units. If the joint venture is established and commences smooth operations by 2027, the combined market share of TCL and Sony could potentially reach 16.7%, further increasing the brand's market share. In the TV sector, TCL's main brand covers segments from entry-level to high-end price points, while its innovative sub-brand, Thunderbird, focuses on value-for-money and the youth market. Sony specializes in the high-end market, with years of deep cultivation, particularly in overseas premium markets. According to AVC Revo data, Sony's shipments within Asia-Pacific, North America, and Western Europe accounted for 80% of its total in 2025. This collaboration is expected to help TCL further increase its market share and influence in key overseas regions, while also aiding its expansion into overseas high-end markets.
TCL previously issued a positive profit alert, showing strong performance. TCL Electronics released a positive profit forecast on January 18th, anticipating an adjusted net profit attributable to shareholders of HK$2.33-2.57 billion for 2025, a year-on-year increase of 45%-60%. This was driven by its large-size display business maintaining a leading market position with significant results from its mid-to-high-end shift, its internet business sustaining high profitability, continuous expansion of its innovation business scale, and equity incentives boosting team morale to drive performance improvement.
Regarding investment advice, based on the profit forecast, the institution has adjusted the company's earnings projections. It expects the company to achieve operating revenues of HK$117.1/132.9/149.2 billion for 2025-2027, and net profits attributable to shareholders of HK$2.42/2.91/3.35 billion (previous values for 2025-2027 were HK$2.35/2.82/3.23 billion). This corresponds to EPS of HK$0.96/1.16/1.33 (previous values for 2025-2027 were HK$0.93/1.12/1.28). The closing price of HK$12.50 on January 21, 2026, corresponds to P/E ratios of 13/11/9x for 2025-2027. The "Overweight" rating is maintained.
Risk warnings include uncertainties in international trade, adjustments in market demand, intensified competition from technological changes, and collaboration progress falling short of expectations.
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