GTHT Securities has issued a research report maintaining its earnings forecasts for TCL ELECTRONICS (01070). The firm projects earnings per share (EPS) for 2026-2028 to be HK$1.2, HK$1.5, and HK$1.8 respectively, representing year-on-year growth of +23%, +25%, and +20%. This corresponds to price-to-earnings (P/E) ratios of 12, 10, and 8 times.

Applying a 15x P/E multiple for 2026, benchmarked against industry peers, the firm arrives at a target price of HK$18.2, leading it to maintain an "Add" rating. The report views the company as a stock with strong alpha, low valuation, and high dividend potential, noting its ongoing gains in global market share and further progress in premiumization and globalization.

First-Half 2026 Performance Preview

The company has released a preliminary forecast for the first half of 2026, anticipating revenue in the range of HK$60.3 billion to HK$65.7 billion, representing a year-on-year increase of 10% to 20%. Adjusted net profit attributable to shareholders is expected to be between HK$1.48 billion and HK$1.65 billion, a year-on-year rise of 40% to 56%.

For the second quarter of 2026 specifically, revenue is projected to be HK$31.1 billion to HK$36.5 billion, up 6% to 24% year-on-year, with adjusted net profit attributable to shareholders estimated at HK$1.10 billion to HK$1.27 billion, an increase of 22% to 41% year-on-year.

Steady Growth in Core TV Business

Using the mid-point figures, the company's Q2 2026 revenue grew approximately 15% year-on-year. The report expects domestic market structural upgrades to be a primary driver, citing data showing TCL's main brand gained a combined 1.0 percentage point in online and offline sales share in Q2 2026, with average selling prices rising 7% year-on-year.

Overseas sales are anticipated to continue their robust growth trajectory. The firm believes the company's globalization and premiumization strategy is advancing steadily, supported by major sporting events like the FIFA World Cup, leading to sustained gains in international market share.

Enhanced Profitability from Product Mix Improvement

Based on the mid-point of the guidance, the company's adjusted net profit margin for Q2 2026 was approximately 3.5%, an improvement of 0.4 percentage points year-on-year. As the globalization and premiumization strategies are further implemented, the TV business maintains its global leadership while continuously improving its product mix, leading to a notable enhancement in gross margin performance.

Furthermore, the monetization capability of the high-margin internet business has strengthened, and the profitability of the small-to-medium sized display segment has also improved.

Key Risk Factors

Potential risks highlighted include fluctuations in raw material prices, intensifying industry competition, and macroeconomic uncertainties.