Huachuang Securities issued a research report stating that industrial chain empowerment enhances TCL ELECTRONICS' (01070) competitiveness, with overseas market share expected to continue rising. The company is capitalizing on industrial structure upgrade trends, which should lead to profit expansion. The firm forecasts EPS for 2025-2027 to be HK$0.95, HK$1.12, and HK$1.31, respectively. Using a DCF valuation method, a target price of HK$16.0 is set, corresponding to 2025-2027 P/E ratios of 13x, 11x, and 10x. This marks the initiation of coverage with a "Strong Buy" rating.

The core views from Huachuang Securities are as follows: Structural opportunities are emerging in the existing stock TV market. The global TV industry has entered an era of stock competition driven by structural upgrades. Future core drivers lie in larger screen sizes and advancements in display technology. Consumer demand for large-screen TVs is growing robustly; data from Omdia shows the global average TV screen size increased from 42.5 inches in 2017 to 52 inches in 2023. Regarding display technology iteration, Mini LED TVs have become a definitive mainstream upgrade direction, with market penetration rising rapidly. According to DSCC, Mini LED TV shipments reached 8.2 million units in 2024, a 100% year-on-year increase, surpassing OLED TV shipments of 7 million units.

Concentration in the upstream supply chain grants Chinese companies stronger competitiveness, and industry competition is intensifying. From the TV upstream perspective, global LCD panel capacity has consolidated in Mainland China. With the full exit of South Korean firms like Samsung and LG, Chinese panel manufacturers now hold significant influence in the chain; Mainland Chinese panel makers' share of global LCD panel shipment area exceeded 70% in 2024. Leading panel manufacturers' strategy of producing according to demand is expected to mitigate severe cyclical price fluctuations, creating a more stable profit environment for downstream finished product assemblers.

Regarding downstream demand, although global TV demand remains stable at around 200 million units annually, market concentration has increased. Omdia data shows the global TV CR4 (four-firm concentration ratio) rose from 45% in 2018 to 57% in H1 2025. However, examining the share composition reveals Samsung's share remained stable around 19%, while Hisense Visual Technology and TCL ELECTRONICS' shipment shares increased from 6.7%/8% in 2018 to 13.2%/13% in 2023, respectively. Meanwhile, LG's shipment share declined from 12.3% to 10.95%. This shift indicates the gap between Chinese and South Korean companies is narrowing further.

TCL ELECTRONICS is transforming into a global leader driven by both profit and market share. In terms of product mix, the average size of TCL TV shipments has continued to increase, growing from 52.4 inches in 2021 to 63.3 inches in 2024. In the large-size segment, the share of TVs 65 inches and above increased from 11.1% in 2021 to 29% in 2025. For Mini LED TVs, TCL's global Mini LED TV shipment market share rose by 4.1 percentage points year-on-year to 28.7% in H1 2025, ranking first in the market. In the premium market, TCL's TV market share increased from 10% to 20% in less than two years, steadily capturing share from South Korean competitors.

In terms of global market share, TCL ELECTRONICS' overseas share continues to grow. According to Tonglian and Euromonitor data, its North American market share increased from 4.5% in 2016 to 18% in 2023; during the same period, its Western European market share rose from 2% to 6%. The report believes that with expanded channels and enhanced product strength, overseas market share will increase further.

Leveraging group industries to build a second growth curve, the company utilizes its brand influence and global channel network to empower innovative business development. Among these, the distributed photovoltaic business, backed by group company TCL Zhonghuan, saw revenue grow 104% year-on-year to HK$12.87 billion in 2024. Meanwhile, the full-category marketing business, distributing the group's white goods products, creates efficient synergy with the core black goods business and has become a stable growth point. Additionally, the company's incubated AI+AR glasses business holds a leading position; according to CINNO Research data, in Q1 2025, Leinuo held a 45% sales share in the domestic AI+AR glasses market, firmly ranking first in the industry.

Risk warnings include a significant increase in panel prices; intensified market competition; and foreign exchange rate fluctuations.