Core Viewpoint - TCL Technology reported a revenue of 165 billion yuan for 2024, representing a year-over-year decline of 5% [1] - The company achieved a gross margin of 11.7%, down 3.0 percentage points year-over-year, and a net profit attributable to shareholders of 1.56 billion yuan, a decrease of 29% compared to expectations of 2.48 billion yuan, primarily impacted by the new energy photovoltaic business [1] - For Q1 2025, TCL recorded a revenue of 40.1 billion yuan, a slight increase of 0.4% year-over-year, with a gross margin of 13.3%, up 1.7 percentage points year-over-year and 2.8 percentage points quarter-over-quarter, and a net profit of 1.01 billion yuan, a significant increase of 322% year-over-year [1] Group 1: Q1 2025 Performance - The display business achieved a revenue of 27.5 billion yuan in Q1 2025, an 18% year-over-year increase, with a net profit of 2.33 billion yuan, up 329% year-over-year and 30% quarter-over-quarter [2] - The improvement in the display business was mainly driven by national subsidy policies, leading to a simultaneous increase in both volume and price of LCD panels [2] - The company maintained a strong position in the large-size panel market, ranking second globally, with the highest market share in 65-inch and 75-inch products, and an increase in the shipment proportion of 65-inch and above products to 58% [2] Group 2: Q2 2025 Outlook - For Q2 2025, the company expects stable prices for large-size LCD panels despite a recent slowdown in customer orders, as production control measures will be implemented [2] - The company anticipates an acceleration in the expansion of mid-size IT and automotive businesses as the T9 production line reaches full capacity, which will further increase the revenue share from mid-size products [2] - The OLED business is expected to see continued improvement in profitability in Q2 2025 due to strong orders from high-quality clients and an increase in the shipment proportion of high-end OLED products [2] Group 3: Target Price and Ratings - The company maintains a target price of 5.80 yuan and a "buy" rating, with a 3% and 32% upward revision of profit forecasts for 2025 and 2026, respectively, to 6.84 billion yuan and 10.63 billion yuan [3] - The introduction of a profit forecast for 2027 is set at 13.73 billion yuan, with expected BPS of 3.20, 3.76, and 4.49 yuan for 2025, 2026, and 2027, respectively [3] - The target price is based on a 1.81x PB for 2025, reflecting a premium over the comparable company average of 0.86x, driven by an increase in global market share of LCD panel capacity [3]

Investment Rating - The investment rating for the company is "Buy" with a target price of 5.80 RMB [6][4]. Core Views - The company's performance in Q1 2025 shows significant improvement in profitability, driven by government subsidy policies that have led to an increase in both volume and price for LCD panels [1][2]. - The company has adjusted its earnings forecasts for 2025 and 2026 upwards by 3% and 32% respectively, reflecting better-than-expected supply-demand dynamics in the panel industry [4]. Summary by Sections Financial Performance - In 2024, the company achieved revenue of 165 billion RMB, a year-on-year decrease of 5%, with a gross margin of 11.7% and a net profit attributable to shareholders of 1.56 billion RMB, down 29% year-on-year [1]. - For Q1 2025, the company reported revenue of 40.1 billion RMB, a slight increase of 0.4% year-on-year, with a gross margin of 13.3%, up 1.7 percentage points year-on-year, and a net profit of 1.01 billion RMB, up 322% year-on-year [1][2]. Business Segments - The display business generated revenue of 27.5 billion RMB in Q1 2025, representing an 18% year-on-year increase, with net profit rising 329% year-on-year [2]. - The company holds the second-largest global market share in large-size TV panels, with the highest market share in 65-inch and 75-inch products, and an increasing shipment ratio of 58% for products 65 inches and above [2]. Future Outlook - For Q2 2025, the company expects stable pricing for large-size LCD panels despite a slowdown in customer orders, as production control measures are anticipated to be implemented [3]. - The company aims to accelerate the expansion of its mid-size IT and automotive businesses as its T9 production line reaches full capacity, which is expected to enhance revenue from these segments [3]. Valuation Metrics - The target price of 5.80 RMB is based on a price-to-book ratio of 1.81x for 2025, compared to a peer average of 0.86x, reflecting the company's increasing global market share in LCD panel production [4]. - The company’s earnings per share (EPS) for 2025 is projected to be 0.36 RMB, with a return on equity (ROE) of 5.72% [10].