TCL Electronics accelerates the implementation of diversified development strategies and establishes an open smart home system

HONG KONG, October 29, 2018 -- TCL Electronics Holdings Limited ("TCL Electronics" or the "Company", HKEx stock code: 01070.HK) today announced that for the nine months ended September 30, 2018 and three Monthly unaudited latest financial and operating data.

TCL Electronics accelerates the implementation of diversified development strategies and establishes an open smart home system

performance review

With the completion of the name change of TCL Electronics, while consolidating and enhancing the existing TV business, the company has gradually implemented strategic transformation and developed diversified businesses to increase profit growth points. In the first three quarters of 2018, the company's business operations performed well. Both sales volume and turnover maintained a significant growth trend. Gross profit margin increased steadily, expenses were controlled, and profitability continued to increase.

The global layout has driven strong sales growth. The sales volume of LCD TVs in the first three quarters exceeded 21.12 million units, a year-on-year increase of 31.1%, and achieved 82.5% of the original annual target of 25.6 million units; LCD TV sets in the third quarter The sales volume was 7.95 million units, a year-on-year increase of 22.1%, a record high in a single quarter. In view of the better-than-expected sales performance, the company is pleased to announce that it has raised its full-year sales target to 28.3 million units.

In the first three quarters, turnover increased by 16.1% year-on-year to HK$32.79 billion, a record high in the first three quarters; gross profit increased by 17.7% year-on-year to HK$4.97 billion, and gross profit margin increased by 0.2 percentage points year-on-year to 15.1%.

The overall product structure continued to be optimized and the product strength continued to improve. The sales volume of smart TVs and 4K TVs increased significantly year-on-year, with sales volume of 15.21 million units and 6.11 million units, representing a year-on-year increase of 49.1% and 63.6% respectively.

The sales volume in overseas markets continued to grow, with outstanding performance, proving that the global strategic layout has achieved remarkable results. In the first three quarters, the sales volume of LCD TVs increased significantly by 34.5% year-on-year to 13.54 million units, and the turnover also increased significantly by 32.3% year-on-year to HK$19.57 billion. The product and brand upgrade strategy has achieved remarkable results, and each key market ranks high.

The sales volume in the Chinese market continued to increase. The sales volume of LCD TVs in the Chinese market in the first three quarters was 7.58 million units, a year-on-year increase of 25.4%.

The monetization ability of Internet commerce was further highlighted. The revenue for the first three quarters reached RMB 200 million, which was 90.9% of the original target, a substantial increase of 205.0% year-on-year. The annual revenue target was raised from RMB 220 million to RMB 260 million.

The international product and brand upgrade strategy is remarkable. In July this year, the TCL R6 series won the annual Editor's Choice Award (Editor's Choice) of CNET, a well-known American electronic product media evaluation agency; the new spring product C6 won the European IFA exhibition in August. "2018-2019 Best Buy LCD TV" of the highly-renowned EISA Award, which is recognized as the most authoritative honor for audio-visual consumer electronics products in Europe; at the same time, X8 QLED TV has won the IFA product technology innovation representing the forefront of display technology innovation in one fell swoop "Display Technology Gold Award" in the grand prize. It has been recognized by the industry, which is a high recognition of the picture quality and sound quality of TCL TV products.

Accelerate the implementation of the diversified development strategy in an all-round way, enter the smart AV market and the commercial blue ocean market, and establish an open smart home system with smart TV as the terminal.

The sales volume of TV sets in the first three quarters exceeded 21.12 million sets, and the turnover hit a record high for the same period; the annual sales volume target was raised to 28.3 million sets

TCL Electronics' LCD TV sales volume maintained rapid growth in the first three quarters and the third quarter: LCD TV sales volume in the first three quarters was 21.12 million units, a year-on-year increase of 31.1%, and the original annual target of 25.6 million units has been achieved of 82.5%. Among them, overseas sales performed brilliantly, proving that the global strategic layout has achieved remarkable results. The sales volume of LCD TVs in the third quarter was 7.95 million units, a year-on-year increase of 22.1%, a record high in a single quarter. In view of the better-than-expected sales performance, the company is pleased to announce that it has raised its full-year sales target to 28.3 million units. According to Sigmaintell's data, TCL Electronics has a global TV sales market share of 11.8% in the first half of 2018, ranking third, and the only Chinese TV brand that ranks among the top three in the world.

The company adhered to the strategy of high-quality products, continued to improve its product structure, and continued to enhance its product strength. In the first three quarters, the overall sales of smart TVs and 4K TVs increased significantly year-on-year, with sales of 15,209,174 and 6,110,057 sets respectively. , an increase of 49.1% and 63.6% year-on-year.

The company continued to reduce costs and increase efficiency, the advantages of scale effect were prominent, expenses were controlled, and profitability continued to increase. Turnover in the first three quarters increased by 16.1% year-on-year to HK$32.79 billion, a record high in the first three quarters; gross profit increased by approximately 17.7% year-on-year to approximately HK$4.97 billion; gross profit margin reached 15.1%, an increase of 0.2 percentage points year-on-year.

Business in overseas markets: the advantages of scale effect are highlighted, and the operating performance of various regions continues to improve significantly

TCL Electronics insisted on deepening its global strategic layout, continued to expand sales channels, and expanded scale effects. The sales volume in various overseas regions continued to increase significantly, the brand influence continued to strengthen, and the gross profit margin increased significantly.

Sales volume: In the first three quarters, the sales volume of LCD TVs in overseas markets increased significantly by 34.5% year-on-year to approximately 13.54 million sets.

North American market: Accelerating channel penetration, the sales volume in the first three quarters increased by 30.7% year-on-year; according to the latest market research report by NPD, the company further jumped to the second place in the North American sales volume market share ranking in July and August this year.

Emerging Markets: Maintaining a good growth trend, the sales volume in the first three quarters increased by 38.3% year-on-year, of which the sales volume in Brazil increased by 52.2% year-on-year. According to the latest GfK report, the company ranked third in the Philippines in terms of market share in terms of sales volume from January to August 2018, fourth in Thailand and Vietnam, and fifth in Australia.

European market: The sales volume in the first three quarters increased by 60.3% year-on-year, among which France, Germany, Spain and other regions continued to exert strong efforts to promote the increase in sales volume; the market share of sales volume in France rose one place to third (Data source: GfK ).

Turnover: Sales of LCD TVs in overseas markets for the first three quarters increased significantly by 32.3% year-on-year to approximately HK$19.57 billion.

Gross profit margin: Thanks to the drop in screen prices, the improvement of product structure, and the effect of the product and brand upgrade strategy, the gross profit margin of LCD TVs in overseas markets improved significantly in the first three quarters, up 1.2 percentage points year-on-year to 12.2%, and in the third quarter increased by 2.5% year-on-year percentage points to 13.1%. Among them, the gross profit margin of self-owned brands in the first three quarters increased by 2.5 percentage points year-on-year to 14.6%, and in the third quarter increased by 3.1 percentage points year-on-year to 15.3%.

In the first three quarters, the sales volume in various key overseas markets continued to rise, ranking among the top in the market, and the operating performance was significantly improved year-on-year.

Business in the Chinese market: Adhere to the high-quality strategy and continue to optimize the product structure

TCL Electronics adheres to the strategy of high-quality products and continues to optimize its product structure. The gross profit margin of the Chinese market in the first three quarters improved year-on-year.

Sales volume: The sales volume of LCD TVs in the Chinese market in the first three quarters was approximately 7.58 million units, a year-on-year increase of 25.4%.

Turnover: In the first three quarters, the turnover of LCD TVs in the Chinese market dropped slightly by 2.9% year-on-year to approximately HK$12.97 billion.

Gross profit margin: In the first three quarters, the gross profit margin of LCD TVs in the Chinese market remained stable, up 0.3 percentage points year-on-year to 19.6%, of which the gross profit margin of self-owned brands increased by 1.4 percentage points year-on-year to 22.8%.

According to the latest CMM omni-channel data, in the first three quarters of 2018, the TCL TV brand price index increased from 101 in the same period last year to 112, and the ranking increased from the third to the second in the same period last year.

Internet business: Strong improvement in commercial monetization capability, raising annual revenue target to RMB 260 million

TCL Electronics continues to strengthen platform construction and user operation, comprehensively promote the new business model of "smart manufacturing + Internet", deepen the "1+1+N" strategic cooperation model, and strive to enhance the commercial realization capability of Internet business.

Scale continues to expand, user stickiness continues to increase

As of September 30, 2018, the total number of active users of TCL smart TVs increased by 34.7% year-on-year to 29,310,181, and the number of daily active users in the first three quarters of 2018 increased by 40.6% year-on-year to 13,893,154. The scale of Internet TV business users continued to grow significantly, including:

The video business has a total of approximately 25.42 million users, a year-on-year increase of 22.9%;

The number of paying users reached approximately 4.32 million, representing a year-on-year increase of 136.0%; and

The average daily boot time of users is up to 5.5 hours, a year-on-year increase of 12%. Through the refined operation of users, user stickiness is further enhanced.

Business monetization ability further improved; full-year revenue target raised to RMB 260 million

TCL's electronic Internet platform operating capabilities continued to improve. In the first three quarters of 2018, revenue was approximately RMB 200 million, a substantial increase of 205.0% over the same period last year. It has achieved 90.9% of the original annual target of RMB 220 million, of which the revenue from advertising business reached RMB 200 million. About RMB 92.118 million, video paid share and membership card revenue reached about RMB 84.886 million, a significant increase of 137.2% and 208.9% year-on-year respectively. The Internet business performed well in the first three quarters, and its monetization ability continued to increase. The annual revenue target was raised from RMB 220 million to RMB 260 million.

Product and brand upgrade strategies have achieved remarkable results, and brand strength has been recognized by all walks of life

In July this year, the TCL R6 series won the annual Editor's Choice Award from CNET, a well-known American electronic product media evaluation agency; "2018-2019 Best Buy LCD TV", this award is recognized as the most authoritative honor for audio-visual consumer electronics products in Europe; at the same time, X8 QLED TV won the "Display Technology Gold Award" in the IFA Product Technology Innovation Award, which represents the forefront of display technology innovation. "; TCL Electronics has been recognized by the industry, which is a high recognition of the picture quality and sound quality of TCL TV products; in September, TCL Electronics was officially included in the list of stocks in the Hang Seng Hong Kong Stock Connect Index; in addition, TCL was listed on the global digital economy published by Forbes for the first time. Ranked 79th in the top 100 list, becoming the only Chinese home appliance brand on the list; and among the top 50 Chinese brands going overseas in 2018 jointly released by Facebook and KPMG. TCL's electronic products and brand upgrading strategies have achieved remarkable results. Brand strength has been recognized by all walks of life.

Continue to promote the diversification strategy to start commercial display and smart home business

TCL Electronics has fully accelerated the implementation of its diversified development strategy. After entering the smart AV market in the first half of the year, it will continue to make efforts to transform and upgrade in the third quarter. The company actively grasped the huge demand gap for commercial displays in the new economic era, completed the acquisition of TCL Commercial Information Technology (Huizhou) Co., Ltd. ("Commercial Information Technology") in the third quarter, entered the commercial blue ocean market, and achieved "B2C and B2B dual-track development"; At the same time, the company has reached an all-round strategic cooperation with Sunshine 100, the first of its kind in the industry, and will work together to build a shared smart apartment and promote the official implementation of the leading domestic smart home apartment.

In the future, while gradually implementing strategic transformation and diversified business development, TCL Electronics will focus on consolidating and enhancing the existing TV business. The Chinese market will adhere to the high-quality strategy and continue to improve product strength. The overseas market will deepen the globalization strategy. Consolidate the North American and South American markets, increase the market share and profitability in Europe and Southeast Asia, explore emerging markets such as India and Russia, further enhance the TCL brand's share and brand power in the global market, and improve the global business layout. At the same time, TCL Electronics will continue to increase investment in research and development, accelerate the development of artificial intelligence and Internet applications, and strive to become an international electronics industry group to create value for shareholders.

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