How wide is the "moat" of TCL electronics?

Writing / high light

Edit / Wan Tiannan

"The key to investing in an enterprise is not how fast the company's revenue growth is, but the time that the company's competitive advantage and competitive advantage can last. Only with a large enough moat can the enterprise continue to bring investors to investors Come to a generous return. "

In 1993, Buffett proposed the concept of moat for the first time in the letter of shareholders. He told investors that the Economic Heshong River is a structural characteristics that companies can maintain their competitive advantages all year round. It is equally important.

In this era full of challenges and opportunities, in order to achieve long -term development, you must establish your own solid "moat".

As a brand standing in China for 40 years, TCL can still launch a impact on the consumer market in many rounds of global economy. It must have its unparalleled advantages and indestructible "moat".

In the first half of 2022, the global economic pressure was under pressure. The soaring price of commodities and energy caused by geopolitical conflicts has affected most countries around the world, bringing passive, difficult to solve input inflation, and economic recession.

This is the difficult moment of global companies. It is extremely testing the strategic fixed force and business layout of the enterprise. The generous "moat" also determines the state of survival of the enterprise.

In this context, TCL Electronics (01070) released 2022 mid -term results. TCL electronics achieved revenue of 33.679 billion Hong Kong dollars, which was the same as the same period last year, a slight decline of 3.6%year -on -year. Compared with the contraction of the scale of revenue, TCL electronic business improvement and efficiency increased the quality. In the first half of the year, gross profit of 5.782 billion Hong Kong dollars, an increase of 3.9%year -on -year; the overall gross profit margin increased by 1.3 percentage points year -on -year, reaching 17.2%; HK $ 100 million, a year -on -year increase of 4.9%.

Seeing the true chapter against the trend, the results are not easy in the current market environment. How did TCL electronics do? Where is the "moat"? Why can we maintain stable development in the trend?

Looking for answers with questions, we will re -examine TCL electronics and tap the secrets hidden behind TCL electronics.

Break through the mid -to -high end, explore differentiated competition

The global economic recession, the traditional home appliance industry is also difficult to speak. According to the general data of Ovi Cloud Network, the Chinese home appliance market achieved retail sales of 338.9 billion yuan in the first half of 2022, a year -on -year decrease of 9.3%. At the same time, Zhongyi Kang also expressed its views. From the short -term factors, the economic impact brought by the epidemic has exacerbated conservative consumption behavior, savings, liabilities, and low consumption gradually became popular, which put pressure on the sales of the home appliance market.

However, in such a market environment, a new trend has quietly appeared, and large -screen and full -scene products can be better than consumers. According to the statistics of Zhongyi Kang's data, in the first half of 2022, the overall market performance was weak, and the market size of 75 -inch and above products increased against the trend. Among them, the market size of 86 -inch and 98 -inch products was much higher than other size products.

TCL Electronics has noticed this trend very early, positioning strategy at "mid -to -high -end+large -screen", and the main development is developing MINI LED as its core smart screen business.

Mini LED refers to a LED chip with a size of 50-200 microns. Compared with traditional display, the MINI LED display effect is more delicate and bright. More importantly, the Mini LED has more cost advantages in large screen display, so it is called "next generation display technology". In this regard, TCL electronic layout, continuous investment, and establishing product advantages with the advantages of research and development.

As early as 2016, TCL Electronics took the lead in deploying the MINI LED industry chain. In 2018, it released the world's first Mini LED backlight TV and achieved mass production in 2019. It became the world's first MINI LED backlight TV mass production. Enterprise. The first advantage allows TCL Electronics to lead in the field of MINI LED television. In 2020, TCL Mini LED Zhiping's global share exceeded 90%. On this basis, due to the research and judgment of the future industry accelerated to intelligent and technological transformation, TCL Electronics continued to deeply cultivate MINI LED technology, and developed the upgraded version of MINI LED-QD-Mini LED technology, which became TCL electronics Its cutting -edge display technology.

QD-Mini LED has the technical advantages of LCD and OLED, which breaks through the industry technical problems of the huge amount of particle LED chips. It upgrades the noodle sources into pixel-level light sources. At the same time, the world's leading QLED technology is used to achieve realization The ultra -high contrast, ultra high brightness, ultra -high color gamut, and long life are the real next -generation mainstream large -screen display technology. Compared with OLED's self-optical technology, the QD-Mini LED greatly improves its peak brightness. At the same time, it solves the problem of long-term displayed scorching screens. It is also much better than the OLED screen in terms of cost, which can allow consumers Enjoy the optimal audiovisual experience.

More advanced technology brings more recognized products. The TCL electronic mid -term performance report shows that in the first half of 2022, the sales volume of 65 -inch and above TCL smart screen increased by 36.9%year -on -year, and the proportion of sales was significantly increased by 5.1 percentage points to 15.1%year -on -year. At the same time, sales of high -end products TCL Mini LED increased by 7.8%year -on -year, of which TCL Mini LED Zhiping sales in the Chinese market surged 31.2%year -on -year. It can be seen that the large -screen strategy of TCL electronics has made it steadily win in this counter -trend, and the upgrade of the product structure has driven the gross profit margin to break up upwards. The gross profit margin of the smart screen business has increased by 2.6 percentage points year -on -year. Obviously, in the strategy of "mid -to -high -end+large -screen", TCL electronics's global layout, research and development strength, and brand image "Trinity River" complement each other and achieve each other, and thus established the leading advantage of TCL electronics in the MINI LED industry. The leadership of "Global Overlord" is strongly competed.

Outside the smart screen, explore VR/AR and create a new growth curve

With the development of the times, the moat is not static.

In this regard, Zhang Lei, the founder of Gao Yan Capital, has proposed the concept of "dynamic moat", emphasizing that in the future business logic, enterprises must change from seeking winning to constantly pursuing new growth space, from static games to dynamic symbiosis Essence This coincides with the concept of the "high -building wall, extension of grain" by Bachelor Zhu Sheng more than 600 years ago.

The "dynamic moat" is particularly obvious in the strategy of TCL electronics. "Building a wall" means vertical essence, the case is the "mid -to -high -end+large -screen" play of the case; The moat and explore the VR/AR field.

2021 is the first year of the Yuan universe. Hardware, software, content, and applications have bred rich investment opportunities, and more and more capital poured into the track. According to VR gyroscope data, the global VR/AR industry segments have increased financing and acquisitions year by year. Among them, AR smart glasses were 14.85 billion yuan in 2021, and XR smart glasses would reach 24.07 billion yuan. By 2025, global AR glasses shipment shipments The amount is expected to reach 48 million units.

Smart glasses can be regarded as derivative applications displayed by smart screens. TCL Electronics cut into the VR/AR industry. It can directly copy the original advantages and use the three major weapons of "R & D+Brand+Globalization". The team and other aspects continued to make efforts to seize the display entrance of the next generation of information revolution in the first year of the universe.

At the channel side, TCL Electronics has the channels for global retail and front -line operators; on the production and research end, TCL Electronics has the support of Huaxing Optoelectronics and TCL Research Institute in Si Micro LED technology, voice, perception and understanding and machine visual algorithm technology to seize the frontier Technology and industrial results; on the production side, there are decades of production and supply chain precipitation; at the team side, senior experts and authoritative consultants in the field of optical/software/algorithm.

At present, TCL Electronics has begun to arrange product matrix, and has released a number of smart glasses products. Among them, 2D and 3D full high -definition viewing is supported, which provides users with XR smart glasses equivalent to watching a 140 -inch giant screen with a 40 -meter 140 -inch giant screen -TCL NXTWEAR Air, which has been released online and offline in the Chinese market in April; In addition, on CES 2022, TCL Electronics also shows the industry's first Micro LED holographic light waveguide AR smart glasses in the industry, and won the 2022 IF design award. A few days ago, TCL Electronics also announced cooperation with the ideal car and iQiyi to expand the richer smart glasses application scenarios.

The dynamic moat of TCL electronics shows a virtuous cycle: under the blessing of the Trinity, TCL Electronics can be reused in new fields and product exploration. The application efficiency is more efficient, the product results are outstanding, and the user's mind is the first to increase the consumer's TCL to TCL to TCL The recognition of the brand image has further strengthened its moat, bringing a long -lasting competitive advantage to TCL electronics.

The channel layout is complete, and the fate of the photovoltaic air outlet is developing rapidly

In the "three -driving carriage" of a virtuous circle, TCL electronics brand and R & D strength are more like "spear". Sprint in new products and new areas. The advantages of global channels are "shields". Product layout.

As early as 2004, TCL Electronics began a global layout. Although I encountered setbacks when I acquired the French Thomson color TV business, this also caused TCL electronics to gain valuable experience. "Rebirth" described, "When the eagle needs to experience a self -innovation of reborn, it must pull out the beak, pull out the nails, and fade the feathers to get rebirth." Now, TCL Electronics is not only reborn to be reborn. And at the top of the world.

According to the latest reports of GFK and NPD, the market share of TCL smart screen sales has ranked among the top five in more than 20 countries and regions overseas and the market share increased year -on -year. Second, the United States, Canada, Italy, etc. ranked third.

TCL Electronics has opened up the globalization channel. It benefits not only smart screen products, but TCL electronics also achieves multi -product coverage. The most prominent of which is the global distribution business of empty ice (air conditioning, refrigerator, washing machine), and the scale has accelerated. According to data from the semi -annual report, the distribution revenue of the TCL electronics marketing business in the first half of this year was HK $ 4.248 billion, a year -on -year increase of 26.7%. In addition to empty ice, TCL electronics also uses channel advantages to cross -border photovoltaic.

Environmental protection, green, and sustainable development are global consensus. In recent years, photovoltaic power generation has developed rapidly as an important renewable energy power generation technology. In many countries, it has become a energy form of cleaning, low -carbon and price competitiveness. BOC International estimates that the end-end demand in 2022 may exceed 230GW, and the global photovoltaic installation machine from 2021-2025 is expected to continue to improve, and the annual installation CAGR is expected to be close to 30%. In China, the photovoltaic industry has developed rapidly. According to the National Energy Administration data, the newly added aircraft power generation machine in my country in the first half of the year was 30.878 million kilowatts. Among them, the distributed photovoltaic installation machine was 1,96.53 million kilowatts, surpassing the installation of centralized photovoltaic power stations (11.225 million kilowatts).

With the help of the sinking channel network established by home appliance sales, and cooperating with the accumulated user recognition and brand advantages for many years, and the complete photovoltaic industrial chain and supporting financial advantages of the system, TCL Electronics quickly opened the distributed photovoltaic market in the first half of this year this year this year , Gradually achieve a comprehensive coverage from households to industrial and commercial distributed photovoltaic photovoltaic photovoltaic.

TCL electronic focusing households use distributed photovoltaic to form an experienced team to form a collaborative upstream and downstream industries with TCL Central, and make full use of the advantages of Central in the field of silicon wafers and components to achieve rapid volume. In fact, TCL Electronics began to officially operate the photovoltaic business in the second quarter of this year, and it has achieved revenue of HK $ 170 million in the first half of the year, and the monthly installation order volume and income have increased.

Facing the huge market size space, the TCL electronic globalization channel advantage of the city is very promising. Its improvement channels for overseas can still be used as the starting point of overseas photovoltaic business. Copy in the successful factor of rapid volume in China. Important participants.

Multi -dimensional establishment of investment logic, and depending on the geometry of the moat

However, even if the moat is deep, the discussion on TCL electronic valuation has not been consensus. The fundamental reason is inertial thinking. Investors seem to be accustomed to giving enterprises only through a single industry.

The valuation logic of the traditional manufacturing industry believes that its products have low added value and limited brand premium space, but for the consumer electronics industry, especially growth companies, this valuation framework is obviously outdated, which obviously ignores dynamic development. Elements -changes in media are not the same as the change of the same product element.

As a manufacturer, the display technology of TCL electronics accumulation can be used at large -scale smart screen to the display hardware of the Yuan universe entrance. With the ecological changes of consumer entertainment needs, it is fully deployed. As a growth enterprise, the TCL electronic Internet business light assets, high as high as high, high The profit margin operation model brings sustainable user operating income to it. With the accumulation of word -of -mouth accumulation of hardware products, it can further occupy the user's mind.

BOC International analysts also point out the advantages of TCL electronics: "Brand leads value, deepen the global leading advantage of smart screen business, and continue to break through the full -category layout of smart home." TCL Electronics "R & D+Brand+Globalization" triple moat recognition. At the same time, BOC International and CICC have also given "buy" and "running industry" rating after the release of TCL electronic mid -term performance.

Therefore, the investment logic of TCL electronics must be comprehensively multi -dimensional. In terms of hardware business, it is necessary to consider its current leading technology, but also to consider the growth and adaptability of the technology; and on the software business (Internet), you need to see the mutual support of this part of the business and the hardware business. In addition, the powerful industrial collaboration behind TCL Electronics needs time to catch up with other companies. With the continuous advancement of the development strategy of science and technology and globalization, the "moat" advantage of TCL electronics may bring more prominent commercial value.

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