(Yicai Global) June 30 -- TCL Electronics’ stock price surged after the Chinese television set maker said it will completely assimilate its tablet and mobile phone-making subsidiary.
Its shares [HKG:1070] closed 13.8 percent higher today at HKD3.79 (49 US cents) each, after earlier climbing as much as 14.1 percent. The benchmark Hang Seng Index rose 0.5 percent.
TCL Electronics will pay CNY1.5 billion (USD21.2 million) for all of TCL Communications Technology Holdings from their mutual parent TCL Industrial Holdings Guangdong, it said in a statement released after the market closed yesterday. It will also sell its TV foundry business to TCL Industrial for CNY2.5 billion.
“These transactions allow us to further the acceleration of implementing ‘AI x IoT’ strategy with smart displays as the core,” TCL Electronics Chief Executive Kevin Wang said in the statement. That enables TCL “to extend our smart scenarios from home to outdoor mobile environments, adding commercial settings as well, to offer our customers a complete smart ecosystem.”
The Guangdong province-based firm’s TV and mobile phone businesses have mutually beneficial strengths in technology, procurement, channels and brands, Wang told Yicai Global, adding that ithas become the third-largest TV brand.
While the global market for TVs will notundergo any great change, absorbing something over 200 million sets each year, the mobile phone market has far greater potential, with 1.4 billion units delivered annually, he said.
TCL’s phones mainly target overseas markets, with good sales in fifth-generation handsets, tablet computers and smart-connected products. It is waiting for an opportune moment to infiltrate the Chinese market, Wang said. TCL's mobile phone business can remain profitable this year and increase its gross profit margin, he added.
The company is divesting its TV foundry business to avert internal competition in production capacity, technology, upstream resources and downstream customers, allowing it to focus on brands with greater premium potential, Wang said.
Editor: Ben Armour