TCL Multimedia Technology Holdings Ltd
Headquartered in China, TCL Multimedia Technology Holdings Limited is engaged in the research and development, manufacturing and distribution of consumer electronic products. Its products are sold all over the world. The Group is one of the leading players in the global TV industry.
Acquisitions
In July 2013, the Group entered into 13 stock transfer agreements with certain independent third parties, and pursuant to which the Group agreed to acquire a total of 6,746,885 shares of preferred equity interest of Amlogic, Inc., representing 18.89% of Amlogic, Inc.’s total equity interest, for a cash consideration of $29,000,000. Amlogic, Inc. is a fabless semiconductors manufacturer for a wide range of consumer application including smart televisions and tablets. The acquisition was completed on 22 July 2013.
Business combinations
On 31 March 2014, the Group and Sanyo Manufacturing Corporation (“SMC”), an independent third party, entered into two agreements, namely: (i) the asset purchase agreement pursuant to which the Group agreed to acquire the assets comprising certain pieces of land located at the Industrial Development Zone known as Ciudad Industrial Nueva Tijuana in Baja California, Mexico, all the buildings erected on the Land and certain operated in SMSA, a then non-wholly-owned subsidiary of SMC, at a consideration of US$12,850,000; and (ii) the stock purchase agreement pursuant to which the Group agreed to acquire 45,000 shares in SMSA, representing 90% of the equity interest in SMSA at a consideration of US$1,646,000. The total consideration was US$14,496,000. SMSA is principally engaged in the manufacture and sale of a wide range of electronic consumer products including television sets. The acquisition was completed on 30 April 2014.
On 2 December 2013, the Group entered into an equity transfer agreement with Toshiba Corporation, an independent third party, pursuant to which the Group agreed to acquire an additional 21% equity interest in Toshiba Visual, a former 49% owned associate of the Group, at nil consideration. Toshiba Visual is mainly engaged in the trading of television products and components under the brand of “Toshiba”. The equity transfer was completed on 9 May 2014 and Toshiba Visual became a 70% owned subsidiary of the Group since then.
Fair value of 70% equity interests in Toshiba Visual is HK$50,983,000 (equivalent to approximately $6,240,000).
Disposals
On 14 December 2015, the Group disposed of its 100% equity interest in Charter Joy Investments Limited (“Charter Joy”), together with the related shareholders’ loan of approximately HK$194,712,000 (equivalent to approximately $25,060,000), to Active Industries International Limited, an associate of T.C.L. Industries, for a consideration of approximately RMB163,129,000 (equivalent to approximately $25,060,000). Charter Joy is an investment holding company and its subsidiary, Chengdu Legao Shidai Industries Co., Ltd.#, held a land use right and certain buildings in Chengdu.
TCL Eletronicos de Brasil Ltda., TCL Thomson Electronics Singapore Pte. Ltd. and TCL Electronics (Singapore) Pte. Ltd., all were wholly-owned subsidiaries of the Group, were wound-up voluntarily during 2015.
TCL International Electronics (Huizhou) Co., Ltd., Inner Mongolia TCL Electrical Appliance Company Limited, TCL King Electrical Appliances (Huhehaote) Company Limited and TCL GoVideo, all were wholly-owned subsidiaries of the Group and were wound-up voluntarily during 2014.
Summary (from latest annual report 2015, ended Dec 31)
• Market Capital: $861,266,386 (HK$6,685,233,035, last share price is HK$3.85. There were 1,736,424,165 ordinary shares as of June 30, 2016).
• Total stockholders’ equity: $553,172,000 up by $5,921,000 or 1% from $547,251,000 in 2014.
• Current liabilities: $1,622,807,000 or 69% out of total liabilities and equity is down by $326,174,000 or -17% from $1,948,981,000 in 2014 primarily due to repayment of bank and other loans by new bank and other loans.
• Non-current liabilities: $164,406,000 or 7% out of total liabilities and equity is up by $30,100,000 or 22% from $134,306,000 in 2014 primarily due to increase of loan due to related party.
• Net sales: $4,379,560,000 up by $274,226,000 or 7% from $4,105,334,000 in 2014.
• Net income: $3,323,000 down by $25,392,000 or -88% from $28,715,000 in 2014 primarily due to increase of administrative expenses by $49,750,000.
• Cash and cash equivalents: $285,165,000 down by $128,643,000 or -31% from $413,808,000 in 2014.
o $40,178,000 provided by operating activities: increased by $130,795,000 or 144% compared to fiscal 2014 (2014: -$90,617,000) primarily due to increase of trade payables to related parties.
o $26,124,000 provided by investing activities: increased by $91,344,000 or 140% compared to fiscal 2014 (2014: -$65,220,000) primarily thanks to disposal of Charter Joy Investments Limited for $24,650,000 (net inflow of cash), lower by $36,013,000 purchases of property, plant and equipment and available for sale investments, no expenses on business combination, which were $11,649,000 in 2014.
o -$195,856,000 used in financing activities: decreased by $393,289,000 or -199% compared to fiscal 2014 (2014: $197,433,000) primarily due to repayment of bank and other loans. In 2014 proceeds from loans were higher than their repayments.
Subsidiaries
Particulars of the Company’s principal subsidiaries are as follows:
Name, Place of incorporation, % of equity, Share capital, Purchase price
1. Guangzhou Digital Rowa Technology Co., Ltd, PRC RMB120,000,000 70% $18,490,000
2. Manufacturas Avanzadas, Mexico US$15,866,637 100% $15,866,637
3. TTE Corporation British Virgin Islands/Hong Kong US$10,000 100% $10,000
4. Shenzhen TCL New Technology, PRC RMB10,608,600 100% $1,635,000
5. TCL (Vietnam) Corporation, Vietnam VND37,135,000,000 100% $1,649,000
6. TCL Electrical Appliance Sales Co., Ltd, PRC RMB30,000,000 100% $4,622,000
1. TCL Electronics (HK) Limited Hong Kong HK$30,000,000 100% $3,861,000
2. TCL Electronics (Thailand) Thailand THB255,000,000 100% $7,378,000
3. TCL Holdings (BVI) Limited British Virgin Islands/Hong Kong 100% $25,000
4. TCL Belgium S.A. Belgium EUR61,500 100% $66,847
5. TCL International Electronics (BVI) Limited British Virgin Islands/Hong Kong 100%
6. TTE (North America) British Virgin Holdings Limited Islands/Hong Kong 100%
7. TCL Information Technology Industrial British Virgin Islands/Hong Kong 100% $4,500,000
8. TCL King Electrical Appliances (Chengdu), PRC RMB100,880,000 100% $15,544,000
9. TCL King Electrical Appliances (Huizhou), PRC RMB485,863,120 100% $74,863,000
10. TCL King Electrical Appliances (Nanchang), PRC RMB21,400,000 100% $3,297,000
11. TCL King Electrical Appliances (Wuxi), PRC RMB78,835,125 70% $12,147,000
12. TCL Overseas Electronics (Huizhou), PRC RMB217,699,156 100% $33,544,000
13. TCL Overseas Holdings Limited British Virgin Islands/Hong Kong 100%
14. TCL Overseas Marketing Limited British Virgin Islands/Hong Kong 100%
15. TTE Technology Inc. United States of America US$75,954,000 100% $75,954,000
16. TCL Overseas Marketing, Macao MOP100,000 100% $12,516
17. TCL Operations Polska SP. ZO.O. Poland PLN126,716,500 100% $32,659,000
18. TCL Optoelectronics Technology (Huizhou) Co., PRC RMB576,000,000 100% $88,752,000
19. Huizhou TCL Coretronic Co., Ltd.# PRC RMB32,000,000 100% $4,930,000
20. Toshiba Visual Products (China) Co., Ltd. PRC RMB50,000,000 70% $7,704,000
21. TCL Moka Manufacturing, S.A. de C.V. Mexico MXN50,000 100% $2,562 $1,646,000
22. TCL Moka, S. de R.L. de C.V. Mexico MXN3,000 100% $153
Joint ventures (50% of equity interest)
TCL Sun, Inc., Philippines 50%
TCL-IMAX Entertainment Co., Limited, Hong Kong 50%
Others
Total net assets (share attributable to the company) $5,935,000
Associates (less than 50% of equity interest)
TCL Finance Co., Ltd. 14% $38,834,000
Amlogic, Inc 18.89%
Guangdong Yijiatong Technical Development of Digital Home Co., Ltd. 20%
Huizhou Bri-King Optronics Co., Ltd. 49%
Other
Total net assets (share attributable to the company) $52,485,000
Opinion about the company
Fall of profit in 2015 by 8.6 times from $28.7 million in 2014 to $3.3 million in 2015 unfavorable affected earnings per share dividends, which decreased from HK17.76 cents in 2014 to HK1.94 cents in 2015 (with almost the same number of shares in these periods). Moreover, the Board does not recommend the payment of any dividend for the 2015 year and six months ended 30 June 2016, which could unfavorable affect share price.