TCL Electronics gets HK$18.96 target as Q1 profit jumps 124%

Guotou Securities maintained its “Buy-A” rating for TCL Electronics Holdings Ltd. (01070.HK), setting a six-month price target of HK$18.96 after the company’s first-quarter net profit increased 123.6%.

"The company is poised for continued overseas market share gains, while its innovative businesses like photovoltaics are entering a fast-growth phase," Guotou Securities said in its May 14 research report.

The bullish forecast follows TCL’s report of a 123.6% year-over-year jump in net profit attributable to the parent to HK$360 million for the first quarter of 2026. Revenue grew 15.3% to HK$29.23 billion, driven by strong performance in its display and international businesses.

The rating reinforces the success of TCL's global expansion and product upgrade strategy, which now includes a recently announced major joint venture with Sony. Guotou’s target implies significant upside, based on a 16-times price-to-earnings multiple on its 2026 EPS forecast of HK$1.18.

Overseas Strength and Product Mix Drive Growth

Growth was primarily fueled by a 23.2% year-over-year increase in overseas television revenue. The company’s focus on higher-end products showed results, with shipments of Mini LED televisions in overseas markets accounting for 14.2% of the total, an increase of 8.2 percentage points from the prior year. The smaller and mid-size display business also saw rapid growth, with revenue climbing 26.3%.

Profitability improved alongside revenue. Overall gross margin for the quarter rose by 1.5 percentage points year-over-year. This was supported by a 3.0 percentage point margin improvement in the large-size display business and a significant 10.6 percentage point increase in the high-margin internet business, which itself grew revenue by 13.2%. The company did not disclose its latest dividend distribution.

The strong earnings and the new Sony joint venture signal that TCL's strategy of vertical integration and premiumization is gaining traction against global competitors. Investors will now watch to see if the company can sustain its margin expansion and overseas growth through the rest of 2026.

This article is for informational purposes only and does not constitute investment advice.