In order to expand the production capacity of large-size complete machine modules and Mini LEDs, TCL Technology (000100) plans to spend 2.8 billion yuan to acquire the associated asset Maojia International.

On the evening of December 11, TCL Technology announced that TCL Technology Investment, a wholly-owned subsidiary of the company's Hong Kong subsidiary, planned to acquire 100% of Maojia International's equity held by TCL Industries (Hong Kong) in cash at a transaction price of 2.8 billion yuan. Through this acquisition, the company supplements design services and processing business on the basis of the original display panel business, which is conducive to providing B-end customers with a complete service system from panels to complete machines.

Maojia International was established in February 2013. Maojia International holds 100% of the shares of TCL Overseas Electronics (Huizhou) Co., Ltd., Qianhai Maojia Software Technology Co., Ltd. and other companies, and engages in intelligent display worldwide through these subsidiaries Terminal product processing business.

After many transactions, TCL Industries (Hong Kong) currently holds 100% of Maojia International's equity. Since TCL Industries (Hong Kong)'s actual controller is Li Dongsheng, this transaction constitutes a connected transaction.

Financial data show that from January to October this year, Maojia International achieved an operating income of 10.015 billion yuan and a net profit of 236 million yuan. The transaction is valued at 2.8 billion yuan. Maojia International expects that its net profit in 2021, 2022 and 2023 will be no less than 224 million yuan, 246 million yuan, and 288 million yuan, respectively. Based on this, the cumulative net profit during the performance commitment period will not be less than 760 million yuan.

With an investment of 2.8 billion to acquire related assets, TCL Technology is fond of Maojia International's large-size complete machine and module production capacity, and plans to advance the production capacity of Mini LED in the future.

Industry insiders pointed out that in the future, more and more strategic customers need TCL Technology to provide large-size modules or complete machines, such as Xiaomi, LG, Sony, etc., and Samsung will also have this trend in the future. Therefore, listed companies need to supplement the ability to provide customers with complete modules, and the acquired Maojia International has already provided OEMs for many domestic and foreign manufacturers.

Maojia International mainly manufactures large and medium-sized smart display terminal products including monitors, TV sets and various commercial displays through ODM mode. Shipments reached 11.36 million units in 2019. According to statistics from the market research organization Dixian, the target company's large-size display terminal processing shipments from January to September 2020 ranked third in the world.

Through this acquisition, TCL Technology will supplement the design service and processing business on the basis of the original display panel business, which is conducive to providing B-end customers with a complete service system from the panel to the complete machine, and can also better meet customer customization needs and improve Product added value.

At the same time, TCL Huaxing will increase its IT and commercial display business in the future. This business is similar to that of mobile phones. For the trend of integrated shipment of panels and modules, Maojia International is already contracting commercial display products to supplement related businesses of listed companies. .

Card slot layout Mini LED

With the introduction of various TV brand manufacturers, the Mini LED backlight TV market is about to enter a rapid growth channel.

It is understood that TCL Huaxing has been deploying Mini LEDs, but the current mass production is mainly backlit MiniLED products, and they are mainly implemented on the module side, so listed companies need a complete module solution to achieve Mini LED shipments.

Maojia International has a complete matrix of processed products, which can cover various types of curved surfaces from 19 inches to 105 inches, quantum dots, 4K, borderless, and different combinations of solutions from Linux to Android systems. At the same time, the picture quality, sound quality, etc. Research and development, supply chain management, and manufacturing process control in key technical fields are at the leading level in the industry. Through this acquisition, TCL Technology will advance its card slot layout in the application of new display technology.

TrendForce predicts that the global sales of Mini LED backlight TVs will reach 4.4 million units in 2021, accounting for about 2% of the overall TV market; by 2025, the global sales of Mini LED backlight TVs will exceed 35.5 million units. Samsung expects to ship more than 2 million Mini LED-backlit LCD TVs next year.

In addition, Maojia International has production bases in Huizhou, Mexico and India, and has a complete overseas production capacity. Among them, the Huizhou base has the largest production capacity, covering global first-line customers and regional head customers. The Mexican plant has a production capacity of 1.8 million units/year, covering customers in North America, South America and China and the United States; the Indian plant is currently under construction and will be completed and put into production next year. The production capacity is expected to reach 3 million units/year, mainly to develop emerging markets.

TCL Technology believes that after the completion of this acquisition, it can make full use of Maojia International’s overseas production capacity and overseas customer resources to provide a stable overseas market "outlet" for the company's panel products, improve overseas market coverage, and improve global business layout. And effectively alleviate the adverse effects of trade tensions and increased tariff barriers.