TCL to Set up Financial Company

In one of my previous projects for a conglomerate client (not TCL), I was wondering why they got a very diversified portfolio of business that had so little if any relationships among the LOBs and subsidiaries. Is the portfolio built from conscious decisions or by just a series of accidents? It's hard to know. But it looks like FS is considered a sweet spot that many want to squeeze in to expand the portfolio to reach out and/or improve internal efficiency...


TCL to Set up Financial Company
TCL to Set up Financial Company

09/22/2006, 09:33 [SinoCast China IT Watch]


SHENZHNE, September 22, 2006, SinoCast -- TCL, the biggest television maker in China's mainland, got the green light from The China Banking Regulatory Commission to set up a financial company of its own with a registered capital of CNY 500 million.

Lv Zhongli, senior vice president of TCL, will work as president of the new company that is invested by TCL Group, The Bank of East Asia, TCL King (Hohhot) Company and TCL Mobile Communications (Hohhot) Company, with each of them holding 62 per cent, 20 per cent, 14 per cent and 4 per cent of the stake, respectively.

Wang Hongbo, secretary of TCL's Board of Directors, says the company will establish this financial company in order to improve its fund management efficiency.

Wang says that the new company will be mainly engaged in providing accounting, financing, credit assessment and related consulting service as well as providing other fund and insurance related service to each of its members.

By June 30 this year, TCL's current liabilities accounted for CNY 6.1 billion and bank loans for CNY 4.1 billion. TCL announced lately that it booked a net loss of CNY 320.24 million in 2005, compared to a net profit of CNY 245.21 million a year earlier, due to a steep drop in mobile handset sales and business integration costs after making several overseas acquisitions.

The loss per share was CNY 0.124 in 2005, compared to earnings of CNY 0.09 a year earlier.

Although the firm's total sales grew 28 percent year-on- year to CNY 51.68 billion, handset sales fell to CNY 5.89 billion from CNY 8.04 billion a year earlier.

The company sold 7.5 million mobile handsets overseas last year and 3.4 million units domestically.

Despite an annual growth rate of 35.49 percent in television sales to CNY 31.52 billion last year, TCL-Thomson Electronics Corp (TTE) - TCL Corp's 67-33 venture with Thomson SA - posted a loss last year. It did not provide any figures.

TTE sold 9.23 million TV sets domestically, and 6.13 million in Europe and America. The company added it is still integrating overseas acquisitions from Alcatel and Thomson. TCL said it plans to accelerate this integration this year.

The firm did not provide any further details on its 2006 outlook. The company's computer sales also grew by 13 percent from a year earlier to 700,000 units, contributing CNY2.2 billion to sales.

Sales of home appliances, including air conditioners, fridges and washing machines, rose 19 percent year-on-year to CNY3.75 billion .

Philips Electronics China and Alliance Fortune were earlier given approval to boost their stakes in TCL Group to 7.46 percent and five percent respectively.

In a separate statement, TCL said it booked a net loss of CNY 130.32 million in the first quarter, compared to a loss of CNY 327.23 million a year earlier, narrowing the loss on rising revenue.

Loss per share in the first quarter stood at CNY 0.0504 , compared with a loss of CNY 0.1265 a year earlier. Revenue in the first three months rose 1.62 percent year-on-year to CNY 11.92 billion . Sales from color televisions rose two percent year-on-year to CNY 7.36 billion .

The company sold 5.41 million TV sets in the first three months, up seven percent year-on-year, with 2.22 million sold domestically and 3.19 million sold overseas.