TCL Group recently made an announcement regarding its intention to acquire a 10.08% stake in Huaxing Optoelectronics, which is held by several shareholders including Changjiang Hanwing and others, through a stock issuance. The agreed value of this transaction amounts to RMB 4.034 billion, entirely settled via the issuance of shares. Post-completion of this deal, the listed company will hold 85.71% of China Star Optoelectronics’ equity directly.
**TCL Acquires Additional Stake in China Star Optoelectronics**
Huaxing Optoelectronics currently ranks as the second-largest TV LCD panel manufacturer in mainland China, establishing itself as a globally recognized leader in LCD panel production. In 2016, the combined purchases of China's top six TV brands accounted for 24% of China Star Optoelectronics' sales, placing it at the forefront of the market. Its 55-inch products achieved the highest domestic market share, while globally, Huaxing Optoelectronics captured a 13% share of the TV panel market in 2016, ranking fifth worldwide. Additionally, its 32-inch products ranked second globally. By the first quarter of 2017, China Star Optoelectronics boasted a 15% share of the global TV panel market, maintaining its position as the fifth-largest player in the industry.
**Strengthening Control and Enhancing Competitiveness**
This transaction represents the acquisition of a minority stake in a subsidiary, China Star Optoelectronics, by the listed company. Following the transaction, China Star Optoelectronics remains a controlled subsidiary of TCL, with its ownership percentage increasing. This move strengthens the company’s management and control over the subsidiary, allowing for deeper planning in the LCD panel product field. This not only enhances the overall competitiveness and profitability of the company but also supports the effective implementation of the listed company’s growth strategy. It helps stabilize the shareholding structure of holding subsidiaries, reduces internal management costs, and improves operational efficiency. This aligns with TCL’s strategic goals of transitioning toward "smart + Internet" solutions and building a "product + service" business model.
**Market Leadership and Future Growth Potential**
In the first quarter of 2017, China Star Optoelectronics’ T1 and T2 plants maintained high capacity utilization and product yields. The ongoing rise in LCD panel prices since the second quarter of 2016, driven by increased TV demand and reduced overseas supply, has positively impacted profitability. TCL is investing in the construction of a 6th-generation LTPS-AMOLED flexible display panel production line in Wuhan, expected to commence operations in 2020 with an estimated investment of 35 billion yuan. The T3 project’s output will provide valuable technological support for the upcoming T4 project. Furthermore, with the commencement of the company’s 11th-generation line, the market share for large-sized displays will grow, and post-T4 completion, Huaxing is poised to strengthen its competitive edge globally in the semiconductor display sector, presenting exciting future prospects.
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This acquisition underscores TCL’s commitment to leveraging its strengths in the display technology sector to drive innovation and growth across its portfolio.
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