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EQS-News: TCL Electronics (1070.HK): no notice received from the US government and all TV products sold in US fully complied with the law.
2020-12-24 12:23


EQS-News / 24/12/2020 / 12:23 UTC+8

TCL Electronics (1070.HK): no notice received from the US government and all TV products sold in US fully complied with the law. 

 

After the market closed on December on 22 Dec, TCL Electronics Holdings Limited ("TCL Electronics", stock code: 01070.HK) issued a clarification announcement: "The Group has not received any notice in relation to the relevant government's review. The operating systems installed in the television products sold by the Group in the US are those of Roku or Google, the Group's partners in the US, and the upgrade and iteration of system security were carried out collectively in strict compliance with the requirements of the partners; such manner is in accordance with the common practices and technology standards in the industry, and in compliance with the local laws, regulations and safety standards. The Group highly values the protection of user privacy and data security issues, and treats privacy protection and security as one of the core competitiveness of the products of the Group."

 

Previously, media reported that TCL Electronics was under review by US because US DHS found that TCL TV users were at risk of network intrusion and data leakage.

 

Possibly affected by the news, TCL Electronics plunged nearly 17% intraday and bounced back a bit by the close of trading with the decline narrowed to 14.87 %.

 

Based on TCL Electronics' clarification announcement and public info, it turns out that the allegation did not match the facts.

 

1. TCL Electronics only provides smart hardware, Smart TV, in the U.S. market. It does not supply user operating systems, hence not involving in user information and data operations. The operating system and software of all TVs sold by TCL Electronics in the US are provided by local US companies, Roku and Google. TCL Electronics does not have any access to install backdoors.

 

2. Roku, Google system must meet the requirements of network security in US. TCL brand TVs sold in the US must comply with the network security requirements of TV system providers such as Roku, Google. The claim of backdoor installation does not stand up to scrutiny.

 

3. TCL has been working with US partners for many years. In fact, the Company began working with Roku as early in 2014 and becomes Roku's largest TV partner around the world. In 2019, it began working with Google in Europe, Latin America and other regions.

 

TCL brand TV sales volumes ranked among the Top 3 around the world and Top 5 in 19 countries. According to the third quarter financial report disclosed by TCL Electronics, sales volume of TCL brand TV reached 7.24 million sets in the third quarter of 2020, surging by 49.7% YoY and 24.7% QoQ; overall sales volume in the first three quarters reached 17.32 million sets, up 14.4% YoY. According to the latest report by Sigmaintell, the market share of TCL brand TV in terms of sales volume increased by 2.7 percentage points YoY, from 8.6% to 11.3% in the third quarter of 2020, ranking global Top 3.

 

In recent years, TCL Electronics has performed well in overseas market. Sales volume in the first three quarters of this year increased by 26.8% year-on-year to 12.83 million sets, with TCL brand TV ranking second place in the North American market. Since last year, Europe and populous countries and regions in emerging markets, such as Southeast Asia, India and Brazil, have become new engines for the company's overseas growth.

 

Through partnership with internet giants like Roku, Google and Netflix, TCL Electronics has continued to expand its global home internet business in recent years. The revenue of overseas internet business in the first three quarters of 2020 totaled at HK$210 million, representing a year-on-year growth of 30.3%. TCL Channel will be available on TCL brand Roku TV and Google TV in the U.S. to further promote internet value-added services.

 

A short-term price fall may bring long-term investment opportunities. Essence International and First Shanghai Group released their reports and maintained "buy" rating on TCL Electronics. According to the two institutions, the operating systems installed in the TCL TV products in the US are operated by Roku or Google, and the upgrade and iteration of system security were carried out collectively in strict compliance with the requirements of Roku and Google; such manner is in accordance with the common practices and technology standards in the industry, and in compliance with the local laws, regulations and safety standards. After many years of endeavours, TCL brand TVs have high recognition from consumers in US market and rank top 2 in terms of sales volume.

 

TCL Electronics is one of the few Chinese companies in this industry that enjoys the benefits of having a vertically integrated industry chain and possesses cutting-edge display technologies such as QLED, Mini LED and 8K. TCL Electronics has acquired 100% stake in TCL Communication Technology Holdings Limited ("TCL Communication") in the middle of the year, marking an important move in the Company's "AI x IoT" strategy. The merger of TCL Communication has strengthened the synergies among different screen scenarios including "large screen - medium screen - small screen - wearable display", thus contributing to the building of a full-scenario smart display ecosystem. Meanwhile the Company has huge growth potentials as it extends its smart scenarios further from smart home, to mobile services and smart commercial displays.

 

In addition, Mr. LI Dong Sheng, the chairman of the board of directors of the Company, plans to increase his shareholding in the Company by acquiring no more than 5 million shares, which indicates his confidence in the Company's sustainable and stable development in the future and its long-term investment value.



File: TCL Electronics (1070.HK): no notice received from the US government and all TV products sold in US fully complied with the law.

24/12/2020 Dissemination of a Marketing Press Release, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.

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