China's TCL to double LCD TV capacity

Thu Jan 22, 2009 4:56am EST

Related Topics

* Plans to double LCD TV production capacity by end-2009

* Sees 2009 TV sales value in China up by double digits

* Forecasts overall TV sales volume flat this year

(Adds details and share prices)

By Joanne Chiu

HONG KONG, Jan 22 (Reuters) - China's appliance and top TV maker TCL Corp 000100.SZ plans to double its LCD TV production capacity to 10 million units by the end of 2009 to meet rising domestic demand, its chairman Li Dong Sheng said on Thursday.

Total investment in the project will be announced in March with the company's annual results, Li told Reuters in an interview after a shareholders' meeting in Hong Kong.

TCL, which leads rivals Qingdao Haier (600690.SS), Skyworth Digital (0751.HK) and Huawei Technologies [HWT.UL], is also hoping to compete with the likes of global leaders Nokia (NOK1V.HE) and LG Electronics (066570.KS).

The company makes television sets through Hong Kong-listed unit, TCL Multimedia Technology Holdings (1070.HK), and mobile handsets via TCL Communication (2618.HK).

TCL returned to the black in 2007, posting a net profit of 395.8 million yuan ($57.9 million) after struggling for years to turn around the money-losing assets it acquired from France's Thomson and Alcatel (ALUA.PA), making TV sets and mobile handsets, respectively.

"The growth engine will be in China this year because the penetration rate of LCD products there remains low in the colour TV market," Li said.

It has launched a homegrown third-generation (3G) network, TD-SCDMA, as well as a handset model, and has three other models waiting for government approval, Li said.

China Mobile (0941.HK), the world's largest mobile carrier, plans to start 3G operations using the TD-SCDMA technology in 38 cities later this year.

CHINA TV SALES BUOYANT

Revenues from TV sales are seen rising by double digits in China this year but overall TV sales volume is likely to be flat as demand from overseas markets is expected to slow during the financial crisis, Li added.

TCL sold 4.18 million LCD TV sets in 2008, more than triple its 2007 level, against a capacity of 5 million units and total sales of 14.36 million TV sets posted in the year earlier.

Sales from television and other audio and visual products accounted for more than 60 percent of the group's sales in the first three quarters of 2008.

Li said its LCD TV sales rose "remarkably" in the third and fourth quarters last year in China after price cuts.

Beijing's recent stimulus policy, including the provision of subsidies to rural areas for buying home appliances, including TV sets, should boost consumer sentiment, he said.

About half of TCL's products fall into the subsidised category but the market should not over-react to this, Li added.

TCL shares have risen about 20 percent in the past three months, in line with a firm Shenzhen stock market .SZSA.

Its two Hong Kong subsidiaries, TCL Multimedia and TCL Communication, were down 2.4 percent and up 13 percent, outperforming an 11 percent loss in the benchmark Hang Seng Index .HSI during the quarter.

($1=6.836 Yuan)

(Reporting by Joanne Chiu, Editing by Jacqueline Wong)

((alison.leung@reuters.com; +852 2843 6369; Reuters Messaging: alison.leung.reuters.com@reuters.net)) Keywords: TCL FORECASTS/

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