Eagle Eye Warning: TCL Technology's sales gross profit margin is quite volatile

Sina Finance Listed Company Research Institute | Earnings Hawk-Eye Early Warning

On March 28, TCL Technology released its 2025 annual report. The audit opinion was a standard unqualified audit opinion.

The report shows that the company’s operating revenue for the full year of 2025 was 184.063 billion yuan, up 11.67%; net profit attributable to shareholders was 4.517 billion yuan, up 188.78%; net profit attributable after deducting non-recurring items was 2.897 billion yuan, up 870.95%; basic earnings per share was 0.2333 yuan per share.

Since the company went public in January 2004, it has issued cash dividends 15 times, with total cash dividends already implemented of 14.683 billion yuan. The announcement shows that the company plans to pay cash dividends of 0.9 yuan for every 10 shares to all shareholders (including tax).

The listed company earnings hawk-eye early warning system conducts intelligent quantitative analysis of TCL Technology’s 2025 annual report across four major dimensions: earnings quality, profitability, funding pressure and safety, and operating efficiency.

I. Earnings Quality

During the reporting period, the company’s revenue was 184.063 billion yuan, up 11.67%; net profit was 214 million yuan, up 105.15%; net cash flow from operating activities was 44.022 billion yuan, up 49.09%.

From an overall performance perspective, key items to focus on:

• Net profit is relatively volatile. In the past three annual reports, net profit was 4.78 billion yuan, -4.16 billion yuan, and 0.21 billion yuan, with year-over-year changes of 167.37%, -186.93%, and 105.15%, respectively; net profit is relatively volatile.

| Item | 20231231 | 20241231 | 20251231 | | Net profit (yuan) | 4.781 billion | -4.156 billion | 0.214 billion | | Net profit growth rate | 167.37% | -186.93% | 105.15% |

Based on the quality of operating assets, key items to focus on:

• The growth rate of notes receivable is higher than the growth rate of operating revenue. During the reporting period, notes receivable increased by 152.95% compared with the beginning of the period, while operating revenue grew year over year by 11.67%; the growth rate of notes receivable is higher than that of operating revenue.

| Item | 20231231 | 20241231 | 20251231 | | Operating revenue growth rate | 4.69% | -5.47% | 11.67% | | Growth rate of notes receivable vs. beginning of period | 19.99% | -69.15% | 152.95% |

II. Profitability

During the reporting period, the company’s gross margin was 13.15%, up 13.48% year over year; net profit margin was 0.12%, up 104.61% year over year; and return on net assets (weighted) was 7.98%, up 170.51% year over year.

From the company’s operating-side returns, key items to focus on:

• Sales gross margin is relatively volatile. In the past three annual reports, sales gross margin was 14.68%, 11.59%, and 13.15%, with year-over-year changes of 67.17%, -21.07%, and 13.48%, respectively; sales gross margin shows abnormal volatility.

Based on the company’s asset-side returns, key items to focus on:

• Return on invested capital is below 7%. During the reporting period, the company’s return on invested capital was 4.14%, and the average value across the three reporting periods was below 7%.

From non-recurring gains/losses, key items to focus on:

• Non-recurring gains make up a relatively high proportion. During the reporting period, the ratio of non-recurring gains to net profit was 1695.3%. (Note: non-recurring gains = investment net gains + net gains from fair value changes + non-operating income + losses from disposal of non-current assets).

From whether there is impairment risk, key items to focus on:

• Goodwill / net assets ratio continues to grow. In the past three annual reports, the goodwill / net assets ratio was 7.2%, 8.4%, and 8.6%, showing a continuing upward trend.

From dimensions such as customer concentration and minority shareholders, key items to focus on:

• Losses attributable to minority shareholders are negative, while net profit attributable to shareholders is positive. During the reporting period, losses attributable to minority shareholders were -4.3 billion yuan, while net profit attributable to shareholders was 4.52 billion yuan.

| Item | 20231231 | 20241231 | 20251231 | | Losses attributable to minority shareholders (yuan) | 2.566 billion | -5.72 billion | -4.303 billion | | Net profit attributable to shareholders (yuan) | 2.215 billion | 1.564 billion | 4.517 billion |

III. Funding Pressure and Safety

During the reporting period, the company’s asset-liability ratio was 64.23%, down 1.06% year over year; the current ratio was 0.97, and the quick ratio was 0.8; total debt was 169.285 billion yuan, of which short-term debt was 45.164 billion yuan; the ratio of short-term debt to total debt was 26.68%.

From long-term funding pressure, key items to focus on:

• Short-term debt can be covered by broad money funds, but long-term debt cannot. During the reporting period, the ratio of broad money funds / total debt was 0.32, and broad money funds were lower than total debt.

From the perspective of cash/funds management and control, key items to focus on:

• The ratio of total debt / total liabilities is greater than 20%, and interest expense / net profit is greater than 30%. During the reporting period, the ratio of total debt / total liabilities was 69.91%, and the ratio of interest expense to net profit was 2315.77%; interest expense has a significant impact on the company’s operating performance.

IV. Operating Efficiency

During the reporting period, the company’s accounts receivable turnover ratio was 8.29, up 11.3% year over year; inventory turnover ratio was 8.89, up 10.04% year over year; and total asset turnover ratio was 0.49, up 13.17% year over year.

From operating assets, key items to focus on:

• The proportion of accounts receivable / total assets continues to increase. In the past three annual reports, the ratio of accounts receivable / total assets was 5.75%, 5.88%, and 5.94%, respectively, showing continued growth.

Click TCL Technology’s Hawk-Eye Early Warning to view the latest warning details and a visual preview of the financial report.

Sina Finance Listed Company Earnings Hawk-Eye Early Warning System Overview: The listed company earnings hawk-eye early warning is an intelligent, professional analysis system for listed company financial reports. The hawk-eye early warning system gathers a large number of authoritative financial experts from accounting firms and listed companies, and tracks and interprets the latest financial reports of listed companies across multiple dimensions such as company earnings growth, earnings quality, funding pressure and safety, and operating efficiency. It also uses charts and text to highlight potential financial risk points. It provides technical solutions for professional, efficient, and convenient identification and early warning of financial risks for financial institutions, listed companies, regulatory authorities, and more.

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