Tonly spin-off lets TCL Multimedia focus on TVs

PUBLISHED : Friday, 19 July, 2013, 12:00am
UPDATED : Friday, 19 July, 2013, 5:25am

Television maker TCL Multimedia Technology (TCLM) said yesterday the spinning off of Tonly Electronics would allow it to be more focused on its core television sector, with a better business and cost structure.

The proposed spin-off of Tonly, which was announced by TCLM earlier this year, will be carried out by way of introduction. This enables a company to list without funds being raised.

Tonly is expected to be listed on the main board of the Hong Kong stock exchange on August 14.

Tonly's chief financial officer, Ren Xuenong, said the significance of the spin-off was that it would give the company its own platform. "To raise funds is not a priority concern," he said.

TCLM shareholders will be given one Tonly share for every 10 shares they hold in TCLM.

Tonly accounted for about 10 per cent of TCLM's total revenue last year.

"The proposed spin-off will create separate platforms for the TV and audiovisual (AV) businesses, allowing more flexibility and possibilities for further investment," TCLM's acting chief executive, Hao Yi, said yesterday.

Tonly makes audiovisual products and provides original design manufacturer services to well-known AV products brands including Philips, LG and Toshiba, the company says.

A market research report by Euromonitor said Tonly was the mainland's largest video product manufacturer and the third-largest maker of home theatre system and sound bar speakers in terms of production volume last year.

Ren said Tonly would not raise funds in the six months after listing, but might consider doing so in the future according to needs.

He said Tonly's net asset value was HK$330 million and with last year's net profit standing at HK$95 million, it had a price-earnings ratio of 3.5. By comparison, the PE ratio - a guide to investment returns - of other leading electronics manufacturing service providers usually exceeds 10.

TCL Corp, the ultimate holding company of TCLM and Tonly, will own 61.3 per cent of Tonly after it lists.

Tonly reported a 4.3 per cent year-on-year rise in net profit for the first quarter this year to HK$34.7 million, while quarterly revenue rose 11.3 per cent to HK$894.6 million.