Skyworth announced a share buy-back offer. The Company proposed tobuy back up to 392.8 million shares, representing approximately 12.8% ofthe issued shares, at a price of HK$2.80 per share. The consideration forthe offer is approximately HK$1,099.8 million if the offer is accepted in full.
　　Besides, the Company will dispose of two of its subsidiaries to a third partyfor a total consideration of RMB1,321.2 million, to enhance the Company’sliquidity position and provide funding for other investments.
Challenging TV market in 1H2020 in China. According to AVC, total TVsales volume was 16.0 million units in Jan.-May 2020 in the China market,down 14.8% YoY, and total sales value decreased by 27.9% YoY during thesame period. However, during the period of the “618” campaign, total TVsales volume reached 3.3 million units, up 30.9% YoY. AVC expects totalTV sales volume to be 28.9 million units in 1H2020, down 9.2% YoY.
Maintain investment rating as "Accumulate" and raise target price toHK$2.68. We believe that a share buy-back will stimulate the Company’sshare price and EPS will increase upon the completion of the offer. We arecautious on the Company’s hardware profitability in the short term while webelieve that the Company’s content business will achieve fast growth. Maindownside risks include weaker-than-expected TV consumption market andmore intense competition.