Our target price of Rmb5.1 is based on 1.7x 2025E PB, the same as 2022-2023 average P/B, as we model a 2024-26 ROE recovery close to the 2016-2018 trend. We use P/B ratio to value TCL as it is a cyclical asset-heavy stock.

Key risks to our target price include: (1) lower-than-expected panel prices; (2) lower-than-expected panel demand; and (3) macro factors including economic cycles, consumer demand, and geographic tensions.