\u3000\u3000 Shenzhen Transsion Holdings Co.Ltd(688036) (688036)
Events
Shenzhen Transsion Holdings Co.Ltd(688036) released the annual performance express of 2021: the company achieved an operating revenue of 49.254 billion yuan in 2021, a year-on-year increase of 30.33%; The net profit attributable to the parent company was 3.924 billion yuan, a year-on-year increase of 46.08%; The net profit deducted from non parent company was 318000 yuan, with a year-on-year increase of 33.31%.
Key investment points
The performance in 2021 exceeded expectations, and the “king of Africa” has strong profitability. According to the calculation of the company’s annual performance express in 2021, the company’s Q4 in 2021 is expected to achieve a revenue of 13.481 billion yuan, a year-on-year increase of 5.15%; The net profit attributable to the parent company is expected to be 1.042 billion yuan, with a year-on-year increase of 42.35%; It is expected to realize a net profit of 641 million yuan, a year-on-year increase of 0.54%. The continuous growth of the company’s performance is mainly due to the company’s continued competitive advantage in the African market in 2021, actively expanding markets outside Africa, continuously improving product power and strengthening brand promotion, so as to achieve the growth of sales scale. In addition, the income from changes in the fair value of non current financial assets held in the current period increased, the government subsidies received increased, and the non recurring profit and loss increased year-on-year. Against the backdrop of rising prices of raw materials in 2021, the company’s performance continued to grow, reflecting the company’s strong profitability.
Continue to build high barriers to competition in the African market and explore new market opportunities. Based on the African market, the company locates multi-level consumer groups through Tecno, itel and infinix mobile phones, continuously optimizes the product structure and improves the brand image of the company’s products. In 2021h1, the sales of medium and high-end models accounted for 20%, and the proportion of smartphone revenue in the first three quarters of the company has risen to 85%. The company’s sales proportion of smart phones and medium and high-end models continues to increase, driving the improvement of the average ASP of the company’s mobile phone products and laying the foundation for the company’s long-term profitability. In addition, the company actively explores emerging markets outside Africa. In the first three quarters of 2021, the company’s smartphone shipments in India, Pakistan and Bangladesh reached 15%, 10% and 2.8% respectively, of which the market share of smartphones has remained the first in Bangladesh and Pakistan. At the same time, the company is also seeking opportunities to expand the Middle East markets such as Iraq, Saudi Arabia and Turkey, as well as the markets of Latin America and Russia. In the future, it is expected to reprint the company’s business path in Africa and achieve breakthroughs in new markets.
Multi track business goes hand in hand and continues to build a brand ecological closed loop
While focusing on the development of mobile phone business, the company makes efforts at the software end and hardware end at the same time, and improves the company’s brand strength in multiple dimensions: 1) on the software end, the company fully enjoys the traffic dividend brought by its mobile phone’s leading advantage in Africa and other markets, and layout the mobile Internet business from the two aspects of OS and independent app. By 2021q3, the number of users of voice OS had reached 220 million, and the contribution of application distribution and advertising business to revenue for the value-added realization of stock active users also continued to increase. In terms of independent apps, as of 2021h1, the company has more than 10 self-developed and cooperative applications with more than 10 million monthly live users. Each app team operates independently and preempts the layout of each application track. 2) On the hardware side, the company expands its category business, firmly focuses on the category and the strategy of creating popular models, focuses on TV, power bank, TWS headset and other products, Wuxi Online Offline Communication Information Technology Co.Ltd(300959) dual channels at the same time, continues to build the business sales platform, and cooperates with its after-sales service brand carlcare to improve the shopping experience of consumers and help the company form a good reputation effect.
We believe that we will continue to improve the business model of “mobile phone + Mobile Internet service + home appliances and digital accessories”, and make efforts to develop mobile Internet and category business while the mobile phone business is rooted in Africa and expanding new markets. In the future, it is expected to be accompanied by the upgrading of mobile phone product structure and consumption level in emerging markets, the expansion of home appliance and accessories business and the realization of traffic of mobile Internet business, Achieve rapid development.
Profit forecast
It is predicted that the revenue of the company from 2021 to 2023 will be 49.298 billion yuan, 61.508 billion yuan and 73.841 billion yuan respectively, and the EPS will be 4.88, 5.91 and 7.10 yuan respectively. The corresponding PE of the current stock price will be 27, 22 and 18 times respectively, and the “recommended” investment rating will be given.
Risk tips
The risk of intensified industry competition; The downstream demand is lower than the expected risk; Technological R & D innovation is less than expected risk.
