\u3000\u3 Guocheng Mining Co.Ltd(000688) 036 Shenzhen Transsion Holdings Co.Ltd(688036) )
Events
Shenzhen Transsion Holdings Co.Ltd(688036) released the annual report for 2021: in 2021, the company achieved an operating revenue of 49.412 billion yuan, a year-on-year increase of 30.75%; The net profit attributable to the parent company was 3.909 billion yuan, a year-on-year increase of 45.52%; The net profit deducted from non parent company was RMB 3.112 billion, with a year-on-year increase of 30.42%.
Key investment points
The main business revenue grew rapidly and the market share was further expanded
In 2021, relying on the accumulated leading advantages, the company promoted the rapid development of various businesses in emerging markets, actively gave full play to the advantages of localization, and achieved outstanding performance. According to the statistics of IDC, the company’s share in the global mobile phone market is 12.4%, ranking third. Among them, the share of smart phones in the global smart phone market is 6.1%, which is higher than the market share of 4.7% in 2020. In 2021, the company’s overall shipment of mobile phones was about 197 million, with a year-on-year increase of 13.07%. The operating revenue of mobile phone products reached 46.194 billion yuan, accounting for 93.49%; The revenue from other businesses such as category expansion and mobile Internet was 2.342 billion yuan, a significant increase of 112.30% year-on-year. In terms of profitability, the company achieved a gross profit margin of 21.30% in 2021. Due to the shortage of raw materials and the rise of prices, the gross profit margin fluctuated slightly. In terms of expenses, in 2021, the financial expense rates of sales and management of the company were 6.57%, 2.62% and 0.22% respectively, of which the financial expense decreased by 74.02% year-on-year, mainly due to the decrease of exchange loss due to the fluctuation of foreign currency exchange rate. In terms of R & D expenses, in 2021, the company continued to increase R & D investment, with R & D expenses of RMB 1.511 billion, a year-on-year increase of 30.51%, of which the number of R & D personnel at the end of 2021 was 2845, an increase of 48.56% compared with 2020, and the employee salary increased greatly.
Based on emerging market countries, “copy” Africa’s business path
In 2021, the company continued to dig deep into emerging markets such as Africa and South Asia to realize iterative upgrading of product structure. The company has always maintained a dominant position in the African market and further expanded its leading edge, ranking first in market share with a market share of more than 40%. At the same time, the company continues to explore the South Asian market. According to the statistics of IDC, the company accounted for more than 40% of the smart machine market in Pakistan in 2021, ranking first; Bangladesh’s smart machine market accounts for 20.1%, ranking second; India’s smartphone market accounted for 7.1%, ranking sixth. In addition, the company actively explores emerging markets outside Africa and seeks opportunities to expand Middle East markets such as Iraq, Saudi Arabia and Turkey, as well as Latin America and Russia. The company is expected to re carve its business path in Africa and further expand its brand share in emerging markets.
The brand effect is gradually deepened, and the localized operation mode consolidates the competition
Advantageous companies focus on localized operation and technology R & D innovation, firmly implement the strategy of “adjusting measures to local conditions and people’s conditions”, carry out differentiated allocation of resources according to the objective environment and user needs in different regions, and constantly expand the brand influence. At the same time, seizing the characteristics of underdeveloped areas, the company launched the product portfolio of function machine + smart machine, divided the market with multi brand strategy, and benchmarked the three mobile phone brands of Tecno, itel and infinix with different consumer power user groups. In terms of management, the company focuses on overseas operations. Its core management team has been deeply involved in the African market for many years, and has established a perfect overseas business system and strong business ability. In January 2022, the former vice president of Baidu joined Hailong as a voice Messenger, injecting new strength into the future development of the company’s mobile Internet business. In terms of R & D, based on the four core technology fields of African localized dark skin photography technology, application innovation of new hardware materials, big data user behavior analysis and OS system and mobile Internet products and services, the company further increases R & D investment, first mover advantage helps the company maintain a strong competitive position in the African market, and differentiation strategy makes the company form a unique competitive advantage.
Profit forecast
It is predicted that the company’s revenue from 2022 to 2024 will be 61.523 billion yuan, 73.631 billion yuan and 87.312 billion yuan respectively, and the EPS will be 6.00, 7.09 and 7.95 yuan respectively. The corresponding PE of the current stock price will be 14, 12 and 10 times respectively, giving the “recommended” investment rating.
Risk tips
Downside risks of industry prosperity, lower than expected sales of end products, increased industry competition, etc.
