The consumer electronics market is gradually recovering, and new product iterations are expected to drive the next round of growth. Affected by many factors, such as COVID-19 epidemic, industry cycle, broken supply chain and so on, the global consumer electronics market has remained weak since 2022.
Canalys data show that global smartphone shipments declined for the fifth consecutive quarter; 2023Q2 Chinese mainland smartphone shipments of 64.3 million units,-5% year-on-year, overall shipments are still declining, but the decline has gradually narrowed, the consumer market is facing signs of recovery. At the same time, with the increasing maturity of folding screen smart phone technology and the in-depth application of AI technology, consumer electronics companies will increase the layout of AI smart hardware, which may bring about a new round of consumer electronics terminal innovation and business model reform. We believe that with the gradual improvement of market sentiment and the iteration of superimposed new technologies, the global consumer electronics terminal consumer market is expected to usher in a recovery inflection point.
Estelle: continue to cultivate digital sales, based on e-commerce multi-dimensional extension. The company is a leader in the field of 3C digital distribution, deeply ploughing the field of digital sales for more than 20 years, constantly building a sales network, but also actively expanding communications and new retail business. At present, the company has built a global sales network, obtained a mobile resale license, and entered the resale field of the Internet of things. The company has a wide range of products and services, which is mainly divided into three parts: digital distribution business, digital retail service and other digital innovation business. From 2016 to 2022, the company's operating income increased from 48.333 billion yuan to 91.429 billion yuan, and its CAGR reached 11.21% in 6 years. In terms of revenue structure, the company has been innovating new digital retail areas in recent years, and the proportion of digital retail revenue has been increasing, rising from 18.14% in 2020 to 33.27% in 2022, bringing new business growth for the company.
The company's new retail business layout continues to increase, and the development of overseas markets is accelerated. The traditional retail model is based on offline physical store channels, relying solely on the surrounding people to sell goods, seriously limiting the scope of the audience and the inflow of new customers, unable to promote rapid consumption. After years of accumulation, the company has cut into the new field of e-commerce retail from single-line traditional channels, and has formed the brand operation and member operation capability of online full scene through digital tools such as platform e-commerce, live e-commerce, short video, social platform, etc. it can attract customers in the whole network, implement personalized push and service, and rely on warehousing and logistics networks to reduce costs and increase efficiency, and promote retail business upgrading. At the same time, the company is actively expanding overseas markets, with a substantial increase in overseas business in 2022, with overseas revenue of 5.757 billion yuan, + 71.11% compared with the same period last year. At present, the company has obtained the exclusive license of Glory in many overseas countries and regions, and joined hands to achieve a new breakthrough in sales share and sales scale in Hong Kong, China. While helping other brands to sell overseas, the company actively builds its own brand's overseas outlet to lay the foundation for its own business going out to sea. By actively opening up overseas markets and realizing the effective integration of overseas capabilities and resources, Estelle will lay out business innovation with a global perspective and create a strong engine for sustainable development on a larger scale.
Investment suggestion: we expect the company's net profit from 2023 to 2025 to be 802 million yuan, 933 million yuan and 1.143 billion yuan respectively, and the current stock price corresponding to PE is 12x, 10x and 8x respectively. We expect that with the recovery of the mobile phone consumer market, the recovery of the company's mobile phone sales business will drive the company's overall revenue growth. at the same time, as a leading company in the field of communications and e-commerce, the company will actively promote new retail strategies, broaden sales channels and open up new markets. follow-up with strong growth, optimistic about the company's follow-up development, coverage for the first time, given a "recommended" rating.
Risk hint: the recovery of consumer electronics market demand is not as expected; the company's new business expansion is not as expected.