Incident: The company released a performance forecast for the first quarter of 2024, which is expected to be achieved in 24Q1, with operating income of 1,137-1,182 billion yuan, up 28%-33%; net profit to mother of 558-579 million yuan, up 32%-37% year on year; net profit without return to mother of 512-529 million yuan, up 47%-52% year on year.
Inventory and demand were both under pressure for the full year of 2023. The 2024 Q1 pressure factors showed a gradual lifting trend, and the year-on-year growth rate increased significantly in the single quarter:
According to the company's earlier announcement, the estimated operating income for the full year of 2023 was 4.358 billion yuan, down 9.40% year on year, net profit to mother was 2,023 billion yuan, down 7.08% year on year, and net profit after deducting non-return to mother was 1,801 billion yuan, down 12.38% year on year. The pressure on the full-year results of 2023 is mainly reflected in the decline in desktop communication terminal business revenue. On the one hand, the reason was that channel inventory was high in 23 and was in the inventory removal stage, and on the other hand, it was also affected by weak demand from the overseas industry as a whole.
The two major factors suppressing the company's performance in 2024 Q1 have improved. The overall inventory volume of dealers has returned to a healthy and reasonable level, and downstream demand has resumed growth. As a result, the company's three product lines have recovered well. The year-on-year growth rate of the company's revenue, net profit to mother, and net profit after deducting non-return to mother is expected to reach 30%, 34%, and 50% in the first quarter, respectively. This is the first time since 2023 that the year-on-year growth rate in a single quarter has been positive.
The second and third growth curves are growing at a higher rate. Deeply cooperating with Microsoft and releasing new products, it is expected that they will continue to benefit from the progress of Teams' AI capabilities.
The company's first business, the desktop communications business, was adversely affected by weak inventory and demand throughout 2023. We expect inventory levels to gradually normalize in 24, and the year-on-year growth rate is expected to correct.
The company's second business conference products have resumed relatively steady growth throughout 2023. The third business cloud office terminal business was affected by the new product promotion pace and verification cycle in the first half of the year, and has resumed growth in the second half of the year. According to the company announcement, 24Q1 conference products and cloud office terminals grew significantly, so we expect the two major businesses to maintain a high growth rate, especially the cloud office business. The new product verification results are good, and the growth rate is expected to be the top of the three major businesses.
The company cooperated deeply with Microsoft and jointly launched the Copilot integrated SmartVision 60 audio and video all-in-one computer and MVC in 2023. The future will be further upgraded along with Teams' AI functions, which is expected to drive the company's demand for supporting conference products and audio and video hardware.
Profit forecast and valuation: The company has plenty of room for future development, significant long-term competitiveness advantages, steady operation, and a second and third growth curve. We expect the company's net profit to be 20/25/2.9 billion yuan in 2023-2025, respectively, corresponding to PE 19/15/13 times, maintaining a “buy” rating.
Risk warning: Economic recovery falls short of expectations, and marginal computing power development falls short of expectations.