Incident: On April 23, 2024, the company released its 2023 annual report and 2024 quarterly report. The 2023 revenue was 4.35 billion yuan, down 9.6% year on year; net profit to mother was 2.01 billion yuan, down 7.7% year on year; net profit after deducting non-return to mother was 1.79 billion yuan, down 13.0% year on year. The company achieved revenue of 1.16 billion yuan in a single quarter in the 24Q1 quarter, up 31.0% year on year, net profit to mother of 569 million yuan, up 34.5% year on year, and net profit without return to mother of 520 million yuan, an increase of 49.3% year on year.
The inflection point of the business was further verified, and Q1 results exceeded expectations. 23H2 revenue increased 12.8% month-on-month, and 24Q1 revenue increased 31% year-on-year, a significant inflection point. The 24Q1 performance exceeded expectations mainly due to inventory replenishment and high downstream demand, and dealer inventory has returned to a healthy and reasonable level. There has been a steady increase in profitability. In '23, the company achieved a gross profit margin of 65.7% and a net profit margin of 46.2%, up 2.71 pct and 0.96 pct, respectively. We believe it was mainly due to changes in the company's business structure and the gradual results of high-end development.
The product continues to be upgraded, and the second and third curves continue to gain strength. By product, phone revenue fell 19% in '23, revenue from conference products increased 13%, revenue from cloud office terminals fell 10%, and conference revenue accounted for 34%, up 6.7pct year-on-year. 24Q1 conference products and cloud office terminals have grown significantly. In '23, the company's conference products were equipped with AI technology in the solution to achieve full capabilities and full-scene coverage; completed the iterative upgrade of BH series business Bluetooth headsets, and achieved good channel verification results. The company maintained a high level of R&D investment in 23 years, reaching 499 million yuan, and the R&D expenditure ratio was 11.48%. The company continues to refine the underlying audio and video technology core, continuously refine product capabilities, and enhance the long-term competitiveness of solutions. In '24, the company mainly launched next-generation smart conference terminal products such as professional audio and video conferencing tablets, conference room series products, and core camera/microphone/speaker. At the same time, new headset products will also be launched in the wired, DECT wireless, and Bluetooth wireless categories.
The cash dividend ratio is increasing year by year, and equity incentive targets anchor a higher growth rate. The company plans to share 1.14 billion yuan for the year in '23, increasing the annual dividend ratio to 56.5%; in addition to the mid-year dividend of 6.3 billion yuan, the cash dividend distributed throughout the year was about 1.77 billion yuan, and the annual dividend ratio reached 87.9%. The company has actively rewarded investors since its listing. Since listing, the dividend rate has reached 51.3%. Compared with 44.7% in '21 and 53.8% in '22, the dividend rate in '23 has further increased, and the company's dividend rate for the past 12 months has reached 4.1%. The company launched a new phase of equity incentives. It plans to grant 960,000 stock options (0.08% of total share capital) to 270 key players to evaluate 24-25 results based on 23 years: the revenue and net profit growth target for 24 to 25 years is 20%, and the revenue and net profit growth target for 25 years is 40%. The company issued a large-scale equity incentive plan for core cadres, anchoring the 24-25 high performance growth rate target and demonstrating the company's determination and confidence in development.
Investment advice: The inflection point of the company's performance has arrived, and inventory replenishment and downstream demand are booming; core competitiveness is remarkable, and the second three curves open up room for growth. We expect the company to achieve net profit of 2,673 billion yuan/3.459 billion yuan/4.412 billion yuan in 24-26 years, corresponding PE of 17x/13x/10x. The company's PE valuation center has been 39x in the past five years. Maintain a “Recommended” rating.
Risk warning: New product expansion falls short of expectations, risk of exchange rate fluctuations, hybrid office progress falls short of expectations, etc.