Incident: The company recently released its 2023 annual report and 2024 first quarter report. It achieved operating income of 4.348 billion yuan, YoY -9.61%; realized net profit to mother of 2.010 billion yuan, YoY -7.69%; and gross profit margin of 65.72%, an increase of 2.71 pct over the previous year. The first quarter of 2024 achieved operating income of 1,164 billion yuan, YoY +30.95%; realized net profit to mother of 569 million yuan, YoY +34.45%; gross profit margin of 64.63%, an increase of 0.17pct over the previous year.
Comment: 2024Q1's revenue and profit sides have both increased, and an inflection point in operation has arrived. By product, the company's conference product revenue in 2023 was 1,466 billion yuan, YoY +12.81%, gross profit margin up 1.07pct; cloud office terminal revenue was 323 million yuan, YoY -10.33%, gross profit margin 53.90%, up 2.52 pct year on year; desktop communication terminal revenue was 2,544 billion yuan, YoY -19.11%, gross profit margin 67.40%, up 3.64pct year on year. The large decline in desktop communication terminals was mainly due to the inventory cycle superimposed on demand shifts in some industries . On the cost side, the company's sales/management/R&D expenses in 2023 were 2.776/133/499 million yuan respectively, YoY +7.91%/+19.13%/+0.69%, respectively. 2024Q1's revenue side achieved the first year-on-year increase since 2022/Q4, mainly due to dealer inventory returning to a healthy level and downstream demand returning to growth. Among them, conference products and cloud office terminals grew significantly.
Product categories and channels continue to expand, and industry competitiveness continues to improve. During the reporting period, the company equipped the solution with AI technology and launched various all-round terminal products such as MeetingEye 500, MeetingBar A10, and DeskVisionA24. The BH series business Bluetooth headsets were iteratively upgraded. In terms of channels, the company continues to expand Pro AV and IT channels, and appropriately enhance foreign sales to enhance localized service capabilities. Continuously enhance the competitiveness of the industry in terms of both products and channels.
Issuing equity incentives shows confidence in long-term development, and a high dividend ratio values shareholder returns. The company announced the 2024 restricted stock incentive plan. It plans to grant 3,099,600 shares to a total of 159 people at a price of 17.22 yuan/share. The performance evaluation target is 20%/40% revenue and profit growth in 24/25 (based on 23 years). Furthermore, the company paid a cash dividend of 9 yuan for every 10 shares. Considering the mid-year dividend for 23 years, a total cash dividend of 1,767 billion yuan was distributed in 2023, and the annual dividend ratio reached 87.90%.
Profit forecast: Yilian Network is a leading global enterprise office communications manufacturer. It is optimistic that the company's conference products business and office terminal product business will continue to grow and increase its market share. In 2024-2026, it is expected to achieve operating income of 54.06/66.55/ 8.078 billion yuan, and net profit to mother of 2,417/29.59/3.625 billion yuan, corresponding to EPS 1.91/2.34/2.87 yuan, maintaining the “buy” rating.
Risk warning: New business growth falls short of expectations, and raw material prices fluctuate.