Incidents:
The company released its 2023 annual report. In 2023, it achieved operating income of 4.348 billion yuan, a year-on-year decrease of 9.61%; realized net profit of 2,010 billion yuan, a year-on-year decrease of 7.69%;
The company released its 2024 quarterly report. The Q1 performance in 2024 grew rapidly, achieving revenue of 1,164 billion yuan, a year-on-year increase of 30.95%, and net profit of 569 million yuan, an increase of 34.45% over the previous year. Mainly due to the recovery in industry demand, all three product lines recovered well.
1. Maintain a high level of product iteration, and achieve steady, moderate and positive quarterly operations in 2023 to achieve operating income of 4.348 billion yuan, a year-on-year decrease of 9.61%; net profit to mother of 2,010 billion yuan, a year-on-year decrease of 7.69%. The year-on-year decline in the company's performance is mainly due to industry demand facing some pressure due to the impact of the overseas environment, but on a quarterly basis, H2 grew 12.76% month-on-month in '23, and business continued to recover better quarterly.
By product, the total proportion of conference products and cloud office terminals reached 41.15%, a significant increase over the previous year. The second and third growth curves are full of momentum.
Desktop communication terminals achieved revenue of 2,544 billion yuan, down 19.11% year on year, accounting for 58.52% of revenue; gross margin was 67.40%, up 3.64 pct year on year; desktop communication terminal performance declined a lot, mainly due to a shift in demand in some industries affected by the hybrid office trend due to the addition of inventory cycles. In the future, the company will continue to explore the high-end market, strive to further increase its global market share, and maintain its position as an industry leader.
Conference products achieved revenue of 1,466 billion yuan, up 12.81% year on year; accounting for 33.71% of revenue, up 6.70 pct year on year; gross margin was 65.76%, up 1.07pct year on year. The company has further built a full-scene smart office solution and launched a variety of all-in-one terminals, such as the ultra-clear split video terminal MeetingEye500, the smart Android video all-in-one MeetingBar A10, and the desktop integrated terminal DeskVision A24, which are suitable for medium to large, medium and ultra-small conference rooms respectively. The products continue to advance towards advanced intelligence, and the first-mover advantage is obvious, and it is expected that it will continue to maintain sufficient growth momentum in the future.
Cloud office terminals achieved revenue of 323 million yuan, a year-on-year decrease of 10.33%; accounting for 7.44% of revenue; gross margin of 53.90%, an increase of 2.52 pcts year-on-year. The company completed the iterative upgrade of the BH series business Bluetooth headset and achieved good channel verification results. According to the company's annual report, in the future, the company will continue to enrich the business headset product matrix, continue to improve the competitiveness of the headset product line, and commercial headsets are expected to make great strides in the future.
2. Actively promote sales, and have a stable cost structure. The R&D investment rate during 2023 was increased by 20.05% for many years, an increase of 4.69pct over the previous year. Among them, the sales/management/R&D expense rates were 6.3%/14.5%/11.5%, YoY+1.0/+2.0/+1.2pct, respectively, and the overall cost remained stable.
The company actively promotes sales, and currently accounts for 26.60% of sales staff. In the future, the company will continue to build sales capabilities for large-scale projects and “platform+smart hardware terminal” solutions, while building and improving sales channels, such as gradually expanding Pro AV and IT channels, while appropriately increasing the proportion of foreign sales to enhance localized service capabilities.
Furthermore, the company's R&D investment continues to increase, and the R&D cost rate is increasing year by year. In 2023, the company's R&D expenses increased 0.69% year on year, accounting for 11.48% of revenue; the number of R&D personnel increased 6.13% year on year, accounting for 51.77% of the total number of people. The company focuses on forward-looking R&D and innovation, continuously strengthening the four major competency matrices of professional meetings, voice communication, efficient collaboration, and smart office, continuously refining the core of the underlying audio and video technology, continuously improving the long-term competitiveness of full-scenario communication and collaboration solutions throughout the industry, and building the company's technical moat.
3. Stable cash flow, independent investment and construction of an intelligent industrial park. Judging from the cash flow statement, the company's cash income ratio in 2023 was 1.02, a slight increase over the previous year, and the operation remained steady; net cash flow from operating activities was 1,801,897,585 yuan, YoY -15.12%; net cash flow from investment activities was 7,865,291.80, YoY+ 100.64%, mainly due to the company changing its operating model and independently investing in the smart industrial park. In July 2023, the intelligent industrial park and warehouse were completed and put into operation. Outsourced processing plants entered centralized production one after another. At the same time, perfect quality control systems were set up, and production and storage efficiency were further improved, thereby increasing inventory and reducing the scale of production. In the future, the company will carry out detailed planning of equipment, production lines, etc., raise the level of intelligence, reduce labor costs, use smart industrial parks as a new starting point to build an intelligent manufacturing industry ecosystem, and continuously strengthen supply chain capabilities, thereby supporting the company's long-term development strategy and ensuring the company's steady operation and business growth.
4. Shareholder returns continue to increase, share repurchases and stock incentives have been implemented one after another, full of confidence in long-term development, and shareholder returns continue to increase. The company achieved net profit of RMB 2,010 billion in 2023. It plans to distribute a cash dividend of RMB 9 to all shareholders for every 10 shares based on the total share capital of the company after deducting the repurchased shares of 1,262 million shares. It is estimated that a total cash dividend of 1,136 billion yuan will be distributed, accounting for 56.52% of the net profit to mother.
Implement share repurchases and stock incentives to demonstrate confidence in the company's development. According to the company's 2023 annual report, the company completed the 2022 restricted stock grant reservation in 2023 and established the 2023 business partner shareholding plan. As of September 19, 2023, the company's share repurchase plan has been completed. A total of 2.1746 million shares have been repurchased, accounting for 0.17% of the company's current total share capital, and the total transaction amount is 9999 million yuan. At the same time, according to the company's announcement, the company launched the 2024 restricted stock incentive plan on April 22, 2024 to motivate and induce key employees in all echelons and demonstrate full confidence in the company's long-term development.
5. 2024 focuses on the three strategic directions of “full-scene coverage, all-round terminals, and intelligent transformation”, and continues to launch high-quality new products. In 2024, the company will take “full-scene coverage, all-purpose terminals, and intelligent transformation” as the three strategic directions. In 2024, it will mainly launch next-generation smart conference terminal products such as professional audio and video conferencing tablets, conference room series products, and core cameras/microphones/speakers. At the same time, headphone products will also launch new products in the wired, DECT wireless and Bluetooth wireless categories to gradually improve the product matrix; through professional meetings, voice communication, and high efficiency The four major capabilities of collaboration and smart office continue to empower enterprises to transform digitally and expand and improve communication and collaboration solutions across the entire industry. At the same time, the company will also continue to build sales capabilities for large-scale projects and “platform+smart hardware terminal” solutions to further enhance the company's long-term competitiveness.
6. The 2024 equity incentive plan highlights the company's confidence in development
The company announced the 2024 restricted equity incentive plan. The 2024-2025 fiscal year will be used as the assessment year. The 2024/2025 operating income and net profit growth rate will be no less than 20%/40% based on 2023 operating income and net profit, respectively. The assessment goals of the company's current equity incentive plan show the company's development confidence in the steady recovery of performance.
7. Investment suggestions:
As a leading global communication and collaboration solution provider, the company gradually recovered downstream demand and performance after experiencing an inventory removal cycle, adjusted profit forecasts with reference to the company's latest equity incentive plan. The estimated revenue for 2024-2026 was adjusted from 59.5/71.1/N/A 100 million yuan to 52.2/63.3/7.79 billion yuan, respectively. Earnings per share were adjusted from 1.93/2.29/N/A yuan to 1.91/2.31/2.86 yuan, respectively, corresponding to April 24, 2024 The daily closing price was 36.57 yuan/share, and PE was 19.15/15.84/12.78 times, respectively, maintaining the “gain” rating.
8. Risk warning:
Risk of exchange rate fluctuations; shortage of raw materials and risk of price increases; sales volume of commercial headsets and conference tablets falling short of expectations; overseas market expansion falls short of expectations; increased risk of industry competition; systemic risk.