Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 4.35 billion yuan, down 10% year on year, net profit of 2.01 billion yuan, down 8% year on year, net profit after deducting 1.79 billion yuan, down 13% year on year; 24Q1 achieved revenue of 1.16 billion yuan, up 31% year on year, net profit due to mother of 570 million yuan, up 49% year on year.
The whole of 2023 was mainly about maintaining stability and restoration. Conference products were the first to resume steady growth. In the future, along with the gradual recovery of inventory and demand, all three major businesses are expected to reach an inflection point in performance. By product for the whole year, the desktop communication terminal business achieved revenue of 2.5 billion yuan, a year-on-year decline of 19%, with a gross profit margin of 67%, an increase of 4 percentage points; conference products achieved revenue of 1.5 billion yuan, a year-on-year increase of 13%, accounting for 34% of revenue, and a gross profit margin of 66%, an increase of 1 percentage point over the previous year; cloud office terminals achieved revenue of 300 million yuan, a year-on-year decrease of 10%, accounting for 7% of revenue and a gross profit margin of 54%, an increase of 3 percentage points over the previous year. The pressure on the full-year results of 2023 is mainly reflected in the strong decline in desktop communication terminal business revenue. On the one hand, channel inventory was high in 23, and on the other hand, it was also affected by weak demand from the overall overseas industry. However, two major factors of suppression improved in 24, and the overall inventory volume of dealers has returned to a healthy and reasonable level. We believe that the three business lines of subsequent companies are expected to resume the growth trend.
24Q1 showed high performance growth, and the growth rate of the second and third product lines was high. The company's performance showed a quarterly improvement trend, and 24Q1 ushered in higher growth. According to the company's previous announcement, 24Q1 conference products and cloud office terminals grew significantly. Therefore, we expect the two major businesses to maintain a high growth rate, especially the cloud office business. The new product verification results are good. The growth rate is expected to be the top of the three major businesses, and the company's second and third growth curves will continue to expand.
Release equity incentives to bind talent to the company's long-term growth value. The company announced the 2024 restricted stock incentive plan. The assessment year is 2024-2025. The assessment target is based on 2023. The revenue and net profit growth rates for 24/25 must not be less than 20%/40%, respectively. A total of 159 people, including executives, core managers and core technical (business) personnel, were awarded at a price of 17.22 yuan per share. In addition, the company also announced the 2024 stock options incentive plan, which incentivizes 270 potential key employees. The performance assessment goal is the same as restricted equity incentives, and the exercise price is 34.44 yuan/share.
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 mother for 2024-2026 to be RMB 25.28/3.5 billion, respectively, corresponding to PE of 19/16/13 times, respectively, to maintain a “buy” rating.
Risk warning: Economic recovery falls short of expectations, marginal computing power development falls short of expectations, and business growth falls short of expectations.