Incident: Yilian Network released its 2023 annual report and 2024 quarterly report: In 23, the company achieved revenue of 4.348 billion yuan (-9.61% YoY), net profit of 2,010 billion yuan (YoY -7.69%), net profit net profit of 1,788 billion yuan (YoY -12.99%), gross profit margin 65.72% (YoY +2.71 pct), net profit margin 46.23% (YoY +0.96pct); 24Q1 achieved revenue of 1.164 billion yuan (YoY +30.95%). $569 million (YoY +34.45%), net profit of 520 million yuan (YoY +49.33%), gross profit margin 64.63% (YoY +0.17pct), net profit margin 48.87% (YoY +1.27pct).
Conference products performed steadily, and desktop communication terminals and cloud office terminals were under pressure in the short term. By business: In '23, the company's conference products achieved revenue of 1,466 billion yuan (YoY +12.81%), gross margin of 65.76% (YoY +1.07pct). The company launched a variety of all-purpose terminals. The products continued to advance towards advanced intelligence, and the first-mover advantage was obvious; cloud office terminals achieved revenue of 323 million yuan (YoY -10.33%) and gross margin of 53.90% (YoY +2.52 pct). The company continued to improve the competitiveness of the headset product line, completed the iterative upgrade of BH series business Bluetooth headsets, and the channel verification results were good; Communications terminals achieved revenue of 2,544 billion yuan (-19.11% YoY) and gross margin of 67.40% (YoY +3.64pct). The decline in revenue in this business was mainly due to a shift in demand in some industries due to the combination of inventory cycles and changes in demand in some industries due to hybrid office trends.
The 24Q1 business performance was outstanding, and the issuance of equity incentives showed confidence. The company's 24Q1 revenue and profit growth rate both exceeded 30% year on year, and there was also a month-on-month increase. We believe that the company's operating inflection point may have arrived; at the same time, the company issued a 2024 stock options incentive plan (draft). The performance assessment requirements for the company are based on 2023 operating income and net profit, and the operating profit and net profit growth rates for 2024 and 2025 are not less than 20% or 40%. This target shows the company's confidence in future operations.
Investors are actively rewarded, and the dividend ratio has increased dramatically. According to the company's official account, the company actively rewards investors. The total proposed cash dividend for the 2023 annual dividend was RMB 1,136 million, and the annual dividend ratio increased to 56.52%; in addition to the cash dividend of RMB 631 million distributed by the mid-2023 dividend, the company's cash dividend for the full year of 2023 was approximately RMB 1,767 million, a significant increase from 53.82% in 2022.
Profit forecast and investment advice: We expect the company's net profit to be $2,413 billion, $2,815 billion, and $3.144 billion for 24-26, and EPS of $191, $2.23, and $2.49, respectively. Referring to the company's historical valuation and the average valuation level of comparable companies, the company was given a 2024 dynamic PE range of 20-25X, corresponding to a reasonable value range of 38.18-47.73 yuan, which is “superior to the market” rating.
Risk warning: The SIP phone market is shrinking; the expansion and marketing of new headset products falls short of expectations.