A global leader in enterprise communications, two new growth curves are building a new chapter. The company stands out in a fiercely competitive market with outstanding product competitiveness, excellent channel management capabilities, and cost advantages brought by efficient domestic manufacturing supply chains and engineer dividends. We believe that in the future, the company can replicate the successful path of SIP phones online in two new products, VCS and business headsets, to achieve an increase in brand awareness and market share, and write a new chapter of development. We expect it to be 24-26 Annual net profit to mother was 2,436/28.81/3.414 billion yuan, respectively. Considering the company's excellent product competitiveness and the recovery trend of demand in the European and American markets, the company was given 25x PE in 2024 (comparable company average value:
16.33x), target price 48.18 yuan/share, raised to “buy” rating.
The trend of hybrid office is clear. Communication and collaboration is one of the basic requirements in the corporate office scenario, with potential tracks such as VCS and business headsets. Under the general trend of hybrid office, the demand and frequency of enterprise communication is increasing, and the market space for related products is vast. Looking ahead to 2024, we believe: 1) The two major segments of video conferencing systems and business headsets have strong growth potential. On the one hand, the penetration rate of specialized video conferencing systems is low among the 90 million conference rooms worldwide in 2021; on the other hand, the increase in the proportion of mobile office is expected to drive an increase in demand for business headsets. 2) In terms of prosperity, although the performance of enterprise communications market participants is generally under pressure in 2023 due to weak demand in the global enterprise communications market and the removal of inventory by channel providers, the major trend of hybrid office and enterprise digitalization remains the same. As channel vendor inventory removal nears its end, 2024 may usher in a year of boom recovery.
The competitive advantage of going overseas is prominent, and the efficient domestic manufacturing supply chain and engineer dividends have helped the company develop a comparative advantage in the European and American markets and become an excellent student with strong competitiveness in overseas communications. Specifically, we believe that the company's competitive advantage is reflected in: 1) extreme product strength. In horizontal comparison, the company's products are more cost-effective, the update and iteration speed is fast, and forms a good cooperative ecosystem with manufacturers such as Teams, which can quickly open up brand awareness and increase market share in overseas markets; 2) Good distribution channels, the company guarantees high profit margins with clear product positioning strategies and brand strength, and can achieve win-win cooperation with channel providers with stable and rich concessions; 3) cost advantages, benefiting from an efficient and complete domestic manufacturing supply chain, lower logistics costs, and Engineer dividends, and the company's cost is significantly lower than that of overseas competitors.
VCS and Business Headphones are relaying the new growth curve. Looking at the investment opportunities brought about by the recovery in performance in the short term, we believe that the company's performance growth rate will gradually resume in the context of increased market share in the new product line and the gradual digestion of downstream inventory. The company's 1Q24 revenue/net profit to mother increased by 30.95%/34.45%, respectively. In the long run, with the support of excellent product strength, channel power and cost advantages, the company is expected to gradually gain popularity in the two new product lines, VCS and business headsets, continue to replace the market share of existing manufacturers, and replicate the path of success in the SIP phone field.
Risk warning: risk of declining overseas demand; promotion of cloud office/conference products falling short of expectations; risk of trade policy changes.