Description of the event
On April 22, 2024, the company released the 2023 Annual Report, 2024Q1 Quarterly Report, 2024 Restricted Stock Incentive Plan (Draft), and 2024 Stock Option Incentive Plan (Draft).
The company achieved operating income of 4.348 billion yuan in 2023, -9.61% year on year, and realized net profit of 2.010 billion yuan, -7.69% year on year; 2024Q1 achieved operating income of 1,164 billion yuan, +30.95% year over year, and realized net profit of 569 million yuan, or -34.45% year on year.
The Company's 2024 Restricted Stock Incentive Plan (draft) is an incentive target of 159 people, awarding 3.0996 million shares of restricted stock, accounting for 0.25% of the total share capital. The grant price is 17.22 yuan/share. The assessment target is based on 2023 revenue and profit, and the 2024-2025 revenue and profit growth will not be less than 20% or 40%.
The Company's 2024 Stock Options Incentive Plan (draft) provides incentives to 270 people. The number of stock options granted is 962,400 shares, accounting for 0.08% of the total share capital, and the exercise price is 34.44 yuan/share. The assessment year is 2024-2025. The assessment target is based on revenue and profit in 2023, with revenue and profit growth of no less than 20% or 40% in 2024-2025.
Incident comments
Although demand from overseas markets is slowly recovering in 2023, dealers are still in the inventory removal cycle, and the company's three major businesses are still under full pressure. Conference product revenue was 1,466 billion yuan, +12.81% year over year, gross profit margin 65.76%, +1.07pct year on year.
Cloud office terminal revenue was 323 million yuan, -10.33% YoY, gross profit margin 53.90%, +2.52 pct YoY. Desktop communication terminal revenue was 2,544 billion yuan, -19.11% YoY, gross profit margin 67.40%, +3.64pct YoY. There has been a relative decline in desktop communication terminals, mainly due to the inventory removal cycle and a shift in demand in some industries affected by hybrid office trends.
The 2024Q1 growth rate returned to a high year-on-year increase, and continued to improve month-on-month. The improvement in the macroeconomic environment in the European and American markets has led to a recovery in demand in the enterprise communications products industry. However, due to the downstream dealer inventory cycle, user demand side improvements in 2023 were not reflected in the company's operating data. With the end of the dealer inventory cycle at the end of 2023, 2024Q1's revenue was +4% month-on-month. Combined with the impact of the lower 2023Q1 base, the year-on-year growth rate of 2024Q1 was higher. Furthermore, the appreciation of the US dollar also had a positive impact on the company's profit side. Take financial expenses as an example. 2024Q1's financial expenses are -13 million yuan, and 2023Q1's financial expenses are 121 million yuan.
Take a long leap forward and embark on a journey again. From the three perspectives of the macro environment, downstream inventory, and product progress, we believe that the company's growth is expected to recover from 2024. The digital transformation of global enterprises and the improvement of the quality and efficiency of enterprise communication are inevitable long-term trends, and the deepening and practical use of artificial intelligence also continues to drive the development of the integrated communications industry. Overall, the company actively responds to changes in the external environment, focuses on improving competitiveness, and focuses on medium- to long-term high-quality development. Through continuous iteration of original products to enhance core competitiveness, continuously explore new products to meet the trend of new technologies such as artificial intelligence, and explore new business growth points.
Investment advice and profit forecast: The target assessment target of the company's 2024 restricted stock incentive plan and stock option incentive plan is based on 2023 revenue and profit. The revenue and profit growth in 2024-2025 will not be less than 20% or 40%, highlighting the company's confidence in growth. We expect the company to achieve net profit of 24.2/29.1/3.67 billion yuan in 2024-2026, an increase of 20%/20%/26% over the previous year, corresponding to a valuation of 19/16/13 times. We focus on recommending and maintaining a “buy” rating.
Risk warning
1. The recovery in overseas market demand fell short of expectations;
2. The company's new product development fell short of expectations.