1Q24's revenue increased 88% year over year, and net profit after deducting non-return to mother increased 343% year over year. The company is mainly engaged in smart terminal business with mobile phones as the core. The products are TECNO, itel and Infinix mobile phones of the three major brands, including functional devices and smart phones; the product sales area is concentrated in emerging market countries such as Africa, South Asia, Southeast Asia, the Middle East and Latin America. As the expansion of emerging markets accelerated, the company achieved revenue of 62.3 billion yuan (YoY +33%), net profit of 5.1 billion yuan (YoY +132%), gross profit margin of 24.5% (YoY +3.13pct); entering 1Q24, traditional off-season emerging market demand maintained a good growth trend. The company's revenue was 17.4 billion yuan (YoY +88%, QoQ -9.5%), net non-net profit of 1.35 billion yuan (YoY +343%, QoQ -17%), gross profit margin 22.15% (YY -1.21pct) QoQ-1.48pct).
The company's emerging markets are expanding at an accelerated pace, and the share of regions outside Africa continues to rise. The company shipped about 194 million mobile phones in '23. According to IDC data, the company's share of the global mobile phone market in '23 was 14.0%, ranking third, with a smart phone market share of 8.1%, ranking fifth; Africa's smart phone market share exceeded 40%, ranking first in Africa. In the South Asian market: Pakistan's smart phone market share exceeds 40%, ranking first; Bangladesh's smart phone market share exceeds 30%, ranking first; India's smart phone market share is 8.2%, ranking sixth.
On this basis, the company's share in Southeast Asia, the Middle East, Central Europe and Latin America continues to increase.
In 1Q24, the company's shipment volume increased by 84.9% year on year, higher than the average growth rate of the industry. According to IDC data, global smartphone shipments in the first quarter of '24 were 289.4 million units, up 7.8% year on year; the company shipped about 28.5 million units in the first quarter of '24, with a market share of 9.9%, up 84.9% year on year, which is significantly higher than the average growth rate of the industry. Based on user needs, the company released product technologies such as Explorer satellite communication technology, scroll-screen concept phones, full-scene fast charging technology, AirCharge air charging technology, AIGC portrait photography, and digital people to enhance the competitiveness of high-end products and provide impetus for the subsequent increase in emerging market share.
Expanding categories and businesses such as mobile internet brings room for long-term growth. In terms of mobile internet business, at the end of '23, the number of monthly active users of various application products developed independently and collaboratively by the company exceeded 10 million. Furthermore, with the development of the African market economy and diversification of consumer demand, the company's digital accessories brand oraimo and household appliance brand Syinix are expanding categories, bringing long-term growth impetus to the terminal product business.
Investment suggestions: We are optimistic: 1) While the company maintains its leading position in the African market, the results of developing markets in South Asia, Southeast Asia, the Middle East, and Latin America are gradually showing; 2) the rapid growth of new businesses such as mobile connectivity and home appliances and the construction of a mobile internet ecosystem. Based on the operating expenses situation in the first quarter, the net profit forecast for 24-25 was slightly adjusted. The company's net profit for 24-26 is estimated to be 63.8/77.5/8.98 billion yuan (previous value:
65.2/7.69 billion yuan in 24-25), corresponding PE was 18/15/13 times, maintaining a “buy” rating.
Risk warning: Demand for mobile phones falls short of expectations, and raw material prices fluctuate.