A global brand of first-tier 3C accessories created under the e-commerce wave

Greenlink Technology is a brand mainly engaged in 3C accessories. The products cover five major series: transmission, audio and video, charging, mobile peripherals, and storage. Relying on the “UGREEN Green Link” brand to lay out domestic and overseas markets, the company uses a combination of online and offline sales models: online coverage of mainstream e-commerce platforms at home and abroad such as Tmall, JD, Amazon, AliExpress, Shopee, and Lazada; offline sales channels cover major regions of the country and continue to expand overseas. At the same time, the company continues to develop new product categories such as NAS to open up room for growth. As a result, we expect the company's net profit to be 0.453/0.493/0.554 billion yuan in 2024-2026, an increase of 17.0/8.7/ 12.4% year-on-year. Using the relative and absolute valuation method, we believe that the fair value range of the company 6 to 12 months after listing is 8.343-8.461 billion yuan.

Adhering to efficient R&D to form brand barriers, continue to expand overseas markets, the company built its own “UGREEN Green Link” brand from the beginning of its establishment, and determined the vision of “being a valuable and warm brand”. After adhering to the accumulation of long-term and effective R&D investment, a high-quality product portfolio was formed, while seizing the 3C product innovation dividend period, and taking advantage of the rise of e-commerce to expand channels and effectively distribute products. The brand gradually gained consumer recognition, gained additional brand premiums, and formed effective barriers.

The company uses a combination of online and offline models to achieve global sales. Among overseas online channels, it is leading the list of overseas e-commerce platforms such as Amazon, AliExpress, Shopee, and Lazada. At the same time, the company continues to expand offline channels. Overseas sales accounted for 10.8/17.1/ 19.2% in 2021/2022/2023, respectively, and continued to increase.

NAS creates second growth curve

In the new era of the Internet of Everything, the amount of personal data continues to grow, bringing opportunities to the NAS (Network Attached Storage, Network Attached Storage) market. According to MarketResearch, the 2022 global NAS market was $25.7 billion. The company continues to develop NAS products based on arm and x86 architectures, covering enterprise-level NAS data security and management applications, multi-disk professional NAS operating systems, and AI-based NAS application suites. The total R&D cost for NAS private cloud storage operating systems and application projects in 2021-2023 was 0.16 billion yuan, accounting for 20% of the total R&D expenses for three years.

The estimated fair value range is 8.343-8.461 billion yuan

We use PE relative valuation and FCFF absolute valuation method, and believe that the fair value range of the company after listing is 8.343-8.461 billion yuan. Under the comparable valuation method, the 24-year Wind unanimously expected average PE value of 20.97x to fluctuate 11-15% downward as the range, corresponding to 17.82-18.66x, and the valuation range was 8.081-8.461 billion yuan. The FCFF valuation range was 8.343-9.87 billion yuan, and the delivery range was 8.343-8.461 billion yuan. The corresponding 2024 net profit PE valuation range is 18.40-18.66x, and the 2023 PE valuation range for mother/deducted non-net profit is 21.53-21.83x/22.75-23.07x.

Risk warning: Failure to establish profit forecasting assumptions affects the company's valuation conclusions, risk of developing new technology and new products, risk of operating online platforms, increased risk of market competition, and risk of inventory management.