Core views

2024Q2's performance is expected to continue to increase. 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. The company actively responds to changes in the external environment, emphasizes improving core competitiveness, and helps long-term high-quality development. As adverse factors are digested, the company's performance has returned to an upward channel. As demand from Europe and America recovers and the company's downstream demand continues to improve, we are optimistic about the company's future development trend.

occurrences

The company announced its 2024 semi-annual performance forecast. The 2024H1 company's revenue is expected to be 2.616 billion yuan to 2.718 billion yuan, an increase of 28%-33% over the previous year, and the net profit to mother is expected to be 1.338 billion yuan to 1.39 billion yuan, an increase of 30% to 35% over the previous year.

Brief review

1. Downstream demand improved, and performance continued to grow at a high rate.

2024H1's revenue is expected to be 2.616 billion yuan to 2.718 billion yuan, up 28% to 33% year on year, and is expected to achieve net profit of 1.338 billion yuan to 1.39 billion yuan, up 30% to 35% year on year; net profit after deduction is estimated to be 1.229 billion yuan to 1.283 billion yuan, up 36%-42% year on year. Looking at a single quarter, 24Q2 is expected to achieve revenue of 1.452 billion yuan to 1.554 billion yuan, an increase of 25.7%-34.6% year on year, and net profit to mother of 0.77 billion yuan to 0.821 billion yuan, an increase of 27%-35% year on year. The company continuously improves enterprise communication solutions, makes every effort to expand sales channels, and continues to forge long-term competitive advantages. The company continues to empower enterprise customers to digitally transform and innovate through the four major capabilities of professional conferencing, voice communication, efficient collaboration, and smart office, helping enterprises gain new productivity advantages in the era of artificial intelligence and the digital economy. At the same time, along with the recovery in demand in Europe and the US in 2024 and the cost-effective advantage of the product matrix, the trend of improving downstream demand was verified. 2024H1's downstream demand continued the trend of marginal improvement, performance continued its high growth trend, all product lines maintained a steady pace of progress, and the positive trend of improving business continuity was further consolidated and strengthened.

2. The semi-annual goal of equity incentives is achieved, demonstrating confidence in the future.

In order to further establish and improve the company's multi-level long-term incentive mechanism and deeply bind the long-term interests of employees and the company, the company provides incentives in the form of stock options to potential key players.

The total number of incentives for this plan is 270 people, who are potential key employees who met the company's qualifications when the company announced this incentive plan. Using 2023 as the base, evaluate 24-25 revenue and net profit: the 2024 revenue and net profit growth target is 20%, and the 2025 revenue and net profit growth target is 40%. The assessment target growth rate is high, which shows the company's confidence in development.

3. Continue to enhance product competitiveness with cloud office terminals, and conference products benefit from AI.

Cloud office terminals improve the product matrix and enhance product competitiveness. The main products of cloud office terminals include business headsets, portable conference phones, and personal mobile office cameras, mainly business headsets. The overall product line is still in the early stages of development. With the company's accumulated brand reputation, technical advantages and channel advantages in the enterprise communications market over the years, the product line is growing rapidly. In the future, the company will also continue to increase investment in R&D, continuously refine more professional intelligent audio equipment, improve the product matrix, cover diverse application scenarios, and continue to enhance product competitiveness. Conference products are bound to Microsoft and are expected to benefit from AI. The company's conference product business line always adheres to the “cloud+end” product design concept to form a one-stop complete solution. After years of development, the company's conference products have been continuously expanded and iterated, and new technologies such as AI intelligence and the Internet of Things have also been fully applied in the products. In the future, the company will continue to insist on R&D investment and product innovation, continuously enrich the smart office capability set, use AI technology to create more intelligent office and conference experiences, meet global customer needs faster and more efficiently, and strive to further increase its market share. The company continues to increase R&D investment in the field of SIP phones, driving the company's products to the high-end market. After long-term development, the company's product line has achieved leading competitiveness in the industry, and its market share continues to increase. According to Frost & Sullivan data, the company's share of the global SIP phone market was 38.2% in 2021, ranking first for five consecutive years. In the future, the company will continue to explore the high-end market, strive to further increase its global market share and maintain its position as an industry leader.

4. Profit prediction and investment advice.

The company is leading the world in the traditional desktop communication terminal business, while increasing R&D and transformation in the high-end market to seek greater market share, and also has a certain guiding role in the company's new business line; conference products are expected to benefit from AI and further increase market share; cloud office terminals continue to improve the product matrix and enhance product competitiveness; the company's long-term development trend is improving. Under the AI wave, the company is expected to fully benefit from the growth in integrated communication demand brought about by the digital transformation of enterprises. Along with the recovery in demand in Europe and the US and the cost-effective advantage of the product matrix, the company's downstream demand is expected to continue to improve. We expect the company's revenue from 2024 to 2026 to be 5.231 billion yuan, 6.363 billion yuan, and 7.884 billion yuan, respectively, and net profit to mother of 2.434 billion yuan, 2.983 billion yuan, and 3.629 billion yuan, respectively, corresponding to PE19X, 16X, and 13X, maintaining a “buy” rating.

4. Risk Alerts:

The recession in overseas economies exceeded expectations. If the overseas recession is severe, it will affect customer demand, which in turn will affect the company's operating performance.

Demand for conference products and cloud office terminals fell short of expectations, etc. Conference products and cloud office terminals are currently the company's two fastest growing product lines. They are also new business areas that the company has entered in recent years. There is a possibility that market share will increase, which is the main driving force for the company's future revenue growth.

Prices continue to rise in the supply chain and are out of stock. If overseas demand and the domestic supply chain are affected by force majeure factors, it will cause problems such as falling demand and rising supply chain costs, and there is a risk that the company's revenue will decline and gross margin will decline.

Risk of exchange rate fluctuations. The company's revenue volume mainly comes from Hong Kong, Macao, Taiwan and overseas markets, so exchange rate fluctuations will have a certain impact on the company's revenue and profits.