Description of the event

In the first half of 2024, the company achieved operating income of 2.667 billion yuan, a year-on-year increase of 30.50%, achieved net profit of 1.36 billion yuan, a year-on-year increase of 32.13%, and achieved net profit after deducting non-return to mother of 1.253 billion yuan, an increase of 38.62% over the previous year. In the second quarter of 2024, the company achieved operating income of 1.503 billion yuan, a year-on-year increase of 30.16%, a month-on-month increase of 29.20%, achieved net profit of 0.792 billion yuan, +30.51% year-on-month, and realized net profit without return to mother of 0.733 billion yuan, +31.91% year-on-year and +41.02% month-on-month.

Incident comments

Conference products achieved revenue of 0.95 billion yuan, a year-on-year increase of 51.27%. During the reporting period, the company maintained deep insight into the market and rapid response. With its deep technical strength, the company continued to create flexible and convenient intelligent scenarios to provide a more efficient and better audio and video conferencing experience. The cloud office terminal achieved revenue of 0.2 billion yuan, an increase of 29.29% over the previous year.

During the reporting period, the company continued to expand the commercial headset product line, refine product quality, promote channel development, and continue to build the competitiveness of commercial headset products, which is poised for rapid development. Desktop communication terminals achieved revenue of 1.51 billion yuan, an increase of 20.26% over the previous year. In the future, the company will continue to be market-oriented, technology-based, and quality-supported. Through precise and effective strategies, the company will continue to consolidate the competitive advantage of the industry and strengthen its market position.

Profit margin & expense ratio: 2024H1, gross margin of company conference products +0.07 pct year on year, gross margin of desktop communication terminals +0.14 pct year on year, overall gross margin of +0.04 pct year on year, steady increase slightly; sales expense ratio -1.01 pct year on year, management expense ratio -0.25 pct year on year, financial expense ratio -0.13 pct year on year, R&D cost ratio -2.10 pct year on year. All cost ratios declined.

The company clearly positioned itself in the terminal market based on the SIP protocol in 2005, began laying out video conferencing business in 2015, and officially established a cloud office terminal business line in 2020. Judging from the sales growth slope after the establishment of the business line, cloud office terminals > conference products > desktop communication terminals mean that the company grew faster than the previous product line after opening each new business, indicating that the company has formed a virtuous cycle in technology research and development, product construction, channel reuse, etc. Judging from the company's strategic direction choices and the growth situation after the opening of each new business line, its management and operation capabilities have been significantly enhanced, and α attributes are becoming more refined.

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 company's 2024Q2 revenue and profit all grew rapidly year on month. The trend of high growth continued, downstream demand continued to improve marginally, all product lines maintained a steady pace of progress, and the positive trend of improving business sustainability was further consolidated and strengthened. 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, and the 2024-2025 revenue and profit growth will not be less than 20% or 40%, highlighting the company's confidence in growth. We expect the company to achieve net profit of 2.42/2.91/3.67 billion yuan in 2024-2026, a year-on-year increase of 20%/20%/26%, corresponding to a valuation of 17/14/11 times. We focus on recommending and maintaining a “buy” rating.

Risk warning

1. Overseas market demand recovery falls short of expectations;

2. The company's new product development falls short of expectations.