Key points of investment

Event: The company released a performance forecast for the first three quarters of 2024. In 24Q3, the company expects to achieve revenue of 14.16 to 1.475 billion yuan, a year-on-year increase of 20% to 25%; net profit to mother of 6.90 to 0.719 billion yuan, an increase of 18% to 23% year-on-year; net profit after deduction of 6.53 to 0.679 billion yuan, an increase of 22% to 27% year-on-year, in line with our previous performance outlook. The profit growth rate is slightly lower than the revenue growth rate. We judge that it is mainly affected by exchange rate fluctuations.

In the first three quarters of 24, the company expects to achieve revenue of 40.30 to 4.191 billion yuan, an increase of 25% to 30% over the previous year; net profit to mother of 20.18 to 2.098 billion yuan, an increase of 25% to 30% over the previous year.

The second and third growth curves are high. Looking at product structure optimization by dividing it into three product lines, the desktop communication terminal market is relatively mature. The company has the highest market share of SIP phones in the world, and 24H1 benefits from the demand for inventory replenishment. As the second and third growth curves, conference products and cloud office terminals contributed to faster growth. 24H1 grew by 51% and 29% respectively. Looking ahead to 2025, we are optimistic about optimizing the company's product structure. Conference products benefit from the hybrid office trend and are expected to continue to grow rapidly; cloud office terminals will complete product optimization and adjustment in 23, release new products and improve the product matrix in 24, and growth is expected to accelerate further.

The 24H1 desktop communication terminal earned 1.51 billion yuan, +20.26% year over year, gross profit margin 66.93%, +0.14pp year on year. As inventory returned to normal levels, downstream demand continued the marginal improvement trend, and phone sales picked up markedly. Therefore, we expect desktop communication terminals 24 to maintain good double-digit growth throughout the year.

Conference products 24H1 earned 0.95 billion yuan, +51.27% year-on-year, with a gross profit margin of 65.06%. We anticipate that conference products will continue to benefit from the hybrid office trend. In 23, we cooperated with Microsoft's AI product SmartVision 60 to promote product intelligence, release a variety of new products over the past 24 years, and provide in-depth insight and quick feedback on market demand. Based on the mid-term report performance and base level for the second half of the year, the growth rate is expected to reach around 40% for the whole of 24.

Cloud office terminal 24H1 earned 0.2 billion yuan, +29.29% year-on-year. In '23, the company completed the iterative upgrade of BH series business Bluetooth headsets and achieved good channel verification results. Over the past 24 years, it has released BH74 products to improve the product matrix. Taking into account the interim report, we expect the growth rate to be above 30% for the whole of 24.

Focusing on shareholder returns, the dividend rate for the full year is expected to reach 4.3%. The company will issue a mid-term profit distribution plan. It plans to distribute cash dividends of 6.0 yuan (tax included) to all shareholders for every 10 shares, totaling 0.757 billion yuan in cash dividends, accounting for about 56% of 24H1's net profit to mother. If the dividend ratio for fiscal year 23 remains unchanged at 57%, and the annual dividend for '24 may reach 1.14 yuan/share, the dividend rate for the full year of 24 may reach 4.29%.

Profit forecasting

The company's net profit for 24-26 is estimated to be 2.53, 2.97, and 3.45 billion yuan, respectively, +25.9%, 17.3%, and 16.4%, respectively. Corresponding to 24-26 PE is 20, 17, and 15 times, respectively, maintaining a “buy” rating.

Risk warning

Exchange rate fluctuations exceeded expectations, prices of upstream raw materials fluctuated; industry competition increased risks, etc.