According to the Smart Finance APP, Ping An Securities released a research report stating that Apple (AAPL.US) achieved stable revenue growth in FY24Q4; looking at a single quarter, it achieved a net income of 14.7 billion US dollars, a decrease of 36% year-on-year. The main reason for the decline in net income was the company's inclusion of a one-time income tax expense of 10.2 billion US dollars, which was used to resolve a long-standing tax-related case in Ireland. In terms of product sales, sales of the iPhone 15 series outperformed last year's 14 series, and the sales of the new iPhone 16 series also performed well, collectively supporting revenue growth in the iPhone business. The iPad business, due to this year's new iPad Pro and Air models filling the demand accumulated from not updating new products last year, became the fastest-growing segment in the single quarter among hardware categories.

The main points of Ping An Securities are as follows:

Event: Recently, Apple released its FY24Q4 financial report for the quarter ending September 28, 2024. The company achieved revenue of 94.9 billion US dollars in this quarter, up 6.1% year-on-year, and net income of 14.7 billion US dollars, down 36% year-on-year.

The revenue achieved stable growth, but the profit declined due to retroactive tax payments.

In the 2024 fiscal year, the company achieved revenue of 391 billion US dollars, up 2.02% year-on-year, and net income of 93.736 billion US dollars, down 3.36% year-on-year. The gross margin was 46.21%, an increase of 2.08 percentage points compared to the 2023 fiscal year, and the net margin was 23.97%, a decrease of 1.34 percentage points compared to the 2023 fiscal year. Looking at a single quarter, in FY24Q4, the company achieved revenue of 94.9 billion US dollars, up 6.1% year-on-year, and net income of 14.7 billion US dollars, down 36% year-on-year. The main reason for the decline in net income was the company's inclusion of a one-time income tax expense of 10.2 billion US dollars, which was used to resolve a long-standing tax-related case in Ireland. As for the profit margin, in FY24Q4, the company's gross margin reached 46.22%, up 1.05 percentage points year-on-year and down 0.04 percentage points quarter-on-quarter, while the net margin reached 15.52%, down 10.13 percentage points year-on-year and 9.48 percentage points quarter-on-quarter.

Sales of the 16 series outperformed the same period last year, and iPhone revenue recovered growth.

Looking at the business segments, in FY24Q4, the total revenue of the hardware business of the company reached $66.96 billion, a year-on-year increase of +4.1%, while the service business revenue reached $24.97 billion, a year-on-year increase of +11.9%. Specifically for the hardware business products in FY24Q4, the revenue of the company's iPhone/Mac/iPad/other products was $46.2/$7.7/$7/9 billion, with corresponding year-on-year growth rates of +5.5%/+1.7%/+7.9%/-3%. Among them, the sales performance of the iPhone 15 series outperformed the previous year's 14 series, the new iPhone 16 series also performed well, jointly supporting the revenue growth of the iPhone business. The Mac business, driven by the new Macbook Air, showed relatively stable overall performance, while the iPad business, due to the new iPad Pro and Air models released this year to meet the demand accumulated from the lack of new products last year, became the fastest growing sub-category of hardware in a single fiscal quarter.

Income in multiple regions reached a new high in the fourth fiscal quarter, with the decline in Greater China region narrowing quarter by quarter.

Looking at the regions, the revenue in the Americas/Europe/Greater China/Japan/other Asia-Pacific regions was $416.6/$249.2/$15.03/$5.93/$7.38 billion, with corresponding year-on-year growth rates of +3.9%/+11.0%/-0.3%/+7.6%/+16.6%. Among them, the revenue in the Americas, Europe, and other Asia-Pacific regions reached a new quarterly high in the fourth fiscal quarter, although Greater China was the company's only market with declining revenue, the decline rate has been narrowing quarter by quarter.

Thanks to Apple Intelligence, the upgrade speed of iOS 18.1 far exceeds that of iOS 17.1.

Recently, Apple has pushed the official version system updates of iOS 18.1, iPadOS 18.1, and macOS Sequoia 15.1 to users. The related Apple Intelligence functions have formally launched simultaneously, supporting functions such as AI writing assistants and smart photo searches. Thanks to these AI functions, the user upgrade rate of iOS 18.1 is twice that of iOS 17.1 during the same period last year. iOS 18.2 is planned to be released by the end of 2024, and is expected to introduce more new tools similar to Image Playground. At the same time, Apple has also updated new products such as Macbook Pro, Mac mini, and iMac equipped with the M4 series chip.

Investment Advice: Apple continues to increase its investment in AI, with a combined effort in software and hardware. With Apple's strong brand influence and ecosystem, it is expected to be the first to usher in the wave of AI terminal upgrades. Considering the high standards of AI for the performance and quality of terminal product components, the relevant component links are expected to see an increase in standalone value, benefiting industry chain companies. Recommended to focus on Luxshare Precision Industry (002475.SZ), Goertek Inc. (002241.SZ), Lens Technology (300433.SZ), Lingyi Itech (002600.SZ), Suzhou Dongshan Precision Manufacturing (002384.SZ), Avary Holding (002938.SZ), Zhuhai Topray Solar (688772.SH), Shenzhen Sunway Communication (300136.SZ) and other industry chain companies.

Risk warning:

1) Product Technology Update Risk: The electronics industry sees rapid product technology upgrades, with new technologies and processes emerging constantly. If companies fail to continuously update market-competitive products, it will weaken the company's competitive advantage.

2) Macroeconomic fluctuation risks: If the global economic growth slows down, market demand will inevitably slow down or even shrink, leading to a decrease in global consumer electronics demand. It is expected that the recovery of the consumer electronics industry may be less than anticipated.

3) Trade friction risks: If trade protection policies are implemented worldwide, it may impact the performance of relevant companies.