Key points of investment

Event: The company publishes its 2024 mid-year report. At 24H1, the company achieved revenue of 2.667 billion yuan, a year-on-year increase of 30.5%; net profit to mother of 1.36 billion yuan, an increase of 32.13%; net profit after deduction of 1.253 billion yuan, a year-on-year increase of 38.62%, in line with the previous median performance forecast.

In 24Q2, the company achieved revenue of 1.503 billion yuan, a year-on-year increase of 30.16%; net profit to mother was 0.792 billion yuan, an increase of 30.51% year-on-year.

Product intelligence continues to advance, and the growth rate of conference products exceeds expectations

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.

The mid-term dividend exceeded expectations. Neutral estimates that the annual dividend rate may reach 5.5%. The company issued 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. It is conservatively estimated that if the number of annual dividends for '23 remains unchanged and the annual dividend for '24 is calculated at 0.9 yuan/share, the dividend rate for the full year 24 corresponding to the current market value will reach 4.7%. According to neutral estimates, 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 24 may reach 5.5%.

2024 equity incentive target revenue/profit +20% YoY, business partner incentive target revenue +30% 2024 equity incentive target revenue/profit +20% YoY. In April 24, the company issued the 2024 Restricted Stock Incentive Plan implementation assessment management measures. According to the equity incentive target, based on 2023 revenue and net profit, the 2024-2025 revenue and net profit growth rate will not be less than 20%/40%.

The 2024 Business Partner Incentive Target Revenue +30% YoY. The company released the Business Partner Incentive Fund Plan in June '21. The first operating cycle is for the five fiscal years 2021-2025. The performance conditions required to withdraw the incentive fund are that the year-on-year revenue growth rate of the company's consolidated statements is not less than 30% (including capital).

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 16, 14, and 12 times, respectively, maintaining a “buy” rating.

Risk warning

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