Yealink(SZ:300628)2024-10-21 00:32Investment Rating - The report maintains a "Buy" rating for Yealink Network Technology with a target price raised to Rmb50, implying an expected share price return of approximately 25.4% [4][24]. Core Insights - Yealink's 3Q24 preliminary results slightly exceeded forecasts, leading to an upgrade in EPS forecasts by 7%, 6%, and 3% for 2024, 2025, and 2026 respectively [3][24]. - The company achieved a net profit growth of 27.5% year-on-year for the first nine months of 2024, surpassing the management's target of over 20% for the year [3][4]. - The report highlights the anticipated increase in corporate capital expenditures in the US and EU due to rate reductions, which is expected to drive demand for Yealink's communication systems [5][24]. Summary by Sections Financial Performance - For 2024, the expected net profit is projected at Rmb2,511 million, reflecting a growth of 40.4% year-on-year, with a diluted EPS of Rmb1.987 [6][11]. - The revenue split for the first half of 2024 shows SIP phone systems contributing 57%, video conferencing systems 36%, and cloud office systems 7%, with respective year-on-year growth rates of 20.3%, 51.3%, and 29.3% [14][24]. Market Position and Strategy - Yealink is positioned as a leading provider of unified communication solutions, holding over 30% of the global SIP phone market share in 2023 [25]. - The company is expected to benefit from the ongoing trend towards hybrid workplaces, which is anticipated to enhance its market share in enterprise communication [24][25]. Valuation Metrics - The target price of Rmb50 is based on a discounted cash flow (DCF) model, assuming a discount rate of 9.1% and a terminal growth rate of 1.0%, which aligns with the stock's historical mean PE ratio of 25-26x [24][26].