TRANSSION(688036) 广发证券·2024-11-20 11:19Investment Rating - The report maintains a "Buy" rating for Transsion Holdings with a target price of 118.31 CNY per share, based on a 20x PE valuation for 2025 [4] Core Views - Transsion Holdings reported Q3 2024 revenue of 16.693 billion CNY, a YoY decrease of 7.22%, and net profit of 1.051 billion CNY, a YoY decrease of 41.02% [2] - The company's gross margin improved to 21.72% in Q3 2024, up 0.83 percentage points QoQ, driven by easing upstream component price pressures [2] - Transsion maintains a strong market position in Africa and is expanding into emerging markets such as South Asia, Southeast Asia, Latin America, the Middle East, and Eastern Europe [2] - The company is actively developing AI-enabled smartphones, including the PHANTOM V Fold2 5G, featuring AI functions like real-time call translation and AI image editing [2] Financial Performance - For the first three quarters of 2024, Transsion achieved revenue of 51.252 billion CNY, a YoY increase of 19.13%, and net profit of 3.903 billion CNY, a YoY increase of 0.50% [2] - The company's EPS is forecasted to be 4.68, 5.92, and 6.81 CNY for 2024, 2025, and 2026, respectively [2] - Revenue growth is expected to be 14.9% in 2024 and 2025, and 14.6% in 2026, with net profit growth projected at -3.6%, 26.3%, and 15.1% for the same periods [3] Market Expansion and AI Strategy - Transsion has established a significant market share in Africa and is making inroads into Pakistan and Bangladesh, with further growth potential in other emerging markets [2] - The company launched multiple AI-enabled smartphones in September 2024, including the PHANTOM V Fold2 5G, which features advanced AI capabilities [2] - Transsion has partnered with MediaTek to establish an AI joint laboratory in Shenzhen, focusing on innovations in large language models, AI agents, and AI voice and imaging applications for smartphones [2] Valuation and Financial Ratios - The company's P/E ratio is projected to be 20.75, 16.42, and 14.27 for 2024, 2025, and 2026, respectively [3] - ROE is expected to be 22.7%, 22.6%, and 21.0% for 2024, 2025, and 2026, while EV/EBITDA is forecasted at 15.02, 10.82, and 8.75 for the same periods [3]