TRANSSION(SH:688036) EBSCN·2025-08-29 07:06Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is expected to see a recovery in performance in Q2 2025, driven by long-term growth in emerging markets, expansion of product categories, mobile internet, and edge AI development [1][6] - Despite a decline in revenue and net profit in the first half of 2025, the company shows signs of improvement with a significant quarter-on-quarter revenue increase in Q2 2025 [5][7] - The company leads in market share in emerging markets, ranking third globally among smartphone manufacturers, with a focus on diversifying its product offerings and enhancing internet services [6][8] Financial Performance Summary - In H1 2025, the company reported revenue of 29.077 billion, a year-on-year decrease of 15.86%, and a net profit of 1.213 billion, down 57.48% [5] - Q2 2025 results showed revenue of 16.074 billion, a year-on-year decline of 6.09% but a quarter-on-quarter increase of 23.61%, with a net profit of 0.723 billion, down 41.03% year-on-year but up 47.47% quarter-on-quarter [5][7] - The gross margin for H1 2025 was 20.09%, with Q2 2025 showing a slight improvement to 20.76% [7] Business Segment Analysis - The smartphone segment generated revenue of 24.389 billion, down approximately 17% year-on-year, while the feature phone segment saw revenue of 1.704 billion, down about 35% year-on-year [6] - The company has a 12.5% share of the global smartphone market, ranking third, with a 7.9% share in the global smartphone market, ranking sixth [6] - Other business segments, including digital accessories and home appliances, achieved revenue of 2.971 billion, a year-on-year increase of 15% [6] Future Outlook - The company anticipates accelerated revenue growth in H2 2025 due to factors such as the US dollar interest rate cuts and ongoing product launches [7][8] - The report projects a downward revision of net profit forecasts for 2025 and 2026, with estimates of 3.601 billion and 4.816 billion respectively, while introducing a new forecast for 2027 at 5.685 billion [8][9] - The current market valuation corresponds to a PE ratio of 27X for 2025, 20X for 2026, and 17X for 2027 [8]