TRANSSION(SH:688036) Haitong Securities·2024-03-13 16:00Investment Rating - The investment rating for the company is "Outperform the Market" and is maintained [2]. Core Views - The report identifies Transsion Holdings as a company focused on emerging markets, primarily in Africa, while also expanding into other regions such as India, Bangladesh, and Myanmar. The company aims to create a closed-loop business model through its ecosystem of "mobile phones + internet services + home appliances and digital accessories" [5][31]. - The company is expected to benefit from the rapid growth of niche markets in the third world, with projected revenues and net profits for 2023 estimated at 62.39 billion and 5.503 billion yuan, respectively. The compound annual growth rate (CAGR) for revenue and net profit from 2016 to 2023 is expected to be 27.1% and 89.4%, respectively [5][12]. Summary by Sections 1. Fundamental & Financial Analysis - Transsion Holdings has established a strong presence in emerging markets, with a significant focus on Africa. The company has multiple manufacturing centers globally, including in China, Ethiopia, India, and Bangladesh, and operates over 2,000 after-sales service points worldwide [12][20]. - The company's revenue from Africa was 20.633 billion yuan in 2022, accounting for 44.9% of total revenue, down from 88.6% in 2016. This indicates a growing contribution from other emerging markets [12][20]. 2. Investment Logic: Market, Product, Track, and Ecosystem - Market: The report emphasizes the low smartphone penetration in emerging markets, particularly in Africa and Southeast Asia, which presents significant growth opportunities as these markets mature [20][21]. - Product: Transsion focuses on localized innovation and user experience, resulting in high brand loyalty among consumers. The company has developed technologies tailored to local needs, such as low-light photography and long battery life [22][23]. - Track: The company is diversifying its product offerings by expanding into 3C accessories and home appliances, which are expected to create a second growth curve [23][24]. - Ecosystem: Transsion is developing a software ecosystem based on Android, collaborating with leading internet companies to enhance its service offerings [24][26]. 3. Financial Forecast and Investment Recommendations - The report forecasts earnings per share (EPS) for 2023, 2024, and 2025 to be 6.82, 7.52, and 9.08 yuan, respectively. The price-to-earnings (PE) ratio for 2024 is estimated to be between 22-26x, suggesting a reasonable value range of 165.44 to 195.52 yuan [31][32].