TRANSSION(SH:688036)2026-01-20 03:19Summary of Transsion (688036.SS) Conference Call Company Overview - Company: Transsion Holdings - Ticker: 688036.SS - Market Cap: Rmb76.2 billion / $10.9 billion - Current Price: Rmb66.20 - 12-Month Price Target: Rmb91.00, indicating an upside of 37.5% [7] Industry Insights - Industry: Smartphone Manufacturing - Trends: The smartphone market is experiencing challenges due to rising memory costs and increased competition, particularly in the budget segment [1][2] Key Points from Management 1. AI Smartphone Expansion: Management is optimistic about the growth of AI smartphones, particularly in budget models. The Infinix Hot 60i, priced at $115, features advanced AI functions such as DeepSeek R1 and Folax AI, which includes capabilities like auto-answering calls and real-time translation [1][2] 2. Product Mix Upgrade: To counteract rising memory costs, Transsion plans to upgrade its product mix and pass some costs onto consumers. The company is also looking to leverage local memory suppliers to maintain revenue growth [2] 3. Smartphone Shipment Growth: Recent shipment growth has slowed, with a CAGR of +35% from 2015-2021, followed by +9% from 2021-2024. The company aims to remain among the global top five smartphone manufacturers by 2025 [1] 4. Pricing Strategy: Management anticipates raising smartphone prices due to increased memory costs, while also expecting less aggressive pricing competition among brands due to slim margins across the industry [2] 5. Outlook for 2026: Despite challenges in the first half of 2026, management is positive about a better performance in the second half of the year [2] Financial Projections - Revenue Forecast: Expected revenue growth from Rmb68.7 billion in 2024 to Rmb99.8 billion by 2027 [7] - Earnings Per Share (EPS): Projected EPS to increase from Rmb5.48 in 2024 to Rmb7.60 in 2027 [7] - Valuation: The target P/E multiple is set at 15.0x, aligning with industry peers, reflecting the competitive nature of the smartphone market [3] Risks - Market Risks: Potential risks include faster or slower-than-expected smartphone shipment growth and changes in average selling prices (ASP) [3] Conclusion - Investment Rating: Neutral, with a target price of Rmb91.00 based on a 2026E P/E multiple of 15.0x, indicating a fair valuation amidst market challenges [3][7]