matters:

1) the company realized revenue of 62.295 billion yuan (yoy +33.69%), net profit of 5.537 billion yuan (yoy +122.93%) and net profit of 5.134 billion yuan (yoy +131.61%) after deducting non-return.

2) Company 24Q1 realized operating income of 17.443 billion yuan (yoy +88.10%,qoq-9.49), net profit of 1.626 billion yuan (yoy +210.30%,qoq-1.60), net profit of 1.354 billion yuan (yoy +342.59%,qoq-16.68).

comments:

shipments and sales revenue continued to grow, the market share of smart machines steadily increased. The company achieved revenue of 62.3 billion yuan (yoy +34%) and net profit of 5.537 billion yuan (yoy +123%) in 2023. The company's new market development strategy achieved results in 2023, with shipments and sales revenue continuing to grow. According to IDC data statistics, the company's share of the global mobile phone market in 2023 was 14.0, up 2.3pct year on year, ranking third, with smartphones accounting for 8.1 percent of the global smartphone market, year-on-year improvement of 2.1pct, ranking fifth.

2023 the company's African smartphone market share of more than 40%, ranking first in Africa. In the South Asian market:

Pakistan smartphone market share of more than 40%, ranking first; Bangladesh smartphone market share of more than 30%, ranking first; India smartphone market share of 8.2, ranking sixth. Company 24Q1 realized operating income of 17.4 billion yuan (yoy +88%) and net profit of 1.626 billion yuan (yoy +210%). According to IDC data statistics, 24Q1 Company's market share in the global smartphone market was 9.9, up 4.2pct year on year, ranking fourth, with the market share steadily increasing.

Promote the development of expanded category business and build a mobile connected ecosystem. The company continued to implement a diversified strategic layout, digital accessories, household appliances and other expanded business, as well as mobile Internet products and services revenue has increased. In terms of category expansion business, based on the in-depth insight of local users into customized products, we will intensify the research and development of localized products. At the same time, we will deepen the channels, expand the retail layout, strengthen the digital capability, and realize the channel construction and coverage of offline brand specialty stores, special area stores, specialized stores and new format stores. Through further improvement of the operation system, cost reduction and efficiency increase will gradually form the sustainable development of expanded category business. The mobile Internet platform based on user traffic and data resources is the core foundation for the company to develop mobile Internet products. Based on the dominant position in the African mobile phone market, the company builds a user product matrix and explores product business models and user growth models suitable for the African market. The company has carried out strategic cooperation with many leading domestic Internet companies such as Netease and Tencent in multiple application fields, and actively developed and incubated mobile Internet products. By the end of 2023, there are a number of independent and cooperative development of application products with more than 10 million monthly live users, mainly music application Boomplay, news aggregation application Scooper, integrated content distribution application Phoenix, etc. The music application Boomplay brand has been deeply rooted in Africa for many years and is recognized by African users. It is currently the leading music streaming platform in Africa. News aggregation application Scooper is one of the leading information flow and content aggregation platforms in Africa, adding self-made programs to enhance the enthusiasm of local UGC creators. The integrated content distribution application Phoenix has introduced a number of localization functions for users in emerging markets through user insight and localization capabilities, the content it distributes through recommend algorithms is loved by local users.

AIGC drive a new round of mobile phone innovation cycle, forward-looking layout embrace the development opportunities of the times. At present, the AIGC field presents trends such as the continuous enrichment of content types, the continuous improvement of content quality, the increasing versatility of technology and the level of industrialization, which makes AIGC increasingly mainstream in the consumer Internet field, with the emergence of explosive applications such as writing assistants, AI painting, dialogue robots, digital people, image generation, video generation, etc. to support the content needs of media, e-commerce, entertainment, film and television fields. In the future, with the improvement of smartphone hardware computing power, the relevant AIGC applications may be popularized in smartphone terminals. The company actively embraces AI development opportunities, ahead of the layout of digital human technology, the establishment of a complete full-link technology and engineering self-research capabilities. By the end of the 23rd, the company had promoted a number of AI-related research projects, including chameleon rainbow technology, content understanding platform automatically generated based on AIGC images, and multi-modal differentiated experience construction based on general artificial intelligence.

investment suggestion: in view of the gradual improvement of the company's cost and expense control ability, we have raised the profit forecast. it is estimated that the company's net profit attributable to its parent in 2024-2026 will be 63.98/75.92/9.089 billion (the original value in 2024/2025 is 60.66/7.524 billion), and the corresponding EPS will be 7.93/9.41/11.27 yuan (the original value in 2024/2025 is 7.52/9.33 yuan). We are optimistic about the company's emerging market development and business growth outside mobile phones, giving 23 times PE in 2024, corresponding to the target price of 182.5 yuan/share, maintaining a "strong push" rating.

risk tips. Downstream demand fell short of expectations, market development fell short of expectations, and mobile Internet expansion fell short of expectations