Event: The company released the 2024 annual performance report, with an overall revenue of 68.743 billion yuan in 2024, a year-on-year increase of +10.35%, a net profit attributable to the parent company of 5.590 billion yuan, a year-on-year increase of +0.96%, and a net profit of 4.609 billion yuan, a year-on-year increase of -10.21%. Our comments are as follows:

24Q4 revenue and net profit improved sequentially, and 24 full-year results were generally solid. The company's overall revenue in 2024 will be 68.743 billion yuan, a year-on-year increase of +10.35%, the net profit attributable to the parent company will be 5.590 billion yuan, a year-on-year increase of +0.96%, and the net profit attributable to the parent company will be 4.609 billion yuan, a year-on-year increase of -10.21%. 24Q4 revenue was 17.49 billion yuan, -9.2%/+4.8% year-on-year, net profit attributable to the parent company was 1.69 billion yuan, +2.0%/+60.4% year-on-year, and net profit attributable to the parent company was 1.36 billion yuan, -16.2%/+66.0% year-on-year. The quarter-on-quarter revenue growth for the year was mainly due to the continuous development of emerging markets and the year-on-year increase in shipments. The net profit after deducting non-attributable to the parent company was under pressure in the short term year-on-year, mainly due to market competition, upstream raw material costs, destocking and other factors.

In 24Q4, the mobile phone business returned to the top five in the world, and patent disputes were settled, and AIGC applications were actively deployed. According to IDC, Transsion shipped 27.2 million smartphones in 24Q4, a year-on-year increase of -3.4%, ranking fourth in the world and returning to the top five in global sales after 24Q1. In addition, according to IP fray, on January 16, 2025, Qualcomm reached a settlement with Transsion to withdraw four non-standard essential patent lawsuits filed against Transsion in India.

The company continues to explore emerging markets and promote product upgrades, and currently has a solid position in the African market, and actively deploys in Southeast Asia, South Asia, the Middle East, Latin America and other regions, and the market outside Africa will become an important growth engine in the future. At the same time, the company is actively deploying AIGC applications, launching TECNO AIOS and AI assistant Ella in 2024, Infinix brand access to DeepSeek-R1 full blood version in February 25, the new NOTE series to be released in March will also be connected to DeepSeek-R1, and the first AI spring conference in vertical screen form will be held in late March.

The expansion of categories & mobile Internet business continued to progress, and explored multi-mode growth space. Relying on the mobile phone user base, the company continued to accelerate the business layout of mobile Internet and category expansion, and achieved steady growth in overall operation in 2024.

In terms of category expansion, the company actively deployed digital accessories, home appliances and energy storage businesses, and was optimistic about the high growth of the accessories business with the improvement of the smartphone business and the energy storage business in emerging markets. In terms of mobile Internet, Transsion has been deeply engaged in localization in the field of OS systems and mobile Internet products, equipped with a deeply customized operating system, Transsion OS, and developed a variety of Internet applications. We believe that the development of the mobile Internet industry in Africa is still in the early stage, and the company is leading the layout of multiple types of products, and is expected to embrace the broad blue ocean in the future.

Maintain an "overweight" investment rating. As a leading mobile phone brand in emerging markets, Transsion Holdings has benefited from the increasing penetration rate of smartphones in emerging markets and the continuous development of the company's market share in the short term, as well as the high growth of digital accessories and energy storage business in the expanded category business, as well as the growth space of mobile Internet business. In the medium to long term, it is expected to benefit from the performance catalyst and valuation improvement brought about by the trend of AI applications. We expect the revenue in 2024-2026 to be 687/775/87.2 billion yuan, the net profit attributable to the parent company to be 56/64/7.5 billion yuan, the corresponding EPS to be 4.90/5.59/6.56 yuan, and the corresponding PE to be 19.3/16.9/14.4 times, maintaining the "overweight" rating.

Risk warning: the risk of less than expected development of emerging markets, the risk of intensified market competition, the risk of raw material price fluctuations, and the risk of exchange rate fluctuations.