Transsion Holdings (688036) Investment Value Analysis Report-African mobile phone king strong barriers, steady growth
Transsion Holdings is the “King of Africa’s Mobile Phones” and is expanding into other emerging markets such as India.
The company is deeply localized in the dimensions of products, sales and operations, and builds expansion barriers to competition.
As the penetration of mobile phones in emerging markets continues to increase, the market share of newly-developed regions is increasing, and the average price brought by the conversion of overlapping feature phones to smart phones has increased. We are optimistic about the company’s overall market and performance growth.
In addition, the company’s layout of digital accessories, home appliances and mobile Internet services opens up more room for growth in the future.
Covered for the first 苏州桑拿网 time and given a “Buy” rating.
Company profile: King of mobile phones in Africa, expansion of accessories, home appliances, Internet . In 2018, the company’s operating income was 22.6 billion, net of non-attribution net profit12.
200 million, mobile phone sales 1.
With 2.4 billion units, 76% of the revenue comes from Africa, and 22% from India and other markets.
Among them, the function machine income is 6 billion yuan, 90.22 million units are sold, the average price is 66 yuan; the intelligent machine income is 15.5 billion yuan, the sales volume is 34.07 million units, the average price is 454 yuan.
According to IDC data, the company’s global market share reached 7 in 2018.
04%, ranking fourth; 48 in the African market.
71%, ranked first.
In addition, the company has laid out smart accessories (accessory brand oraimo), household appliances (brandSyinix), and mobile Internet around its main business, with revenue of $ 700 million in 2018.
Barriers to competition: The target market is accurately positioned and localized barriers are built up.
The global mobile phone market has entered the stock stage, and structural possibilities remain in emerging markets, and domestic mobile phone manufacturers have gone abroad.
We have estimated the mobile phone market size in several major regions: domestic $ 149 billion, India $ 50.7 billion, Western Europe $ 55.9 billion, and Africa $ 10.2 billion.
HOVM unanimously chose India and Western Europe as the main overseas region, mainly due to market breakthroughs and currency diversification.
Transsion chose a differentiated competitive strategy, deeply cultivated the African market, and developed other emerging markets such as India, mainly based on population base dialing. The development of the mobile phone industry was relatively lagging but growing rapidly.
The company’s localization advantages in Africa are obvious: 1) brand awareness, the three major mobile phone brands TECNO (middle), itel (economic), and Infinix (Internet) adapt to different customer groups, and were selected as the most popular brands among African consumers.5th, 17th, and 26th of Top 100, 2) Product customization, deep skin tone shooting, long standby, anti-shake and noise reduction, and other software and hardware innovations to form differentiated selling points; 3) Channels, after-sales localization, and cooperation in AfricaThere are 360 vendors with over 80% offline channel coverage, and more than 2,000 maintenance outlets worldwide. 4) The operation team is localized. As of 2018, all employees of the company1.
430,000 people, of which 7,370 are overseas. The management, sales, and production teams account for 20 overseas personnel.
Core momentum: Sales volume benefited from increased penetration in emerging markets, market share increased, and average price benefited from the upgrade and switch from feature phones to smart phones.
1) African market: The company has continued to grow since 2013. It has overtaken HMD (Nokia ‘s brand operator) and Samsung in the field of feature phones and smart phones, with a distribution of 58 in 2018.
27%, and the share growth rate exceeds TCL and Huawei; the company’s products are gradually upgraded from functional machines to smart phones. In 2016, the allocation of smart phones accounted for 22%, 27% in 2018, and is expected to reach 36% in 2021.Come the average price of mobile phones.
2) India and other markets: The company entered the Indian market in 2016. In 2018, the share of expansion of feature phones and smart phones was 8 respectively.
At 50%, the company’s local cooperative dealers have rapidly expanded to over 2,000, focusing on the low-to-medium-priced mass market, and pushing the market share upward.
Other increments: relying on a huge user base, the Internet and accessories and appliances can grow at a high speed.
Based on the leading mobile phone holdings, the company has expanded value-added services based on OS systems and cross-platform apps, and has formed a good brand base and user stickiness in Africa.
The company has the potential for rapid realization in the Internet field, and has cooperated with Google, Facebook, etc. in the field of advertising distribution, software distribution, and game distribution; and, the company cooperates with internal Internet companies to create independent APPs to explore long-term value, music, news, short-termVideo and other operations have achieved initial results.
Based on the extensive offline store layout, the company launched smart accessories such as bracelets and headphones, as well as home appliances such as TVs, air conditioners, refrigerators, washing machines, etc., which have become popular models in Africa and revenue is expected to grow steadily.
Risk factors: the risk of large non-recurring losses caused by exchange rate fluctuations; the risk that domestic brands going overseas will intensify competition in the mobile phone industry in emerging markets; and the potential downside risks of mobile Internet business that are not expected.
Profit forecast and estimation: The company is deeply cultivating the African market and exploring other emerging countries such as India. It also lays out digital accessories, home appliances and mobile Internet services.
With the continuous increase in mobile phone penetration in emerging markets and the increase in average price brought by the transition from feature phones to smart phones, we predict that the company’s net profit for non-return to motherhood in 2019/20/21 will be 15 each.
Give 23 times PE in 2020, corresponding to a target price of 51.
8 yuan, first coverage, give “buy” rating