The company is one of the leading mobile phones in emerging markets in the world, with a comprehensive hardware/software layout: the company's predecessor was established in 2006 and listed on the Science and Technology Innovation Board in 2019. The company is mainly engaged in the design, research and development, production, sales and brand operation of smart terminals such as mobile phones, with three major brands of mobile phones: TECNO, itel and Infinix, and its products have been leading in the African market for a long time, and continue to expand emerging markets, according to IDC data, the company's global share of smart phones in 2024 will be 8.6%, ranking fourth. The company's performance express report predicts that in 2024, it will achieve revenue of 68.743 billion yuan, a year-on-year increase of 10.35%, and a net profit attributable to the parent company of 5.590 billion yuan, a year-on-year increase of 0.96%.

Mobile phone business: leading position in the African market, with huge potential in emerging markets: The company was the first to explore the African market and has a solid leading position with its localization strategy. According to Canalys data, the company's smartphone market share in the African market in 3Q2024 is 50%, an increase of about 2pct year-on-year. Emerging markets such as India/Southeast Asia/Middle East/Latin America have great economic development potential, helping the development of the smartphone market. The company replicates the localization of the African market, and the company ranks first in Pakistan and Bangladesh in 1H2024, and the contribution of emerging markets to the company's revenue continues to grow. In the short term, the upstream storage price is declining, the patent dispute between the company and Qualcomm is expected to land smoothly, and the marginal trend of the mobile phone business is clear.

AI-empowered, mobile Internet/expansion category opens up a new growth curve: The company's mobile phones build a localized APP matrix and Internet ecology based on its own operating system to feed back the development of mobile phone business. The company has grasped the AI wave and cooperated with Google, Alibaba, MediaTek and other large model/chip manufacturers to launch AI mobile phones/applications. In terms of expanding categories, the company relies on the advantages of mobile phone + localization channels, focuses on new forms of hardware business such as digital accessories/home appliances/energy storage, and actively grasps innovative terminal forms such as AR, according to Canalys data, the company's TWS earphones have a market share of 50% in the African market in 3Q2024, ranking first.

Investment suggestion: The company's traditional mobile phone business is expected to continue to grow with emerging markets, and mobile Internet + expansion categories under AI empowerment will open up a new growth curve. We expect the company's net profit attributable to the parent company in 2024-2026 to be 55.90/63.59/7.585 billion yuan, EPS of 4.90/5.58/6.65 yuan, and the corresponding PE is 18.91/16.62/13.94 times, giving an "overweight" rating.

Risk Warning: Overseas business risk; concentration of supply of major raw materials and risk of price fluctuations; exchange rate fluctuation risk; market competition risk; Macro environmental risks.