We believe that Transcom Holdings is a company focusing on emerging markets, based on the African market and other emerging markets such as India, Bangladesh and Pakistan, while laying out digital accessories, household appliances and mobile Internet services, forming an ecological model of "mobile phone + mobile Internet services + home appliances and digital accessories" and creating a closed-loop business.

African market-based, deep-rooted emerging markets. The main products of Transmitter Holdings are TECNO, itel and Infinix brands of mobile phones, including functional phones and smartphones. The company's deep-rooted overseas emerging markets, 2023 company revenue/home-to-mother net profit is expected to be 623.9/5.503 billion yuan, 2016-2023 revenue/home-to-mother net profit CAGR of 27.1/89.4, respectively. Transparent has established a number of manufacturing centers around the world, including China, Ethiopia, India, Bangladesh, etc. Its after-sales service brand Carlcare has more than 2000 after-sales service outlets (including third-party cooperative outlets) around the world, and is one of the major electronic and home appliance product service solutions in emerging markets.

financial analysis: medium gross margin, high cost of sales rate. The gross margin of Transmission Holdings is between Xiaomi Group-W and Apple (APPLE), and we believe that Transmission is based in the low-line market and can capture the dividends of the niche market. Period cost analysis: The sales, administrative and general cost rate of transmission holdings is higher than that of Xiaomi Group-W and Apple, and the competitive advantage of transmission lies in strong channels (the company uses the depth and breadth of its own sales network to gain a high share in emerging markets with the help of a sound channel layout).

Company growth logic: market, product, track and ecology. Markets: Africa-based, sharing the dividends of the rapid growth of third world niche markets. The mobile phone market in major countries in the world is approaching saturation and gradually entering stock competition, while the mobile phone penetration rate in emerging markets composed of third world regions such as Africa and Southeast Asia is still low. Products: fit user preferences. Based on localized innovation and product positioning focused on user experience, the company's brand has high user loyalty, which is the company's unique competitive advantage. A series of R & D designs that deeply fit the preferences of local consumers have not only successfully cultivated consumers' usage habits, but also established brand competitiveness by strengthening brand recognition in consumers' hearts. Track: Limited diversification, open the road to "borderless" expansion. The company's 3C accessories and home appliances business is expected to create a second growth curve. Ecology: hardware + software to create the "apple ecology" of the third world ". Based on the secondary development of the Android system, the company deeply customized the intelligent terminal operating system, through the application store, advertising distribution and other hardware and software integration to create revenue.

Embark on the journey of the third world, open the "borderless" expansion. We judge that the company is expected to share the dividends of the rapid growth of the niche market in the third world. With the continuous improvement of mobile phone penetration rate and the ASP improvement brought about by the conversion from functional machines to intelligent machines, we expect EPS to be 6.82/7.52/9.08 yuan respectively in 23-25 years. Considering the valuation level of comparable companies and the high growth rate of the market in the region where the company is located, we give a 24-year PE valuation range of 22-26x, corresponding to a reasonable value range of 165.44-195.52 yuan, maintain a "better than the market" rating.

risk tips: the risk of large non-recurring losses; the risk of increased competition in the mobile phone industry.