On the evening of February 25, Transsion Holdings (688036. SH) announced its 2024 earnings report.

According to the data, in 2024, the company will achieve a total operating income of 68.743 billion yuan, an increase of 10.35% over the same period of the previous year, and the net profit attributable to the parent company will be 5.590 billion yuan, an increase of 0.96% over the same period of the previous year, but the non-net profit will be 4.609 billion yuan, a decrease of 10.21% over the same period of the previous year.

"Due to the combined impact of market competition and supply chain costs, the gross profit margin has decreased, and the net profit attributable to the owners of the parent company after deducting non-recurring gains and losses has decreased." Transsion Holdings said.

According

to the latest research by Canalys, in the fourth quarter of 2024, Transsion Holdings' shipments in the African market increased, but its market share declined. At the same time, throughout 2024, mobile phone brands such as Realme and Xiaomi will grow faster in the African market, reflecting intensified market competition.

In this regard, Transsion Holdings told the China Times: "The company will continue to build the core competitiveness of the African market, maintain the competitive advantage of the African market, strengthen the 'moat' through systematic capabilities, carry out digital investment, channel model innovation, retail store image upgrade, and continue to promote localized operations." ”

After the results were released, the company's stock price fell for two consecutive days. On February 26, Transsion Holdings' share price closed at 97.71 yuan, down 0.27%; On February 27, its stock price closed at 94.46 yuan, down 3.33%.

Africa's dominant position in the market is being challenged

According to the performance report, in 2024, the company will achieve a total operating income of 68.743 billion yuan, an increase of 10.35% over the same period of the previous year. In this regard, Transsion Holdings said in the announcement that the company continued to explore emerging markets and promote product upgrades, with a year-on-year increase in overall shipments and an increase in operating income.

According to the latest research from Canalys, the global smartphone market will grow by 7% to 1.22 billion units in 2024, rebounding after two consecutive years of decline. Among them, Transsion Holdings ranked fourth in annual shipments for the first time, with shipments of about 106 million units in 2024 and a market share of 9%, a year-on-year increase over the same period last year. In 2023, Transsion Holdings will ship about 92.6 million units, with a market share of 8%.

However, in the fourth quarter of 2024, Transsion Holdings shipped about 27.2 million units, with a market share of 8%, a year-on-year decline compared with the same period last year. In the fourth quarter of 2023, Transsion Holdings shipped about 28.5 million units, with a market share of 9%.

In terms of the African market, which Transsion Holdings is deeply engaged in, the latest research from Canalys shows that smartphone shipments in Africa will increase by 9% year-on-year in 2024. Among them, Transsion Holdings will ship about 37.9 million units in the African market in 2024, with a market share of 51%, a year-on-year increase over the same period last year. In 2023, Transsion Holdings will ship about 34.5 million units in the African market, with a market share of 50%.

In the fourth quarter of 2024, Transsion Holdings achieved an increase in shipments in the African market, but its market share declined. During the quarter, Transsion Holdings' shipments in Africa increased to 10 million units from 9.8 million units in the same period in 2023. However, its market share fell to 49% from 51% in the fourth quarter of 2023, reflecting increased competition in the market.

It is worth mentioning that Canalys data shows that in 2024, realme, Xiaomi and other mobile phone brands will grow faster in the African market, with average annual growth rates of 89%, 38% and 39%.

In this regard, Yuan Shuai, deputy secretary-general of Zhongguancun Internet of Things Industry Alliance, said in an interview with this reporter: "In the face of market competition, Transsion Holdings should continue to adhere to the guidance of user value, strengthen brand building and market promotion, and improve brand awareness and reputation. At the same time, the company should increase R&D investment, launch more new products that meet the needs of African consumers, and increase market share with differentiated competition strategies. In addition, optimizing supply chain management, reducing costs, and improving gross profit margins are also the keys to coping with market competition. ”

Diversification strategies are developing slowly

"In 2024, due to the comprehensive impact of market competition and supply chain costs, the company's gross profit margin will decline. The gross profit margin is comprehensively affected by factors such as the competitive landscape, cost changes, and the company's price strategy, and we will make adjustments according to the dynamics of cost changes and market competition in the future to maintain a reasonable level of gross profit margin. Transsion Holdings told this reporter.

In this regard, Zhi Peiyuan, vice president of the Listed Company Investment Professional Committee of the China Investment Association, told the China Times that the price fluctuations of raw materials for key components such as chips and display screens may lead to an increase in procurement costs, and changes in the global logistics environment and transportation distances may lead to an increase in cargo transportation costs. In addition, supply disruptions or delays can affect production planning and delivery, indirectly increasing costs.

He believes that Transsion Holdings is affected by supply chain costs, which reflects the fragility of its supply chain, and needs to strengthen supply chain risk management and optimization.

So, can these adverse effects improve in 2025? Transsion Holdings said: "The mobile phone market is a fully competitive market, and in various markets, mobile phone manufacturers have always existed, and the company has always faced the problem of competition. The company will pay more attention to itself, continue to improve the company's localization and differentiation level, and focus on customer value to do a good job in the company's products and services. In terms of supply chain costs, the company will strive to operate according to upstream cost changes and actively take corresponding measures. ”

Zhou Di, a national science and technology expert from the Ministry of Science and Technology, told the China Times: "If Transsion Holdings continues to innovate and upgrade its products this year, launch high value-added products and be recognized by the market, it may be able to increase gross profit margin, and if the global economy is stable, the company's supply chain costs may tend to stabilize." However, the market competition is still fierce, and other brands continue to make efforts, Transsion Holdings may continue to compete at low prices in order to maintain its share, and at the same time, if the global economy is unstable, the supply chain cost may be difficult to control. ”

It is understood that in order to cope with market competition, Transsion Holdings has implemented a diversification strategy and developed digital accessories, household appliances and mobile Internet services.

In 2009, Transsion Holdings founded the after-sales service brand Carlcare, and in 2014 and 2015, Transsion Holdings founded Oraimo, a digital accessories brand, and Syinix, a home appliance brand, respectively. At the same time, it has also independently developed a number of smart terminal operating systems, including HiOS, itelOS and XOS.

However, the company's revenue in new product categories has not expanded over the years. According to the data of the 2024 semi-annual report, the company's non-mobile phone business revenue accounts for about 7%.

In this regard, Yuan Shuai said that this may be due to fierce market competition, inaccurate positioning of new products or poor market promotion. In order to expand into new business areas, companies should conduct in-depth research on consumer needs and market trends, accurately position new products, and increase marketing efforts. At the same time, optimize product development and production processes to improve product quality and cost performance.

"On the basis of its dominant position in the African mobile phone market, the company continues to increase its efforts and accelerate the development of expanded category business, and gradually build an AIoT intelligent ecosystem. The company's digital accessories and household appliances adopt a multi-brand development strategy. Transsion Holdings told this reporter.