On the evening of August 23, Transon Holdings released its semi-annual report for 2022. The data showed that the company achieved operating revenue of 23.109 billion yuan in the first half of the year, up 1.12% year-on-year; achieved net profit attributable to shareholders of the listed company of 1.654 billion yuan, down 4.53% year-on-year; net assets attributable to shareholders of the listed company of 14.694 billion yuan, up 4.79% year-on-year.

 

 

Under the influence of macro factors such as the Russia-Ukraine conflict, global inflation and recurring epidemics around the world, the global economy and market demand have entered a period of weakness. According to the latest data from Canalys, global smartphone shipments decreased to 287 million units in the second quarter of 2022, down 9% year-on-year. Against the backdrop of a sustained industry downturn, Transn actively explored emerging markets through its localization strategy, further optimized its business model while maintaining stable performance, actively explored emerging markets, continued to increase its smartphone share, and established a double-digit growth target for next year and beyond through equity incentives, demonstrating extremely strong growth resilience.

 

 

Market share grew against the trend in the second quarter, and the share of smartphone revenue continued to increase.

 

 

Against the backdrop of a downward trend in the cell phone industry in the first half of the year, Transn maintained a stable operating trend and grew its market share against the trend. In the African market, smartphone shipments in the Middle East and Africa (MEA) region declined 7.8% year-on-year to 38 million units in the second quarter of 2022 and 10% sequentially, the lowest level since the epidemic-hit second quarter of 2020, according to new research from Counterpoint Market Monitoring Services. In contrast, Transn's brands continue to hold the largest share of smartphone shipments in the MEA region, with a 2.5% year-over-year increase in shipment share in 2Q2022.

 

Meanwhile, from a global dimension, Transn continues to expand in markets outside of Africa. According to IDC's second quarter data forecast, Transn's global smartphone market share has continued to increase for two consecutive quarters, reaching 6.64% by the end of the second quarter, up 0.58 pct from 6.06% at the end of the year. With a relatively low level of economic development, the cell phone industry is lagging behind, and the per capita cell phone ownership is small, so the market space is large. With the growing maturity of emerging markets, the proportion of smartphones will continue to increase and there is a large demand for structural improvement, which will strongly support the development of Transn's smartphone business.

 

 

Launching a large-scale equity incentive plan Performance assessment targets release confidence in long-term growth

 

 

On August 19, Transn released the "2022 Restricted Stock Incentive Plan (Draft)", which proposed to grant a total of 17,228,500 restricted shares to incentive recipients, with a total of 932 initial grant recipients, accounting for 5.79% of the total number of employees. The incentive plan assesses 2023 and 2024 revenue and net profit after deduction, and sets two grades of assessment targets, taking 2021 performance as the base, if the annualized growth rate of revenue or net profit after deduction reaches 20% in 2023 and 2024, only the full amount can be vested; if it only reaches 15% compound growth, only 80% can be vested. In response, Morgan Stanley said the stock incentive plan implies that Transon remains optimistic about its growth prospects for 2023 and 2024. At the same time, Transn does not use 2022 results as a growth benchmark, which shows that Transn will not lower its long-term growth expectations for next year and the year after because of this year's phased market decline, and moreover reflects Transn's confidence in its ability to grow.

 

 

Increase investment in technology R&D and focus on localized technology innovation

 

 

Transn has always adhered to the development concept of "global thinking, local innovation" and has made technological innovation one of its core strategies. During the reporting period, Transn invested RMB 890 million in R&D, an increase of RMB 250 million compared to the first half of 2021, up 39.09% year-on-year; 3,482 R&D personnel, up 66.13% year-on-year, and the ratio of R&D personnel to the company's total number of employees increased to 20.20% from 14.19% in the same period last year. In addition, the increase in R&D investment has also helped Transn to achieve remarkable results in terms of patents. As of the end of the reporting period, Transn has obtained a total of 1,870 authorized patents, including 753 invention patents; and has a total of 766 software copyrights.

 

Recently, MIT Technology Review released the list of "50 SmartestCompanies" (TR50) for 2021, and Transn was selected as one of the "50 Smartest Companies" for the first time. For the future, Transn will bring more excellent products to consumers in emerging markets, so that as many people as possible can enjoy the good life brought by technological innovation as early as possible.