Transsion’s 3-quarter profits jump on one-off investment as growth slows

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Transsion brand Techno’s flagship store in Dodoma, Tanzania. (Image credit: Transsion)

Net profits for Transsion, the Chinese smartphone maker, in the first three quarters of the year surged 732% year on year to RMB 1.3 billion (around $180 million), according to the company’s filing, while revenues continued to slow.

Why it matters: This is the first quarterly earnings report released by the Shenzhen-based budget mobile phone seller since its listing on China’s tech-focused STAR Market in September.

  • The surge in profit, however, was not driven by a corresponding surge in revenues, which rose a modest 6.7% year on year.
  • The company profited from foreign currency futures purchased during the first five months of 2018 to hedge against the rapid devaluation of US dollars against the Chinese yuan.

Details: Revenue growth during the three quarters ended Sept. 30 is slowing for the mobile phone maker, down significantly from 12.9% in 2018 and 72.2% in 2017, according to its prospectus filed in April.

  • The company sold 16.6 million smartphones and 38.2 million function phones in the first two quarters, according to the filings.
  • Revenue for the third quarter was RMB 6.4 billion, up 9.7% year on year, while net profit grew 436.7% on an annual basis to RMB 483 million.

Transsion’s lead in African phone market under threat from fellow Chinese rivals

Context: Founded in 2016, the company went public on the STAR Market on the Shanghai Stock Exchange last month, raising RMB 2.8 billion.

  • The company, which owns three phone brands—Tecno, Itel, and Infinix—held a combined 48.7% share of the mobile phone market in Africa last year, according to its prospectus, citing data from research firm IDC.
  • Transsion has been ceding market share in Africa to peers including Samsung and Huawei.
  • The company has a strong presence in other emerging markets such as India, but analysts have said its handset profit margins are significantly lower than those of premium smartphone makers.