Transsion (688036.SS): Smartphone product mix upgrade and Energy to support growth ahead

Transsion smartphone shipments declined sequentially in 1Q26 and 2Q26 amid high memory costs; however, with continuous product mix upgrade and pass-through of high memory costs, its overall revenues increased by 25%/20% YoY in 1Q26/2Q26. For the coming quarters, we expect its smartphone shipment to slightly increase sequentially in 3Q26/4Q26, along with the new Energy business ramp-up to support the 2H26 growth. The company's smartphone shipment global market share troughed at 6.8% in 4Q25, and was up to 7.2% in 2Q26 (vs. 8.6%/7.9% in 2024/2025A), with continuous product mix upgrade: the contribution of shipment of smartphones priced below US$100 declined to 38% in 2Q26 vs. 57% in 2025. We are positive on Transsion's smartphone product mix upgrade and product lines expansion toward Energy;