Transsion Holdings rushes to Hong Kong IPO: "King of Africa" faces competition, with last year's net profit expected to drop by half year-on-year

Known as the “King of Africa,” Transsion Holdings (SH688036, stock price 58.25 yuan, market value 67.06 billion yuan) is accelerating its dual-platform listing on the “A+H” markets.

Previously, Transsion Holdings announced in early December 2025 that it had submitted an application to the Hong Kong Stock Exchange for a main board listing.

At this critical point for a Hong Kong IPO, Transsion Holdings expects its net profit for 2025 to be halved for the first time since going public. The company also faces multiple challenges, including rising component prices and intensified overseas competition.

Today’s African market is no longer an untapped blue ocean but a “cake” that giants want to share. Smartphone brands like Xiaomi, OPPO, and Honor are expanding their influence in Africa and have achieved significant results.

Photos of Transsion brands on African streets Source: Meiri Media Asset Library

Increase in memory prices hits “King of Africa”

The prospectus (draft version) shows that the funds raised from this IPO will mainly be used for: developing AI-related technologies to accelerate product iteration, marketing and brand building, strengthening the company’s mobile internet services, IoT products, and more.

Transsion’s sales are mainly concentrated in Africa, emerging Asia-Pacific markets (excluding China, Japan, Korea, Singapore, Australia, and New Zealand), Latin America, and the Middle East. By optimizing features like night shooting and customizing beautification algorithms for deep skin tones, Transsion has established a competitive advantage in Africa.

According to market research firm Omdia, in 2023 and 2024, Transsion’s market share in Africa’s smartphone market was 50% and 51%, respectively. In the first three quarters of 2025, its shipments in Africa were 9 million, 9.7 million, and 11.6 million units, with market shares of 47%, 51%, and 51%. This means that for every two phones sold in Africa, one is a Transsion brand.

However, impressive market share has not translated into sustained profit growth. Transsion’s 2025 annual performance forecast shows that the company expects to achieve revenue of about 65.568 billion yuan, a decrease of approximately 4.58% year-on-year; net profit attributable to the parent is expected to be about 2.546 billion yuan, down about 54.11% year-on-year.

The company explained: “Due to supply chain costs, the prices of storage and other components have increased significantly, which has impacted product costs and gross margins, leading to a decline in overall gross profit margin during the reporting period.”

The prospectus also warns of risks related to raw material cost fluctuations: “The prices of storage chips (one of the raw materials we purchase) have fluctuated in recent years. We cannot guarantee that our raw material prices will not rise sharply in the future. If that happens, the company may be unable to offset the price increases by raising product prices, which could reduce our profit margins. Conversely, if product prices increase significantly, we may lose market competitiveness.”

A UBS report at the end of last year indicated that memory costs per smartphone could surge by 37% in Q4 2026 compared to a year earlier, equivalent to a $16 increase per device. According to TrendForce’s memory industry survey, the contract prices for conventional DRAM are expected to increase from the initial forecast of 55%-60% in Q1 to 90%-95%, and NAND Flash contract prices are expected to rise from 33%-38% to 55%-60%, with further upward adjustments possible.

The prospectus shows that in the first half of 2025, the average selling price of Transsion’s smartphones was 547.5 yuan per unit, and feature phones were 50.1 yuan per unit. This indicates that Transsion’s product mix remains primarily mid- to low-end.

Images Source: Draft version of the prospectus

Furthermore, the revenue structure shows that Transsion relies heavily on mobile phone sales. From 2022 to the first half of 2025, revenue from phone sales accounted for 91.3%, 92.0%, 92.0%, and 89.8% of total revenue, respectively. Therefore, the rise in the prices of core raw materials for phones directly impacts the company’s profits.

Images Source: Draft version of the prospectus

Compared to top-tier brands that can rely on long-term agreements with memory chip manufacturers and their brand premiums, mid- and low-end manufacturers, especially those focused on cost performance, are more directly and severely affected by the price hikes.

Xiaomi, Honor, and others compete fiercely in the African market

In addition to cost pressures, Transsion also faces the challenge of major domestic smartphone brands accelerating their “going global” strategies.

In recent years, the domestic smartphone market has become saturated, with fierce competition. Brands like Xiaomi, OPPO, and Honor are speeding up their overseas expansion, with Africa becoming a key battleground.

Omdia data shows that in Q3 2025, Transsion held a 51% market share in Africa, with Samsung in second place. Xiaomi and Honor ranked third and fifth, respectively, with shipment growth of 34% and 158% year-on-year.

Last year, Omdia senior analyst Manish Pravinkumar stated: “Xiaomi is accelerating its long-term strategy in Africa, planning to enter more than 15 new markets in the coming months and opening its first flagship store in Morocco. It continues to expand in the sub-$150 market segment; OPPO is consolidating its position in North Africa, with Egypt as a core hub, and maintaining growth in mid-range models; Honor is maintaining steady growth in South Africa by increasing market share with high-cost-performance models.”

Additionally, in Q1 and Q2 2025, Honor’s shipments in Africa grew by 283% and 161% year-on-year, respectively, while Xiaomi’s shipments grew steadily by over 30% during the same period.

To strengthen its position and seek new growth points, Transsion is exploring diversification. The prospectus states that besides phones and internet services, the company also offers lightweight electric mobility devices—mainly two- and three-wheeled electric vehicles. To address frequent power outages in Africa, Transsion has also launched the itel Energy home energy storage series.

Images of some IoT products from Transsion Source: Draft version of the prospectus

However, patent issues are unavoidable in overseas expansion. In 2025, Transsion faced multiple international patent infringement lawsuits: Japanese electronics company NEC, US-based SPT, and Huawei filed patent infringement claims in Europe, involving video codec and image filtering technologies.

With performance under significant pressure, whether the Hong Kong IPO can open new growth space for Transsion remains to be seen.

On February 25, reporters contacted Transsion for comment but had not received a response as of press time.

Meiri Economic News