Stumbling Transsion calls on Hong Kong investors. But will they answer?

The budget cellphone specialist has filed for a Hong Kong IPO, even as its revenue began to fall in the second half of last year

Key Takeaways

• Transssion has filed to list in Hong Kong, reporting its revenue fell 16% in the first half of this year as its profit plunged by more than half
• The company rose to prominence by focusing on budget feature phones for emerging markets, but is facing more competition as those markets transition to smartphones

By Doug Young

When we write about mobile phones, we tend to use the term interchangeably with smartphones, since smartphones account for nearly all mobile phones sold in mature Western markets, and even in some developing markets like China. But the reality is far different in many developing markets like Africa, where a more basic group of feature phones from a pre-smartphone era are still a dominant market force.

A focus on such basic feature phones propelled Shenzhen Transsion Holdings Co. Ltd. (688036.SZ) to global stardom over the last decade, as it profited by selling its basic models to Africa and other emerging markets. Now, the company, currently the world’s fourth largest smartphone maker in terms of units sold, is hoping to dial up fresh funds with plans for a new listing in Hong Kong.

Transsion filed for its Hong Kong listing last week, following reports in July saying it was planning such an IPO to raise up to $1 billion. The new listing would complement its existing listing on China’s A-share market in Shenzhen, which is mostly accessible to domestic Chinese investors. A second listing in the more globally focused Hong Kong certainly makes sense for the company, since the vast majority of its sales are outside China.

Transsion was quite the hot ticket for most of its life, growing at breakneck pace since its founding in 2013 by tapping markets neglected by other major brands, starting with Africa. But lately it’s fallen on hard times as other major players, many of those also from China, start to target those markets to keep their growth alive.

Making matters worse, Transsion is going through a difficult transition from the feature phones that still make up the majority of its unit sales, to smartphones that are quickly gaining traction in emerging markets as technology matures and prices come down. Whereas Transsion is clearly a leader in the fast-disappearing art of making good feature phones, it has far more competition in smartphones from names like Xiaomi (1810.HK), Vivo and Oppo.

“The best thing about Transsion is its large user base in the entry-level segment, which currently accounts for over 40% of global smartphone shipments,” said IDC analyst Will Wong. “Transsion’s strong footprint in emerging markets, such as Africa, gives it an advantage as local users increasingly seek device upgrades.”

Transsion is the brainchild of founder Zhu Zhaojiang, 52, who cut his teeth in the early days of China’s mobile phone market at Ningbo Bird, an early highflyer in the space. Zhu, who also uses the English name George, continues to call the shots at Transsion with 67% of the company’s voting rights. While his instincts probably served the company well in its earlier era as a feature phone specialist, it’s a bit unclear if he has the skills to transition Transsion to the smartphone era.

Reflecting its recent struggles, Transsion’s stock has been falling recently in tandem with its sinking revenue. The company’s Shenzhen-listed stock is down 28% this year, in sharp contrast with Xiaomi – its closest listed peer – whose stock is up about 21% year-to-date.

Feature phone reliance

Despite its recent difficulties, Transsion still looks quite strong on the global smartphone leaderboard. It was the world’s fourth largest smartphone seller in this year’s third quarter with 9% of the market in terms of unit sales, behind only Samsung (005930.KS), Apple (AAPL.US) and Xiaomi, according to IDC. But its revenue is far lower than those three due to its focus on the lower end of the market. And its revenue has been dropping lately as emerging markets make the transition from feature phones to smartphones.

The company’s revenue fell 16% year-on-year to 29.1 billion yuan ($4.1 billion) in the first half of this year from 34.6 billion yuan a year earlier, reversing 10% growth for all of 2024. By comparison, Xiaomi’s revenue rose 38.2% year-on-year in the first half of this year to 227 billion yuan – nearly eight times as much as Transsion’s figure.

Transsion’s two largest markets are Africa, which accounted for 33% of its revenue in the first half of this year, and emerging markets in the Asia Pacific region, which accounted for 36%. But its Africa revenue fell 4.5% year-on-year in the first half of this year, while its emerging Asia Pacific market revenue dropped by an even larger 19.4%. The biggest revenue decline came in its Central and Eastern Europe region, which plummeted by more than half to make up 3.2% of its total compared with 6.5% a year earlier.

A deeper dive into the data shows the diving figures are mostly due to plunging feature phone sales. The company’s smartphone sales in Africa have been relatively steady this year, rising to 17.7 million units in the first half of 2025 from 17.2 million units a year earlier. But its feature phone sales for the market plunged about 30% to 24.2 million units from 34.4 million a year earlier.

Transsion is trying to make up for some of the ground it’s losing in feature phones by moving into mobile internet services and selling internet of things (IoT) products like earbuds. But mobile internet services accounted for just 1.4% of its revenue in the first half of this year. IoT product sales looked slightly more encouraging, with revenue from that segment up 18% year-on-year in the first half of this year to 2.57 billion yuan, accounting for 8.8% of sales.

As its revenue comes under pressure, the company’s profit fell by more than half to 1.24 billion yuan in the first half of this year from 2.86 billion yuan a year ago. As Transsion’s stock has fallen in response to its fading fortunes, the price-to-earnings (P/E) ratio for its Shenzhen-listed shares has dropped to 21 – behind the 27 for Xiaomi and much lower than the 37 for Apple.

If timing is everything, then Transsion’s Hong Kong IPO application is a very mixed bag. In terms of its own business, the company probably should have tried to make this listing early last year when its revenue was still growing and its profits looked healthier. Timing could still work to its advantage now, since Hong Kong is experiencing one of its hottest IPO markets in years and smartphone listings are still relatively rare. But it’s far from clear that Transsion will be able to quickly reverse its sagging fortunes, which could limit the attraction of its shares compared with Xiaomi, Apple and Samsung.

To subscribe to Bamboo Works free weekly newsletter, click here