Apple Stock: Premium Smartphone Dominance Continues (NASDAQ:AAPL)

2


Apple store at 5th Ave in Manhattan, NYC

ozgurdonmaz

In our previous analysis, we determined that Apple Inc’s (NASDAQ:AAPL) success in the Chinese market in 2022 was due to its aggressive pricing strategy, which gave it an edge over Chinese rivals thanks to stronger profit margins. We

Smartphone Shipments (‘mln’)

2018

2019

2020

2021

2022

4-year Average

Americas

269.02

258.77

241.76

260.02

235.79

Growth %

-3.8%

-6.6%

7.6%

-9.3%

-3.04%

Europe (EMEAI)

499.29

515.23

501.76

535.89

476.91

Growth %

3.2%

-2.6%

6.8%

-11.0%

-0.91%

Greater China

398.30

366.60

325.70

329.50

285.80

Growth %

-8.0%

-11.2%

1.2%

-13.3%

-7.80%

Japan

30.12

28.05

26.00

27.37

25.55

Growth %

-6.9%

-7.3%

5.3%

-6.7%

-3.89%

Rest of Asia Pacific

207.77

202.46

197.98

199.52

178.25

Growth %

-2.6%

-2.2%

0.8%

-10.7%

-3.66%

Total

1,405

1,371

1,293

1,352

1,202

Growth %

-2.4%

-5.7%

4.6%

-11.1%

-3.65%

China Smartphone Market Projections (‘mln’)

2019

2020

2021

2022

2023F

2024F

2025F

2026F

2027F

2028F

China Population

1,410

1,412

1,413

1,412

1,412

1,411

1,409

1,407

1,404

1,401

Growth %

0.3%

0.1%

0.0%

-0.1%

0.0%

-0.1%

-0.1%

-0.2%

-0.2%

-0.2%

Penetration Rate

62.6%

66.8%

70.3%

73.6%

76.6%

79.4%

81.8%

84.0%

86.1%

87.9%

Increase

4.5%

4.2%

3.5%

3.3%

3.0%

2.7%

2.5%

2.2%

2.0%

1.8%

Increase Growth Factor

0.94

0.83

0.95

0.91

0.91

0.91

0.91

0.91

0.91

China Smartphone Users

882.2

943.2

993.1

1,039

1,081

1,120

1,153

1,183

1,209

1,231

Growth

8.1%

6.9%

5.3%

4.7%

4.0%

3.5%

3.0%

2.6%

2.2%

1.9%

Net Increase

66.2

61.0

49.9

46.3

41.8

38.4

33.4

29.6

26.1

22.8

Replacement

300.4

264.7

279.6

239.5

235.3

230.1

223.8

216.9

209.3

201.5

Replacement Rate

34.1%

28.1%

28.2%

23.0%

21.8%

20.6%

19.4%

18.3%

17.3%

16.4%

Growth %

-6.0%

0.1%

-5.1%

-5.5%

-5.5%

-5.5%

-5.5%

-5.5%

-5.5%

China Smartphone Sales

366.6

325.7

329.5

285.8

277.1

268.5

257.3

246.5

235.4

224.3

Growth

-8.0%

-11.2%

1.2%

-13.3%

-3.0%

-3.1%

-4.2%

-4.2%

-4.5%

-4.7%

Americas Smartphone Projections (‘mln’)

2019

2020

2021

2022

2023F

2024F

2025F

2026F

2027F

Population

1,018.8

1,025.8

1,031.4

1,037.1

1,043.9

1,051.0

1,058.0

1,064.9

1,071.6

Growth %

0.8%

0.7%

0.5%

0.6%

0.7%

0.7%

0.7%

0.6%

0.6%

Penetration Rate

64.7%

68.9%

71.4%

73.0%

74.2%

75.0%

75.6%

76.0%

76.3%

Increase

5.0%

4.2%

2.5%

1.7%

1.2%

0.8%

0.6%

0.4%

0.3%

Increase Growth Factor

0.83

0.60

0.67

0.70

0.70

0.70

0.70

0.70

Smartphone Users

659.30

706.51

736.12

757.51

775

788

800

809

817

Growth

9.2%

7.2%

4.2%

2.9%

2.3%

1.8%

1.4%

1.2%

1.0%

Net Increase

55.8

47.2

29.6

21.4

17.1

13.9

11.3

9.5

8.1

Replacement

203.0

194.6

230.4

214.4

212.4

209.4

205.8

201.7

197.4

Replacement Rate

30.8%

27.5%

31.3%

28.3%

27.4%

26.6%

25.7%

24.9%

24.2%

Growth %

-3.2%

3.8%

-3.0%

-3.1%

-3.1%

-3.1%

-3.1%

-3.1%

Smartphone Sales

258.77

241.76

260.02

235.79

229.5

223.3

217.1

211.2

205.5

Growth

-3.8%

-6.6%

7.6%

-9.3%

-2.7%

-2.7%

-2.8%

-2.7%

-2.7%

Europe (EMEAI) Smartphone Projections (‘mln’)

2019

2020

2021

2022

2023F

2024F

2025F

2026F

2027F

Population

3,716

3,764

3,810

3,867

3,914

3,961

4,018

4,075

4,121

Growth %

1.4%

1.3%

1.2%

1.5%

1.2%

1.2%

1.4%

1.4%

1.1%

Penetration Rate

35.6%

42.0%

45.8%

48.4%

50.2%

51.4%

52.3%

52.9%

53.4%

Increase

7.7%

6.4%

3.8%

2.6%

1.8%

1.3%

0.9%

0.6%

0.4%

Increase Growth Factor

0.83

0.60

0.67

0.70

0.70

0.70

0.70

0.70

Smartphone Users

1,324

1,581

1,747

1,871

1,964

2,037

2,102

2,156

2,199

Growth

29.1%

19.4%

10.5%

7.1%

4.9%

3.7%

3.2%

2.6%

2.0%

Net Increase

298.5

257.2

165.5

124.6

92.6

73.3

64.6

54.7

42.3

Replacement

216.7

244.6

370.4

352.3

363.7

371.1

376.6

380.1

381.2

Replacement Rate

16.4%

15.5%

21.2%

18.8%

18.5%

18.2%

17.9%

17.6%

17.3%

Growth %

-0.9%

5.7%

-2.4%

-1.6%

-1.6%

-1.6%

-1.6%

-1.6%

Smartphone Sales

515.23

501.76

535.89

476.91

456.2

444.3

441.1

434.8

423.5

Growth

3.2%

-2.6%

6.8%

-11.0%

-4.3%

-2.6%

-0.7%

-1.4%

-2.6%

Japan Smartphone Projections (‘mln’)

2019

2020

2021

2022

2023F

2024F

2025F

2026F

2027F

Population

126.6

126.1

125.5

124.3

123.8

123.2

122.5

121.9

121.2

Growth %

-0.2%

-0.3%

-0.5%

-0.9%

-0.4%

-0.5%

-0.5%

-0.5%

-0.5%

Penetration Rate

74.5%

78.7%

82.6%

86.2%

89.3%

91.7%

93.5%

94.5%

95.2%

Increase

5.5%

4.2%

3.8%

3.6%

3.1%

2.4%

1.7%

1.1%

0.6%

Increase Growth Factor

0.76

0.91

0.94

0.87

0.78

0.70

0.63

0.57

Smartphone Users

94

99

104

107

111

113

115

115

115

Growth

7.9%

5.3%

4.3%

3.4%

3.2%

2.2%

1.4%

0.6%

0.1%

Net Increase

6.9

5.0

4.3

3.5

3.4

2.5

1.5

0.7

0.1

Replacement

21.2

21.0

23.1

22.1

22.4

22.6

22.5

22.4

22.0

Replacement Rate

22.5%

21.1%

22.3%

20.6%

20.3%

20.0%

19.7%

19.4%

19.1%

Growth %

-1.3%

1.1%

-1.7%

-1.5%

-1.5%

-1.5%

-1.5%

-1.5%

Smartphone Sales

28.05

26.00

27.37

25.55

25.8

25.1

24.1

23.1

22.2

Growth

-6.9%

-7.3%

5.3%

-6.7%

1.0%

-2.9%

-3.9%

-4.2%

-4.0%

Rest of Asia Smartphone Projections (‘mln’)

2019

2020

2021

2022

2023F

2024F

2025F

2026F

2027F

Population

1,498

1,510

1,523

1,537

1,550

1,564

1,579

1,605

1,612

Growth %

1.1%

0.8%

0.9%

1.0%

0.8%

0.9%

1.0%

1.6%

0.4%

Penetration Rate

35.9%

43.8%

48.6%

51.8%

54.0%

55.5%

56.6%

57.4%

57.9%

Increase

9.5%

7.9%

4.8%

3.2%

2.2%

1.6%

1.1%

0.8%

0.5%

Increase Growth Factor

0.83

0.60

0.67

0.70

0.70

0.70

0.70

0.70

Smartphone Users

538

661

740

796

837

869

894

921

933

Growth

37.7%

23.0%

11.8%

7.5%

5.2%

3.8%

2.9%

3.0%

1.3%

Net Increase

147.2

123.9

78.2

55.8

41.1

32.1

25.6

26.8

12.3

Replacement

55.3

74.1

121.3

122.4

128.7

133.6

137.4

141.5

143.3

Replacement Rate

10.3%

11.2%

16.4%

15.4%

15.4%

15.4%

15.4%

15.4%

15.4%

Growth %

0.9%

5.2%

-1.0%

0.0%

0.0%

0.0%

0.0%

0.0%

Smartphone Sales

202.46

197.98

199.52

178.25

169.8

165.6

163.0

168.3

155.6

Growth

-2.6%

-2.2%

0.8%

-10.7%

-4.8%

-2.4%

-1.6%

3.3%

-7.5%

Smartphone Market Projections (‘mln’)

2019

2020

2021

2022

2023F

2024F

2025F

2026F

2027F

Average

Americas

258.77

241.76

260.02

235.79

229.50

223.30

217.11

211.19

205.52

Growth %

-3.8%

-6.6%

7.6%

-9.3%

-2.7%

-2.7%

-2.8%

-2.7%

-2.7%

-2.7%

Europe (EMEAI)

515.23

501.76

535.89

476.91

456.24

444.35

441.14

434.77

423.50

Growth %

3.2%

-2.6%

6.8%

-11.0%

-4.3%

-2.6%

-0.7%

-1.4%

-2.6%

-2.3%

China

366.60

325.70

329.50

285.80

277.11

268.49

257.26

246.45

235.41

Growth %

-8.0%

-11.2%

1.2%

-13.3%

-3.0%

-3.1%

-4.2%

-4.2%

-4.5%

-3.8%

Japan

28.05

26.00

27.37

25.55

25.80

25.06

24.09

23.08

22.17

Growth %

-6.9%

-7.3%

5.3%

-6.7%

1.0%

-2.9%

-3.9%

-4.2%

-4.0%

-2.8%

Other Asia Pacific

202.46

197.98

199.52

178.25

169.78

165.63

162.98

168.32

155.64

Growth %

-2.6%

-2.2%

0.8%

-10.7%

-4.8%

-2.4%

-1.6%

3.3%

-7.5%

-2.6%

Total

1,371

1,293

1,353

1,202

1,158

1,127

1,102

1,084

1,042

Growth %

-2.4%

-5.7%

4.6%

-11.1%

-3.6%

-2.7%

-2.2%

-1.7%

-3.8%

-2.8%

Global Premium Smartphone Shipments

2016

2017

2018

2019

2020

2021

2022

Average

Premium Share of Total

7%

8%

13%

15%

15%

19%

21%

Non-Premium Share

93%

92%

87%

85%

85%

81%

79%

Global Total Smartphone Market Shipments (‘mln’)

1,472

1,465

1,405

1,371

1,293

1,352

1,202

Premium Shipments (‘mln’)

103.1

117.2

182.6

205.7

194.0

256.9

252.5

Growth %

13.7%

55.8%

12.6%

-5.7%

32.5%

-1.7%

17.9%

Non-Premium Shipments

1,369

1,348

1,222

1,165

1,099

1,095

950

Growth %

-1.6%

-9.3%

-4.6%

-5.7%

-0.4%

-13.3%

-5.8%

GDP Per Capita Growth by Region

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

Average

Forward Average

Americas

-0.4%

-11.2%

14.0%

12.1%

6.9%

4.8%

3.4%

4.7%

3.5%

3.6%

3.6%

4.5%

Europe (EMEAI)

0.1%

-7.8%

14.9%

8.2%

2.4%

4.0%

4.8%

4.6%

4.5%

4.6%

3.9%

4.2%

China

3.3%

3.5%

19.4%

1.9%

7.1%

7.9%

7.4%

7.4%

7.2%

7.1%

7.0%

7.4%

Japan

1.8%

-1.1%

-0.6%

-15.2%

4.6%

3.1%

5.0%

4.6%

3.7%

5.8%

-3.8%

4.5%

Other Asia Pacific

1.7%

-0.4%

14.2%

-0.1%

5.6%

6.0%

6.1%

6.1%

5.9%

6.1%

3.8%

6.0%

Market Share of Smartphone Makers

Americas

Europe (EMEAI)

China

Japan

Other Asia Pacific

Apple

27.00%

14%

22%

49.00%

16.13%

Samsung

32.50%

29%

9.10%

24.51%

Huawei

0%

5.62%

Xiaomi (OTCPK:XIACF)

6.5%

17%

12%

17.51%

Honor

0%

15%

Google (GOOG)

1.50%

Others

32.5%

40.5%

51.0%

41.9%

36.2%

Premium Market Share

Americas

Europe (EMEAI)

China

Japan

Other Asia Pacific

Total Share of Premium

26.5%

16.5%

18.3%

39.5%

17.4%

Total Share of Non-Premium

73.5%

83.5%

81.7%

60.5%

82.6%

Premium Smartphone Market Share

Americas

Europe (EMEAI)

China

Japan

Other Asia Pacific

Apple

76.4%

63.8%

90.2%

93.1%

69.3%

Samsung

19.6%

27.8%

N/A

3.7%

22.5%

Huawei

N/A

N/A

N/A

N/A

1.0%

Xiaomi

0.2%

1.0%

0.7%

N/A

1.0%

Honor

N/A

N/A

0.8%

N/A

N/A

Google

0.1%

N/A

N/A

N/A

N/A

Others

3.7%

7.3%

8.4%

3.2%

6.2%

Premium Smartphone Market Projections

2022

2023F

2024F

2025F

2026F

2027F

Average

Americas

62.50

65.02

66.30

66.67

67.87

68.39

Growth %

4.0%

2.0%

0.6%

1.8%

0.8%

1.8%

Europe (EMEAI)

78.80

77.19

78.21

81.36

83.89

85.41

Growth %

-2.0%

1.3%

4.0%

3.1%

1.8%

1.6%

China

52.30

54.30

56.75

58.42

60.13

61.58

Growth %

3.8%

4.5%

2.9%

2.9%

2.4%

3.3%

Japan

10.08

10.65

10.67

10.77

10.80

10.75

Growth %

5.7%

0.2%

1.0%

0.2%

-0.4%

1.3%

Other Asia Pacific

31.10

31.30

32.38

33.82

37.05

36.27

Growth %

0.6%

3.5%

4.4%

9.5%

-2.1%

3.2%

Total

234.8

238.5

244.3

251.1

259.7

262.4

Growth %

1.6%

2.5%

2.8%

3.5%

1.0%

2.3%

Premium Market Share

2021

2022

Apple

71%

75%

Samsung

17%

16%

Huawei

5%

3%

Xiaomi

2%

1%

Honor

1%

1%

Google

1%

1%

Others

3%

3%

Company

NPS Score

Google Trends

Interbrand Ranking

Apple

50

68

1

Samsung

36

85

5

Huawei

38

10

86

Xiaomi

43

17

84

Honor

38

6

>100

Google

45

3

4

Company

Camera and Selfie

Audio

Display

Battery

Average

Apple

142

142

144

123

136.6

Samsung

134

136

149

122

132.7

Huawei

150

143

144

121

139.1

Xiaomi

132

108

132

128

126.9

Honor

136

138

145

125

133.9

Google

141

135

148.5

95

127.3

Company

Average Performance Score

Apple

1,398,692

Samsung

1,511,635

Huawei

1,166,084

Xiaomi

1,482,294

Honor

1,110,866

Google

815,169

Company

Number of Smartphones

Apple

4

Samsung

5

Huawei

2

Xiaomi

4

Honor

2

Google

2

Ranking

Branding

Features

Performance

Product Breadth

Average

Competitive Factor Score

Apple

1

2

3

2

2.00

1.30

Samsung

3

4

1

1

2.25

1.25

Huawei

5

1

4

4

3.50

1.00

Xiaomi

4

6

2

2

3.50

1.00

Honor

6

3

5

4

4.50

0.80

Google

2

5

6

4

4.25

0.85

Apple Revenue Forecast ($ mln)

2022

2023F

2024F

2025F

2026F

iPhone

205.5

209.04

217.59

226.50

235.77

Growth %

7.0%

1.7%

4.1%

4.1%

4.1%

Mac

40.2

28.99

39.79

41.79

43.89

Growth %

14.2%

-27.8%

37.3%

5.0%

5.0%

iPad

29.3

29.14

33.72

34.46

35.21

Growth %

-8.1%

-0.5%

15.7%

2.2%

2.2%

Wearables, home and accessories

41.2

40.70

46.23

51.14

55.03

Growth %

7.4%

-1.3%

13.6%

10.6%

7.6%

Services

78.1

83.85

102.99

126.39

155.51

Growth %

14.2%

7.3%

22.8%

22.7%

23.0%

Total

394.3

391.7

440.3

480.3

525.4

Total Growth %

7.8%

-0.7%

12.4%

9.1%

9.4%

EV/EBITDA

Revenue ($ bln)

Weight

Weighted Average

Product

316.2

80.2%

14.38x

Service

78.1

19.8%

29.99x

Total

394.3

100.0%

17.47x



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