relatively normal seasonal business cycle, emerging from the industry's harsh destocking and high inflation. Meanwhile, the company reported continuous improvement in operational efficiency, with an overall gross margin increased 2.7 percentage points year-on-year to reach 47.3% in Q4, and an overall gross margin for the entire year of 2023 increased 3.4 percentage points year-over-year to 46.4%. The non-GAAP net profit margin for the whole year stood at 8.9%. marking the company’s first annual profit turnaround. The company's has also significantly improved operating cash flow continousely. In Q4, net cash generated from operating activities reached approximately $31.8 million. As of the end of Q4, the total net cash of the company was as high as $984.3 million, while its recent total market cap hovers around $1.1 billion – effectively providing a financial safety cushion. Morgan Stanley pointed out that Tuya's current trading price is only 12% higher than its net cash, indicating a low single-digit P/E ratio (excluding cash) for 2024. This indicates that at present, Tuya has been significantly undervalued, either in growth potential or market price. Tuya in the Next Era, Customers First, Business Follows From a short-term perspective, destocking has tended to come to an end. Starting from the third quarter of last year, downstream inventory began to normalize, and inventory levels have returned to healthy levels. Jessie Liu, Board Director and CFO of Tuya Smart, noted that the fourth quarter marks the transition of Tuya from recovery to growth, efficiency improvement, and profit expansion. Given that Tuya focuses on operational efficiency and inventory backlog has become a thing of the past, there is an opportunity for the company's fundamental turning point to resonate with the macro environment turning point, making the near-term prospects promising. Looking at the longer cycle, the global process of pan intelligence has embarked on the second half, a better and broader space for development. As AI, 5G, and IoT integrate into every aspect of life as infrastructure, an increasing number of AI technologies will migrate to or merge with smart devices, creating unprecedented new opportunities. Morgan Stanley highlighted that, the globalization of Tuya customers and the diversification of product distribution, as well as the enhancement of competitiveness, constitute the cornerstone of its positive future outlook. Looking back at the previous era, Tuya’s growth outpaced other players, securing a leading market competitive position among giants, and marking itself one of the first players to pass the test on this track. In the new stage, with leading ABC (artificial intelligence, big data, cloud) technology, rich software and hardware capabilities such as smart device product matrix, as well as a globally leading platform ecosystem, Tuya also embraces a vast field beyond consumer electronics, constantly breaking through the imaginative boundaries of pan intelligence. For example, in response to the ESG energy field in recent years, Tuya has efficiently launched Home Energy Management System (HEMS) and diversified solutions in Europe and the Asia Pacific region, receiving favourable market feedback. In the fourth quarter, Tuya further enhanced its presence in smart heating and temperature control ventilation application, creating innovative products and making good business development progress; Tuya also strengthened its Energy-Saving Dashboard mini-programs and smart temperature control valve solutions, combining energy-saving algorithms in heating applications with Tuya's advanced cloud algorithm capabilities, and pairing them with more intelligent and precise temperature control devices. As an intelligent platform, Tuya will continue to back global customers and partners, helping them achieve their intelligent business roadmaps in a highly efficient and valuable way. Ultimately, the commercial success of more global customers in the smart field through Tuya will also feed back into the sustained growth of Tuya's value. Conclusion In a nutshell, there is a relatively accurate conclusion on the direction of 2024. Smart technology is a clear development path, with the boom of technologies such as AI, IoT, and cloud computing, as well as policy guidance such as new quality productive force. Smart technology has gradually entered a mature stage, and the market is starting to look at tangible results. Tuya, which has stood firm in the storms of the past few years and is now demonstrating profitability amid emerging optimistic prospects, reveals the future path of intellectualization - platform-based enterprises will become the cornerstone of the intelligent industry. Meanwhile, the path chosen by Tuya deserves attention: becoming the ground for customer innovation, fully supporting more customers to enter the era of smart technology and achieve commercial success, lowering the threshold for smart technology, making entry and innovation accessible to everyone, and promoting the popularization of intelligent application scenarios such as Killer App. The prosperity of smart technology requires the continuous effort of platforms like Tuya to make smart technology from building complexity to becoming more simplified and more inclusive, providing more enterprises with the entrance key to the AI smart business era. In the second half of smart technology development, everybody has the chance to play, so the potential for the platform value-add is readily apparent.lg...
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