ZTE (000063)： Clearing Sanctions Affects Return to Growth in 2019
ZTE (000063): Clearing Sanctions Affects Return to Growth in 2019
Event: The company released its 2018 annual report and actually achieved revenue of 855.
1 ‰, a decrease of 21 per year.
4%, net profit attributable to mother is -69.
800 million, a year-on-year decrease of 252.
At the same time, the first quarter of 2019’s performance forecast is attributed to the parent’s net profit of 800-120 million, which will increase 115% -122% in the 杭州桑拿 future.
The sanctions losses were cleared in one go, and the youth were loaded into battle in 2019.
The company imposes US sanctions of 1 billion fines for impairment in 2018.
Based on the logic of “increasing domestic market share and narrowing the expansion of mobile phone business”, we continue to be optimistic about ZTE. It is expected to have a net profit of 55 billion in 2019 and an EPS of 1 in 2019-2021.
The market had poor expectations and performance returned to the growth track.
The market predicts that ZTE’s Q1 profit will be about 500 million.
Net operating cash flow from 18Q4 reached 10.
From the perspective of 100 million US dollars, the net profit of the first quarter of 2019 is estimated to be about 1 billion. The company announced in 19Q1 that it is expected to realize a profit of 800-1.2 billion, which is in line with our forecast.
In the first quarter of the uncertain concentration of orders, the achievement of such results indicates that the company’s business has recovered well and is close to the level of the first quarter of 2017, laying a foundation for gradually achieving performance growth.
Benefiting from the structural change of operator Capex, market share is expected to increase.
The three major operators have announced their capital expenditure plans for 2019, with a total investment of 303 billion, which has stopped falling but has risen by 5.
7%, the proportion of wireless side increased by 5.
4pct to 46%, in line with our “5G wireless advance” judgment.
We believe that ZTE is working on the wireless side, and the domestic market share is expected to increase by 3-5pct over 4G, which will drive continued growth in performance.
And it has carried out 5G cooperation with 30 operators around the world, and the commercial network practice of 5G key technologies has kept ahead.
Shrink consumer business and improve profit performance.
The mobile phone business is feasible, and it is necessary to deal with the contraction, such as the abolition of Nanjing R & D Center.
The number of ZTE mobile phones in the United States has continued to decline, with market share from 11% in 17Q3 to 6% in 18Q3.
Consumer business revenue with the lowest gross profit margin decreased by 45%, accounting for 22% of total revenue.
5%, a decrease of 9 per year.
9 points, driving the overall gross profit margin to rise by 1.
84pct, the company’s overall profitability increased.
Vigorously promote research and development, focus on the main business in preparation for 5G.
The company focuses on 5G core technology and expands R & D investment 109.
10,000 yuan, accounting for 12.
8%, an increase of 0 over the same period last year.
The company has comprehensively deployed areas such as edge computing, Internet of Things, and cloud computing.
The company accrues 10.
900 million Nubia long-term equity investment impairment provisions and confirmation of ZTE Soft Chong7.The investment income of 300 million yuan, if excluding the impact of one-time profit and loss, the net profit of Q4 reaches 6.
400 million, which is close to 6 in Q4 2017.
Risk warning: 5G progress is less than expected; trade war has intensified impact on company business