ZTE (000063)： First coverage of expected performance Double repair communications equipment leader cannot be shaken locally
ZTE (000063): First coverage of expected performance Double repair communications equipment leader cannot be shaken locally
Key elements of the report: ZTE has entered the top five communication equipment suppliers in the world since 2007, focusing on mainstream markets and mainstream products, and providing “cloud management end” ICT industry chain overall solutions.
At present, the company’s production capacity has been fully restored. At the same time, the market has been relatively fatigued by the impact of Sino-US trade frictions. At present, the company has largely recovered to the level before the suspension.
In addition, the company’s R & D growth continues to grow, the number of patents ranks high, and 5G cooperation has been extensively carried out with 30 operators around the world. In the 5G era, the global market voice has gradually expanded.
Investment points: The global communications giant is basically unchanged, and its advantages as a 5G end-to-end solution provider are prominent.
ZTE Corporation is one of the world’s leading listed companies in integrated communications equipment manufacturing and one of the global integrated communications information solution providers. Since 2007, it has entered the ranks of the world’s top five equipment suppliers.
Combined with the performance of the top five communications equipment vendors in 2018, we believe that in the process of 5G commercial launch of digital transformation, ZTE’s advantages as the world’s only 5G end-to-end solution provider will become increasingly prominent.
In the 5G era, China has become a leading country, and ZTE has reached 5G pre-commercial level.
With the expansion of user scale and the increase in related infrastructure needs, the 5G market will usher in a period of high growth for 4 years.
The capital expansion of the three major domestic operators in 2019 may exceed 300 billion yuan. By 2020, the capital expansion of operators will enter the upward channel.
As of January 2019, ZTE has successfully completed NSA and SA laboratories and field tests. The results show that the main functions are in line with market expectations and the company’s products have reached the pre-commercial level of 5G.
Since September 2018, ZTE Corporation has basically integrated the impact of trade friction-related events.
After lifting the ban, the average value of upstream suppliers and downstream operators was fully supported. Large orders helped ZTE resume production quickly, and the company’s production capacity has been fully restored.
The 2018 annual report shows that the core regions and businesses have suffered less, and the overall upward trend of gross profit margin has not changed.
The market has been relatively fatigued by the impact of the trade war, and the company has gradually recovered to its pre- suspension level.
With R & D as its absolute core, ZTE has hit the top three in the world in the 5G era.
The company focuses on mainstream markets and mainstream products, and provides “cloud management end” ICT overall solutions.
In addition, the company’s R & D investment continued to increase, the number of patents ranked high, and technology accumulation merged into the moat.
The company has extensively carried out 杭州夜网论坛 5G cooperation with 30 operators around the world. The 5G era has gradually increased the voice of the global market.
Profit forecast and investment advice: It is estimated that the company will realize net profit attributable to mothers in 2019, 2020 and 2021 respectively.
2.1 billion, 61.
36 billion, 71.
7.9 billion, corresponding to 1, respectively.
13 yuan, 1.
46 yuan, 1.
71 yuan; corresponding to the current expected PE is 27 times, 21 times, 18 times; for the first time to give the “overweight” rating.
Risk factors: 5G construction fails to meet expectations, country risks, and Sino-US trade frictions intensify