On the evening of August 27, ZTE released its performance report for the first half of 2019. From January to June 2019, ZTE realized 44.609 billion yuan in revenue, an increase of 13.12% compared with the previous year; realized net profit of 1.47 billion yuan, an increase of 118.80%, a loss of 7.824 billion yuan in the same period last year; basic earnings per share of 0.35 yuan, an increase of 118.72%.
Among them, the network business of operators realized revenue of 32.485 billion yuan, accounting for 72.82% of the total revenue, an increase of 38.19% over the same period last year. The actual revenue of government and enterprises is 4.7 billion yuan, an increase of 6.02% over the same period of last year.
Galaxy Securities expects that from the end of September 2019, domestic operators will start 5G commerce one after another, and 5G will enter a large-scale construction period. Operatorsdemand for wireless main equipment is expected to drive the companys performance to continue to grow. In the 5G era, barriers to telecommunications equipment industry continue to rise, and related products are expected to maintain a high gross interest rate. ZTE, as the worlds leading equipment manufacturer, has won 25 5G commercial contracts worldwide, and cooperates with more than 60 operators worldwide, which is expected to fully enjoy the dividend of 5G construction.
At present, ZTE has won 25 5G commercial contracts worldwide, and has developed 5G cooperation with more than 60 operators worldwide. As of June 30, 2019, ZTEs 5G strategic layout patents exceeded 3700.
A few days ago, Northeast Securities Research and Report showed that, considering the progress of business recovery and investment income, the companys earnings forecast was raised. It is estimated that net returns to home in 2019-2021 will be 5.12 billion yuan, 6.3 billion yuan and 7.93 billion yuan, respectively. The current stock price corresponding to dynamic PE is 24 times, 19 times and 15 times, maintaining the buy rating.
In addition, on August 29, 2019, Cathay Pacific Junan (Hong Kong) issued a report to maintain its buy rating for ZTE. Meanwhile, the target price was lowered from HK$28 to HK$24.5. As of the reporting date, the companys latest closing price was HK$19.56, with 25.26% upstream space compared with the target price. Guotai Junan (Hong Kong) predicts that the total operating income and net returns of the company in 2019 will be 91.242 billion yuan and 4.689 billion yuan, respectively. The expected EPS in 2019/2020/2021 will be 111/1.25/1.51 yuan, and the expected P/E ratio will be 19.4/17.3/14.3 times.