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2026-08-24 15:49:17 Citi issued a report saying that ZTE (00763.HK)'s 2Q revenue rose 12% YoY to RMB43.037 billion, 7% above market expectations, while net profit fell 45% to RMB1.442 billion, 2% above market expectations. Revenue beat expectations, benefiting from growth in computing power and AI infrastructure businesses, which offset the impact from continued declines in domestic operator capital expenditure. However, gross margin narrowed sharply to 23.2% (down 7.7 ppts YoY and 5.1 ppts below the broker's forecast), as the revenue mix shifted toward lower-margin computing power and server hardware products, dragging operating profit down 58% YoY, far below the broker's expectation by 58%. The broker lowered its 2026 and 2027 net profit forecasts by 19.4% and 14.5%, respectively, due to the shift in revenue mix toward lower-margin products, while the 2028 forecast remained broadly unchanged. Revenue forecasts were raised by 2.6% to 3% to reflect strong computing power demand. TP was lifted from HKD25.4 to HKD25.9 based on a target P/E ratio of 15x, while the valuation base was rolled forward from 2026 to 2027. The Neutral rating was maintained. (ad/da)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |