ZTE (000063) 2019 First Quarterly Report and Interim Report Commentary: Performance Meets Expectations, 5G Leader Starts Again

ZTE (000063) 2019 First Quarterly Report and Interim Report Commentary: Performance Meets Expectations, 5G Leader Starts Again

The company announced the 2019 first quarter and interim results forecast, the company achieved revenue of 22.2 billion US dollars in the first quarter of 2019, a year-on-year decrease of 19.

3%; net profit attributable to ordinary shareholders of listed companies.

63 ppm, an increase of 116 per year.

0%; For the first half of 2019 performance forecast, it is estimated that the net profit attributable to common shareholders of listed companies will be USD 1.2-1.8 billion, 天津夜网 an increase of 115.

3% -123.


The performance in the first quarter of 2019 improved significantly, and operating cash flow turned from negative to positive net profit in the first quarter of 2019.

6.3 billion, which actually turned losses before, and was 2 in the single quarter of 2018Q4.

76 ppm, a significant improvement from the previous quarter. In terms of gross profit margin, the overall gross profit margin for the first quarter of 2019 was 39.

97%, gross profit constant (2018Q128.

01 %%) and MoM (2018 32.

(91%) showed a significant improvement, mainly due to the gradual increase in the proportion of high gross profit operators’ business. In terms of operating cash flow, the company’s net operating cash flow in the first quarter of 2019.

6 billion, from negative to positive, the operating conditions continued to improve.

Continue to spend 5G, and the share of the 5G era will increase in 2019. As a key year to build on the success of the year, 5G commercial licenses will be allocated during the year, 4G expansion will be superimposed on 5G small-scale investment.Inflection point.
As the domestic market of equipment giants among the top four in the world, it is recognized that 5G global military must compete, and the company’s R & D occupation in the first quarter of 2019 was 30.

930,000 yuan, accounting for 13% of operating income.


The company’s current operations have returned to normal levels, and the supply chain has returned to normal. More domestic R & D and channel resources will be expanded, and the expansion to 4G is expected to further increase.

After the 5G leader set off the sanctions storm, the company paid the bills and deposits in time, and the company and ZTE Kangxun’s statements have all been replaced, and the compliance officer reporting to the Bank for International Settlements. At present, the company’s management is operating well.

Risk reminder: 5G progress gradually exceeds expectations, potential restructuring risks, and Sino-US trade frictions exceed expected risks.

Investment suggestion: Maintain “Buy” rating.

The company’s business focuses on the three major areas of operator networks, government and enterprises, and consumers, and actively expands strategic emerging markets such as the Internet of Things, Internet of Vehicles, optical communications, silicon light, and Pre-5G / 5G.

The company’s competitive advantage in the field of 5G network equipment, the layout of the entire industry chain, future performance is expected to resume growth.

The company’s EPS for 2019-2021 is expected to be 1.



93 yuan, corresponding to 26/20/17 times PE, maintain “Buy” rating.