Investment Rating - Target price: HKD 24.80 (previously HKD 27.40), with a potential upside of 38.4% from the current price of HKD 17.92 [1] - Maintains a "Buy" rating for ZTE Corporation (763 HK) based on a 10x FY24E P/E ratio, close to its three-year average [2] Core Views - ZTE's FY23 revenue reached RMB 124 billion, up 1.1% YoY, in line with Bloomberg expectations and 3% above the firm's forecast [2] - FY23 net profit grew 15.4% YoY to RMB 9.3 billion, 5% below Bloomberg expectations but in line with the firm's forecast [2] - FY23 gross margin improved to 41.5%, up 4.34 percentage points from FY22, driven by operational optimization and cost reduction through in-house components [2] - FY23 net profit margin rose to 7.5%, up from 4.2%/5.9%/6.6% in FY20-22 [2] - 4Q23 revenue grew 14.7% YoY and 21.5% QoQ, while net profit increased 17.8% YoY but declined 37.3% QoQ due to product mix changes and higher employee benefits and marketing expenses [2] - ZTE is expected to benefit from telecom industry trends, focusing on 5.5G/6G and AI computing capabilities [2] Financial Summary Revenue and Profit - FY21A-FY25E revenue: RMB 114.5 billion, RMB 123.0 billion, RMB 124.3 billion, RMB 133.7 billion, RMB 142.6 billion [1] - FY21A-FY25E net profit: RMB 6.8 billion, RMB 8.1 billion, RMB 9.3 billion, RMB 10.8 billion, RMB 12.2 billion [1] - FY21A-FY25E revenue growth: 12.9%, 7.4%, 1.1%, 7.6%, 6.7% [1] - FY21A-FY25E net profit growth: 31.4%, 18.6%, 15.4%, 16.3%, 12.5% [1] Margins and Ratios - FY21A-FY25E gross margin: 35.2%, 37.2%, 41.5%, 41.9%, 42.0% [1] - FY21A-FY25E P/E ratio: 11.2x, 9.6x, 8.4x, 7.3x, 6.5x [1] - FY21A-FY25E ROE: 13.2%, 13.8%, 13.7%, 14.3%, 14.5% [1] Business Segments - Carrier network revenue grew 3.4% YoY, driven by domestic wireline and wireless market optimization and overseas strategic progress [2] - Consumer business revenue declined 1.3% YoY due to overseas inventory digestion and competition, partially offset by domestic home network growth [2] - Government and enterprise revenue fell 7.1% YoY, impacted by industry investment and key customer construction timing [2] Forecast Comparison - FY24E revenue: RMB 133.7 billion (firm) vs. RMB 152.8 billion (Bloomberg consensus), 12% lower [7] - FY24E net profit: RMB 10.8 billion (firm) vs. RMB 11.2 billion (Bloomberg consensus), 3% lower [7] - FY24E gross margin: 41.9% (firm) vs. 37.7% (Bloomberg consensus), 4.2 percentage points higher [7] - FY24E net margin: 8.1% (firm) vs. 7.3% (Bloomberg consensus), 0.8 percentage points higher [7] Shareholder Structure - BlackRock holds 7.1% and Vanguard holds 4.2% of ZTE's shares [4] Stock Performance - 1-month absolute return: 21.9%, relative return: 18.4% [5] - 3-month absolute return: 7.2%, relative return: 7.1% [5] - 6-month absolute return: -25.6%, relative return: -17.2% [5] Financial Statements Income Statement - FY21A-FY25E operating income: RMB 114.5 billion, RMB 123.0 billion, RMB 124.3 billion, RMB 133.7 billion, RMB 142.6 billion [9] - FY21A-FY25E operating profit: RMB 8.5 billion, RMB 10.6 billion, RMB 11.0 billion, RMB 12.2 billion, RMB 12.9 billion [9] - FY21A-FY25E net profit: RMB 6.8 billion, RMB 8.1 billion, RMB 9.3 billion, RMB 10.8 billion, RMB 12.2 billion [9] Balance Sheet - FY21A-FY25E total assets: RMB 168.8 billion, RMB 181.0 billion, RMB 201.0 billion, RMB 194.6 billion, RMB 206.5 billion [9] - FY21A-FY25E total liabilities: RMB 115.5 billion, RMB 121.4 billion, RMB 132.6 billion, RMB 118.8 billion, RMB 122.4 billion [9] - FY21A-FY25E total equity: RMB 51.5 billion, RMB 58.6 billion, RMB 68.0 billion, RMB 75.6 billion, RMB 84.0 billion [9] Cash Flow - FY21A-FY25E net operating cash flow: RMB 15.7 billion, RMB 7.6 billion, RMB 17.4 billion, RMB 29.3 billion, RMB 11.6 billion [10] - FY21A-FY25E net investment cash flow: RMB -10.6 billion, RMB -1.3 billion, RMB -20.9 billion, RMB -2.3 billion, RMB -2.6 billion [10] - FY21A-FY25E net financing cash flow: RMB 2.8 billion, RMB 1.5 billion, RMB 7.4 billion, RMB -16.2 billion, RMB -8.0 billion [10]

Investment Rating - Maintain BUY rating with an adjusted target price of HK$24.8, based on 10x 2024E P/E, close to its 3-year average [3][4] Core View - ZTE is expected to capitalize on emerging trends in the telecom industry, focusing on the evolution towards 5.5G/6G and AI compute power [3] - The company's profitability improved steadily due to operation optimization and cost reduction, including the use of self-developed components [3] - Revenue growth is projected to be steady, with FY24E revenue expected to reach RMB133.7bn, a 7.6% YoY increase [1][3] Financial Performance - FY23 revenue grew by 1.1% YoY to RMB124.3bn, in line with consensus and 3% higher than forecasts [3] - FY23 net profit increased by 15.4% YoY to RMB9.3bn, 5% lower than consensus but in line with forecasts [3] - Gross margin for FY23 was 41.5%, a 434bps increase from FY22, driven by cost optimization and favorable revenue mix [3] - FY24E net profit is projected to grow by 16.3% YoY to RMB10.8bn, with a net margin of 8.1% [1][3] Segment Performance - Carrier segment revenue increased by 3.4% YoY, driven by domestic market share gains and overseas progress [3] - Consumer segment sales declined by 1.3% YoY due to overseas inventory digestion and intensified competition, partially offset by domestic growth in family network business [3] - Enterprise & government segment sales declined by 7.1% YoY in 2023 due to a slowdown in investment [3] Valuation Metrics - FY24E P/E is projected at 7.3x, with ROE expected to reach 14.3% [1] - FY25E P/E is projected at 6.5x, with ROE expected to reach 14.5% [1] Market Data - Current price is HK$17.92, with an upside potential of 38.4% to the target price of HK$24.8 [4] - Market capitalization is HK$13.5bn, with an average 3-month turnover of HK$162mn [5]

Financial Performance - ZTE Corporation reported a revenue of CNY 124,250.9 million in 2023, representing a 1.05% increase from CNY 122,954.4 million in 2022[19]. - The net profit attributable to shareholders increased by 15.41% to CNY 9,325.8 million in 2023, up from CNY 8,080.3 million in 2022[19]. - The net cash flow from operating activities surged by 129.70% to CNY 17,405.7 million in 2023, compared to CNY 7,577.7 million in 2022[19]. - Total assets grew by 11.06% to CNY 200,958.3 million in 2023, up from CNY 180,953.6 million in 2022[19]. - The weighted average return on equity increased to 15.19% in 2023, up from 14.66% in 2022[19]. - Basic earnings per share rose by 14.62% to CNY 1.96 in 2023, compared to CNY 1.71 in 2022[20]. - The gross profit margin for 2023 was 41.53%, up 4.34 percentage points year-on-year, driven by improvements in operator networks, government and enterprise, and consumer businesses[58]. - The domestic market revenue reached 86,485.4 million, with a year-on-year growth of 1.45%, accounting for 69.61% of total revenue[61]. - The international market revenue was 37,765.5 million, with a year-on-year increase of 0.15%, making up 30.39% of total revenue[62]. Dividend and Profit Distribution - The company reported a profit distribution plan for 2023, proposing a cash dividend of RMB 6.83 per 10 shares, subject to shareholder approval[3]. - The proposed cash dividend for 2023 is 6.83 CNY per 10 shares, with a total cash distribution not exceeding 3.303 billion CNY, representing 35.0% of the net profit attributable to shareholders of 9.33 billion CNY[148]. - The company has maintained a profit distribution policy of distributing no less than 30% of the average annual distributable profit over the last three years[146]. - As of December 31, 2023, the company has accumulated distributable profits of approximately 25.22 billion CNY[148]. Governance and Compliance - The company emphasizes compliance with laws and regulations affecting its operations, including data compliance and anti-corruption measures[113]. - The company has a dedicated compliance management committee overseeing various compliance areas[113]. - The board of directors is responsible for major operational decisions, ensuring independent and efficient governance[126]. - The company is committed to improving corporate governance practices and has reviewed its governance policies in 2023[152]. - The independent non-executive directors have extensive experience in finance, law, and compliance, contributing to the board's effectiveness[156]. Research and Development - The company maintained a strong focus on R&D in "connectivity + computing power + capabilities + intelligence" technologies, ensuring its core products remain competitive in the industry[24]. - Research and development investment amounted to CNY 26,783.3 million, a 14.34% increase from the previous year, representing 21.56% of total operating revenue, up by 2.51 percentage points[70]. - The company has 35,393 R&D personnel, representing 49.1% of the total workforce[200]. - The R&D budget has been increased to $GG million, focusing on next-generation telecommunications technology[189]. Market Strategy and Expansion - The company is focused on expanding its market presence and exploring new growth opportunities[12]. - The company is actively investing in AI technology, establishing multiple product lines and laboratories to support the development of intelligent computing solutions[25]. - The company is committed to digital transformation and green low-carbon development, positioning itself as a key player in the digital economy[25]. - The company is exploring potential mergers and acquisitions to enhance its product offerings and market reach, with a budget of $GG million set aside for this purpose[183]. Risk Management - The company is committed to managing foreign exchange risks through various strategies, including internal settlement management and the use of foreign exchange derivatives[120]. - The company faces interest rate risk primarily from interest-bearing liabilities, with total interest expenses affected by fluctuations in domestic and foreign currency interest rates[121]. - The company employs credit risk management measures, including credit investigations and insurance, to mitigate the impact of varying customer creditworthiness[122]. Corporate Social Responsibility - The company highlights the significance of ESG principles in its operations and governance[12]. - The company made approximately CNY 26.06 million in charitable donations in 2023[114]. - The company is committed to improving its environmental performance and promoting sustainable waste management[114]. Employee and Workforce - As of December 31, 2023, the total number of employees in the group is 72,093, with an average age of 34.6 years[199]. - Female employees account for approximately 23.9% of the total workforce, while male employees make up about 76.1%[199]. - The group employs 28,951 individuals with a master's degree, accounting for 40.2% of the total workforce[200]. - The company has a diverse hiring strategy focusing on gender, age, cultural and educational background, and professional experience[200].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確 性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而産生或 因倚賴該等內容而引致的任何損失承擔任何責任。 ZTE CORPORATION 中興通訊股份有限公司 （於中華人民共和國註冊成立的股份有限公司） （股份代號：763） 第九屆董事會第十九次會議決議公告 本公司及董事會全體成員保證董事會決議公告的內容真實、準確和完整，沒有虛假記載、 誤導性陳述或重大遺漏。 中興通訊股份有限公司（簡稱“公司”或“本公司”）已於 2024 年 2 月 23 日以電子郵件的方式向公司全體董事發出了《關於召開第九屆董事會第十九次會 議的通知》。2024 年 3 月 8 日，公司第九屆董事會第十九次會議（簡稱“本次會 議”）以電視電話會議方式在公司深圳總部等地召開。本次會議由董事長李自學 先生主持，應到董事 9 名，實到董事 9 名。公司監事會成員及相關人員列席了本 次會議。本次會議的召開符合有關法律、行政法規、部門規章和《中興通訊股份有 限公司章程》（簡稱“《公司章程》”）的有關規定，會議合法、有效。 本次會議審議通過了以下議 ...

M N 28 Feb 2024 CMB International Global Markets | Equity Research | Company Update ZTE (763 HK) MWC 2024: Industry moves towards developing 6G Target Price HK$27.4 As the Mobile World Congress (MWC) unfolded in Barcelona on Monday, AI/5G+6G innovations emerged as a dominant theme, with leading suppliers in (Previous TP HK$27.4) the telecom industry showcasing their latest technologies. ZTE's A-share Up/Downside 56.2% (000063 CH) and H-share (763 HK) prices surged by 10.0% and 10.6%, Current Price HK$17.54 ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不負責，對其 準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部分內容 而產生或因倚賴該等內容而引致之任何損失承擔任何責任。 ZTE CORPORATION 中 興 通 訊 股 份 有 限 公 司 （於中華人民共和國註冊成立的股份有限公司） （股份代號：763） 二零二三年第三季度報告 本公司及董事會全體成員保證信息披露的內容真實、準確、完整，沒有虛假記載、誤導 性陳述或重大遺漏。 本公告在境內和香港同步刊登。本公告根據《深圳證券交易所股票上市規則》規定在境內 刊登。本公告依據《香港聯合交易所有限公司證券上市規則》第13.09(2)條及第13.10B條的 披露義務及香港法例第571章《證券及期貨條例》第XIVA部內幕消息條文而公佈。 §1 重要提示 1.1 中興通訊股份有限公司（以下簡稱「中興通訊」、「本公司」或「公司」）董事會、監事會 及董事、監事、高級管理人員保證本季度報告內容的真實、準確、完整，不存在虛 假記載、誤導性陳述或重大遺漏，並承擔個別和連帶的法律責任。 1.2 本季度報告已經於2023年10月23日召開的本公司 ...

重 要 提 示 1. 本公司董事會、監事會及董事、監事、高級管理人員保證本報告內容的真實、準確、完 整，不存在虛假記載、誤導性陳述或重大遺漏，並承擔個別和連帶的法律責任。 2. 本報告已經於2023年8月18日召開的本公司第九屆董事會第十二次會議審議通過，董事 方榕女士因工作原因未能出席本次會議，委託董事諸為民先生行使表決權。 3. 本公司董事長李自學先生、財務總監李瑩女士和會計機構負責人許建銳先生聲明：保證 本報告中的財務報告真實、準確、完整。 4. 本集團2023年半年度財務報告按照中國企業會計準則編製且未經審計。 5. 2023年中期，本公司不進行利潤分配，也不進行資本公積金轉增股本。 6. 本報告涉及未來計劃、發展戰略等前瞻性陳述，不構成本公司對投資者的實質承諾；本 報告中描述了本公司經營可能存在的風險，請投資者注意閱讀，並注意投資風險。 7. 除特別說明外，本報告中貨幣單位均為人民幣。 8. 本報告分別以中英文兩種文字編製，在對本報告理解發生歧義時，以中文文本為準。 目 錄 2 定義 3 詞匯表 6 第一章 公司簡介和主要財務數據摘要 10 第二章 董事會報告 ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確 性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或 因倚賴該等內容而引致的任何損失承擔任何責任。 ZTE CORPORATION 中興通訊股份有限公司 （於中華人民共和國註冊成立的股份有限公司） （股份代號：763） 二零二三年半年度業績公告 本公司及董事會全體成員保證信息披露的內容真實、準確和完整，沒有虛假記載、 誤導性陳述或重大遺漏。 中興通訊股份有限公司（「本公司」）董事會（「董事會」）謹此宣佈本公司及 其附屬公司（本集團）截至二零二三年六月三十日止六個月之未經審計業績。本 公告列載本公司二零二三年半年度報告全文，並符合香港聯合交易所有限公司 （「香港聯交所」）證券上市規則中有關半年度業績初步公告附載資料之要求。 本業績公告的中英文版本可在本公司網站(www.zte.com.cn)和香港聯交所網站 (www.hkexnews.hk)查閱。本公司將於適當時候向 H 股股東寄發二零二三年半年 度報告，並在本公司及香港聯交所網站刊載。 ...

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不負責，對其 準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部分內容 而產生或因倚賴該等內容而引致之任何損失承擔任何責任。 ZTE CORPORATION 中 興 通 訊 股 份 有 限 公 司 （於中華人民共和國註冊成立的股份有限公司） （股份代號：763） 二零二三年第一季度報告 本公司及董事會全體成員保證信息披露的內容真實、準確、完整，沒有虛假記載、誤導 性陳述或重大遺漏。 本公告在境內和香港同步刊登。本公告根據《深圳證券交易所股票上市規則》規定在境內 刊登。本公告依據《香港聯合交易所有限公司證券上市規則》第13.09(2)條及第13.10B條的 披露義務及香港法例第571章《證券及期貨條例》第XIVA部內幕消息條文而公佈。 §1 重要提示 1.1 中興通訊股份有限公司（以下簡稱「中興通訊」、「本公司」或「公司」）董事會、監事會 及董事、監事、高級管理人員保證本季度報告內容的真實、準確、完整，不存在虛 假記載、誤導性陳述或重大遺漏，並承擔個別和連帶的法律責任。 1.2 本季度報告已經於2023年4月21日召開的本公司第 ...

Financial Performance - The net profit attributable to ordinary shareholders of the listed company for 2022 was 8,080.3 million, representing an increase of 18.60% compared to 6,812.9 million in 2021[21]. - The net profit excluding non-recurring gains and losses was 6,166.9 million, up 86.54% from 3,305.9 million in the previous year[21]. - Total assets increased by 7.22% to 180,953.6 million from 168,763.4 million in 2021[21]. - The basic earnings per share rose to 1.71, a 16.33% increase from 1.47 in 2021[21]. - Operating revenue for 2022 was 122,954.4 million, reflecting a 7.36% increase from 114,521.6 million in 2021[23]. - The net cash flow from operating activities decreased by 51.81% to 7,577.7 million from 15,723.5 million in 2021[23]. - The total liabilities amounted to 121,410.4 million, a 5.14% increase from 115,475.8 million in 2021[23]. - The company achieved a revenue of CNY 122.95 billion in 2022, representing a year-on-year growth of 7.36%[43]. - Net profit attributable to ordinary shareholders was CNY 8.08 billion, an increase of 18.60% year-on-year, while the net profit excluding non-recurring gains and losses rose by 86.54% to CNY 6.17 billion[43]. - The operating revenue from the domestic market was 85,246.3 million, with a year-on-year increase of 9.20%[54]. Dividend and Shareholder Information - The company plans to distribute a cash dividend of RMB 4 per 10 shares to all shareholders, subject to approval at the shareholders' meeting[2]. - The board proposed a cash dividend of 4 yuan per 10 shares for the 2022 fiscal year, subject to shareholder approval[87]. - The company distributed a total of 4.36 billion CNY in cash dividends from 2020 to 2022, representing 68.34% of the average annual net profit attributable to shareholders of 6.38 billion CNY over the last three years, exceeding the 30% requirement[130]. - The company will complete the dividend distribution for the 2022 fiscal year by August 31, 2023, based on the timing of the shareholders' meeting[130]. Corporate Governance - The report indicates a commitment to corporate governance and social responsibility, ensuring transparency and accountability[3]. - The company adheres to corporate governance regulations and has established a governance structure that ensures equal rights for all shareholders[120]. - The board consists of nine members, including three executive directors, two non-executive directors, and three independent non-executive directors, ensuring compliance with listing rules[137]. - The company ensures that directors avoid conflicts of interest during decision-making processes[146]. - The company has a multi-layered cultural system aimed at fostering a harmonious and responsible corporate atmosphere[121]. - The company has implemented a comprehensive compliance management system to mitigate risks associated with international operations[115]. Risk Management - The company emphasizes the importance of risk management, detailing potential operational risks in the report[2]. - The company has strengthened its foreign exchange risk management through business strategy guidance, internal settlement management, financing structure design, and foreign exchange derivatives hedging[94]. - The company has established a risk control and information disclosure system for derivative investments to effectively regulate derivative trading behavior and control associated risks[97]. - The company aims to reduce the impact of exchange rate and interest rate fluctuations on its assets, liabilities, and profitability through hedging transactions[98]. Research and Development - The company has maintained a strong focus on R&D, particularly in core technologies, to enhance product competitiveness and align with global digitalization and low-carbon development trends[28]. - The company is investing in advanced technologies such as heterogeneous computing and distributed databases to optimize performance and reduce costs[5]. - The company is investing 500 million in research and development for new technologies in telecommunications[175]. - Research and development (R&D) expenditure amounted to 21,602.3 million, a 14.88% increase, representing 17.57% of operating revenue, up by 1.15 percentage points[59]. Market Expansion and Strategy - The company is focusing on new product development, particularly in 5G technology and AI solutions, to enhance its market position[5]. - The company aims to enhance market share in the domestic market and improve customer service capabilities in 2023[16]. - The company is focusing on high-value industries such as internet, finance, and transportation for future growth[16]. - The company is actively expanding its market presence in Europe and Southeast Asia by collaborating with major operators to establish 5G demonstration networks[48]. - The company plans to expand its market presence in Southeast Asia, targeting a 20% market share by 2025[175]. Technological Innovation - The company is focusing on innovation in its consumer business, particularly in mobile imaging and display experiences, while expanding smart home applications[113]. - The company launched the new UniSite NEO solution, which includes the OmniUBR product and the new generation 5 series AAU, significantly reducing equipment size, weight, and power consumption while supporting multi-band and high bandwidth[31]. - The company achieved a global shipment of over 240,000 servers in 2022, supporting digital transformation across various industries[33]. - The company’s Common Core solution reduces network complexity and construction costs by over 40%, while improving delivery speed by 30%[31]. Employee and Workforce Information - The company reported a total employee count of 74,811 as of December 31, 2022, with total employee compensation amounting to approximately 27.7 billion[106]. - The group has 36,300 R&D personnel, representing 48.5% of the total workforce[197]. - Female employees account for approximately 24.0% of the total workforce, with 17,936 women employed[200]. - The number of employees with a master's degree is 28,839, making up 38.5% of the total[200]. International Operations - The company operates in over 100 countries, facing various country-specific risks including legal compliance, taxation, and political stability[115]. - The company is exposed to foreign exchange risks due to sales and procurement in currencies other than RMB, and is enhancing its foreign exchange risk management strategies[117]. Awards and Recognition - The company won the "Most Innovative Network Slicing Case" award at the 2022 Network X conference for its 5G slicing solution, which supports flexible slicing granularity from 5 Gbps to 10 Mbps[32].