Group 1 - The core point of the article is that ZTE Mall has reopened the F-code application channel for the Nubia M153 smartphone, allowing a limited number of enthusiasts to apply for purchase qualifications [1] - The F-code application is a queue for a limited number of spots, with no plans for expanded production, prioritizing those who have not previously purchased the model [1] - Users who have already purchased the product, applied for an F-code but did not place an order, canceled orders, or returned products are not eligible to reapply for the F-code [1] Group 2 - There was a rumor that ByteDance was summoned by regulatory authorities due to issues related to cybersecurity, data security, and competition, but insiders have stated that this information is false [1]

Core Insights - A total of 790 stocks in the Shanghai and Shenzhen markets have experienced net outflows of main funds for five consecutive days or more as of December 16 [1] - ST Jinglan has the longest streak of net outflows, with 27 days, while Jingu Co. follows with 21 days [1] - The largest total net outflow amount is from Sunshine Power, with a cumulative outflow of 7.542 billion yuan over five days [1] Group 1: Stocks with Significant Net Outflows - Sunshine Power (300274) has seen a net outflow of 7.542 billion yuan over five days, with a 12.48% outflow ratio and a cumulative decline of 11.84% [1] - Industrial Fulian (601138) follows with a net outflow of 6.123 billion yuan, a 11.65% outflow ratio, and a cumulative decline of 13.30% [1] - ZTE Corporation (000063) has a net outflow of 5.985 billion yuan, with a 14.20% outflow ratio and a cumulative decline of 15.58% [1] Group 2: Other Notable Stocks - Tianfu Communication (300394) has a net outflow of 4.874 billion yuan over six days, with an 8.10% outflow ratio and a cumulative decline of 15.87% [1] - Cambricon Technologies (688256) has a net outflow of 4.778 billion yuan over six days, with a 7.83% outflow ratio and a cumulative decline of 10.15% [1] - Heertai (002402) has a net outflow of 4.495 billion yuan over eight days, with a 12.46% outflow ratio and a cumulative decline of 28.68% [1] Group 3: Additional Stocks with Notable Trends - Changying Precision (300115) has a net outflow of 4.346 billion yuan over six days, with a 15.25% outflow ratio and a cumulative decline of 21.19% [1] - Zhongke Shuguang (603019) has a net outflow of 4.111 billion yuan over six days, with a 12.00% outflow ratio and a cumulative decline of 18.37% [1] - Longji Green Energy (601606) has a net outflow of 2.446 billion yuan over 16 days, with a 6.86% outflow ratio and a cumulative decline of 19.71% [1]

Market Overview - The Shanghai Composite Index fell by 1.11% on December 16, with only three sectors rising, namely retail, beauty care, and social services, which increased by 1.32%, 0.66%, and 0.13% respectively. The communication and non-ferrous metals sectors experienced the largest declines, with drops of 2.95% and 2.81% respectively, placing the communication sector at the top of the decline list [1]. Communication Sector Performance - The communication sector saw a decline of 2.95%, with a net outflow of 7.682 billion yuan in main capital throughout the day. Out of 124 stocks in this sector, 26 rose, including three that hit the daily limit, while 97 fell, with three hitting the lower limit [1]. - Among the stocks with net inflows, five exceeded 100 million yuan, with Hengbao Co., Ltd. leading at a net inflow of 682 million yuan, followed by Tongyu Communication and Datang Telecom with net inflows of 281 million yuan and 269 million yuan respectively [1]. Top Gainers in Communication Sector - The top gainers in the communication sector included: - Hengbao Co., Ltd. with a gain of 9.98% and a turnover rate of 19.25%, attracting 681.86 million yuan in main capital [1]. - Tongyu Communication and Datang Telecom both increased by 10.00%, with turnover rates of 15.09% and 4.33% respectively, attracting 281.06 million yuan and 269.36 million yuan in main capital [1]. Top Losers in Communication Sector - The top losers in the communication sector included: - Zhongji Xuchuang, which fell by 3.34% with a net outflow of 1.5177 billion yuan [2]. - Xinyi Sheng, which decreased by 4.59% with a net outflow of 1.4089 billion yuan [2]. - Changxin Bochuang, which dropped by 7.21% with a net outflow of 533.24 million yuan [2]. Additional Notable Declines - Other significant declines included: - ZTE Corporation, down by 2.90% with a net outflow of 469 million yuan [3]. - Yongding Co., Ltd., which fell by 6.01% with a net outflow of 412.47 million yuan [3]. - Shida Group, which experienced a sharp decline of 9.91% with a net outflow of 386.97 million yuan [3].

Market Performance - The Hong Kong stock market experienced a significant decline, with the Hang Seng Index closing at 25,235.41 points, down 393.47 points, representing a drop of 1.54% [1] - The Hang Seng Technology Index also fell, closing at 5,402.51 points, down 95.91 points, a decrease of 1.74% [2] Market Influences - The decline in the Hong Kong market was attributed to overall low market sentiment and a collective drop in the Asia-Pacific markets, notably the Nikkei 225 index down 1.56% and the KOSPI index down 2.24%, which negatively impacted both A-shares and H-shares [4] - Anticipation of the Bank of Japan's monetary policy meeting on December 18-19, where a potential interest rate hike from 0.5% to 0.75% is expected, may lead to foreign capital returning to Japan, increasing risk aversion and affecting the Hong Kong market [7] Sector Performance - The market saw widespread declines across various sectors, with notable drops in technology stocks such as Alibaba down nearly 3%, and other major players like Xiaomi, JD.com, and Bilibili down over 2% [7] - Gold stocks also faced declines, with Zijin Mining down over 4%, and other gold companies like Shandong Gold and Lingbao Gold down over 3% [7] Capital Flow - There was a net inflow of southbound funds into Hong Kong stocks, amounting to over 80 million HKD by the end of the trading day [8] Future Outlook - Analysts suggest that the Hong Kong market is at a potential rebound phase, with attractive long-term positioning despite existing risks. The focus remains on the economic fundamentals of China and the inflow of southbound capital [10] - The market is expected to remain volatile until the end of the year, with a consensus on a strong policy opening in the first quarter of the next year, particularly favoring sectors like technology and metals [10]

Core Viewpoint - Morgan Stanley has updated its risk-reward analysis for ZTE Corporation (00763) based on disappointing Q3 performance, leading to downward revisions in revenue and profit forecasts for 2025 to 2027 [1] Revenue Forecasts - Revenue forecasts for ZTE for 2025, 2026, and 2027 have been reduced to 5%, 6%, and 7% respectively, reflecting underperformance in domestic 5G business revenue [1] Gross Margin Predictions - Gross margin predictions have been lowered by 0.9%, 0.5%, and 0.4% for the years 2025, 2026, and 2027 respectively, in line with the revised revenue outlook [1] Earnings Forecasts - Earnings forecasts for ZTE have been adjusted downwards by 11.1%, 12.5%, and 10.9% for 2025, 2026, and 2027 respectively [1] Target Price Adjustment - The target price for ZTE has been reduced from HKD 35 to HKD 31.5, with a rating of "in line with the market" [1]

Group 1 - The core viewpoint of the article highlights that ZTE Corporation's revenue and cost dynamics are significantly impacted by the decline in domestic telecom operators' investment in communication infrastructure, leading to a net increase in operating costs exceeding revenue growth [1] - For the first three quarters of 2025, the company's operating revenue increased by 10.48 billion yuan year-on-year, while operating costs rose by 16.14 billion yuan, indicating a challenging revenue environment [1] - The company experienced a rapid growth in revenue from server and computing power products, although the gross margin for these products is lower than that of communication network products, contributing to the overall increase in operating costs [1] Group 2 - Cash payments for purchasing goods and accepting services increased by 18.83 billion yuan year-on-year, primarily for procurement of raw materials and services necessary for project delivery and product production [1] - The raw materials and services, aside from those transferred to operating costs, were accounted for as inventory, indicating a strategic focus on managing supply chain and production needs [1]

Core Viewpoint - Morgan Stanley has revised its risk-return analysis for ZTE Corporation, lowering revenue forecasts for 2025 to 2027 due to disappointing Q3 performance, particularly in domestic 5G business [1] Revenue Forecasts - Revenue forecasts for ZTE are adjusted to 5%, 6%, and 7% for the years 2025, 2026, and 2027 respectively [1] Gross Margin Predictions - Gross margin predictions have been reduced by 0.9%, 0.5%, and 0.4% for the years 2025, 2026, and 2027 respectively, reflecting the underperformance in domestic 5G revenue [1] Earnings Forecasts - Earnings forecasts for ZTE have been lowered by 11.1%, 12.5%, and 10.9% for the years 2025, 2026, and 2027 respectively [1] Target Price Adjustment - The target price for ZTE has been decreased from HKD 35 to HKD 31.5, maintaining a rating of "in line with the market" [1]

Investment Rating - The report maintains a "Positive" investment rating for the communication industry [9]. Core Insights - The communication sector has shown significant growth, with a 5.94% increase in the 50th week of 2025, leading the Yangtze primary industry rankings. Year-to-date, the sector has risen by 80.55% [2][4]. - Demand for optical chips, crucial for AI optical interconnects, remains strong, with overseas capacity expansion focusing on high-margin EML products. The commercialization pace of OCS and CPO is accelerating, driven by the scaling of AI clusters, which will further boost optical module demand [2][7]. - The commercial aerospace sector is entering a period of intensified activity, with core components like antennas and power supplies expected to see increased usage, enhancing their anti-deflationary characteristics [6][7]. Summary by Sections Market Performance - In the 50th week of 2025, the communication sector outperformed with a 5.94% increase, ranking first among primary industries. Since the beginning of the year, it has surged by 80.55% [2][4]. - Notable stock performances include Dekeli (+43.7%), Zhongci Electronics (+40.7%), and Huamao Technology (+28.5%) for gains, while Heertai (-12.6%), ZTE (-10.0%), and Nanjing Panda (-8.0%) faced declines [4]. Optical Chip Demand - Optical chips are in high demand, with Lumentum reporting that its EML production accounts for 50%-60% of the global market. The company has sold out its products until 2026 and has significant bookings for 2027, maintaining high prices [5]. - The company plans to increase EML capacity by approximately 40% over the next three quarters, although a 20% supply-demand gap currently exists, expected to widen to 30% by mid-2026 [5]. Commercial Aerospace Sector - The commercial aerospace sector is experiencing a higher catalytic density, with potential applications in space data centers and a focus on rocket reusability tests expected to accelerate industry activity [6]. - The report emphasizes the importance of selecting stocks with high elasticity and anti-deflation characteristics, particularly in core components like antennas and power supplies [6]. Investment Recommendations - Recommended operators include China Mobile, China Telecom, and China Unicom. For optical modules, suggested companies are Zhongji Xuchuang, Xinyi Sheng, Tianfu Communication, and Shijia Photon, with attention to Tai Chen Guang and Yuanjie Technology [7]. - Other recommendations include Invech for liquid cooling, and Fenghuo Communication, Hengtong Optic-Electric, and Zhongtian Technology for hollow-core fibers [7].

Group 1 - ZTE Corporation (00763.HK) experienced a decline of nearly 4%, with a current drop of 3.88%, trading at HKD 26.74 [1] - The trading volume reached HKD 244 million [1]

Core Viewpoint - ZTE Corporation's stock has experienced a decline of over 4%, currently trading at 26.74 HKD with a transaction volume of 244 million HKD, amid concerns regarding its collaboration with ByteDance's AI model, Doubao Assistant, which has faced backlash from major applications [1] Group 1: Stock Performance - ZTE's stock price fell by 3.88% to 26.74 HKD [1] - The trading volume reached 244 million HKD [1] Group 2: Collaboration and Market Reaction - ZTE partnered with ByteDance to launch the "Doubao Phone" Nubia M153 engineering device [1] - Major applications such as WeChat, Taobao, Xianyu, and several mobile banking apps issued security warnings against Doubao Assistant, leading to forced exits from the applications [1] - Doubao Assistant announced plans to adjust some of its AI capabilities in response to the backlash [1] Group 3: Financial Actions and Legal Matters - ZTE plans to repurchase its own shares using 1 to 1.2 billion CNY of its own funds [1] - The company acknowledged media reports regarding an investigation into its compliance with the U.S. Foreign Corrupt Practices Act and is in communication with the U.S. Department of Justice [1] - ZTE intends to defend its rights through legal means regarding the ongoing investigation [1]