ZTE(SZ:000063) Jin Rong Jie·2025-04-10 09:31Core Viewpoint - ZTE Corporation has undergone a significant management change with the appointment of Fang Rong as the new chairperson, succeeding Li Zixue, who retired due to age. This transition is noteworthy as both chairpersons were born in 1964, and the company is currently facing challenges in growth and profitability [1] Group 1: Leadership Transition - Li Zixue took over as chairman in June 2018 during a crisis caused by the "April 16 U.S. ban," leading the company back to recovery. Under his leadership, ZTE's revenue rose from 85.51 billion yuan in 2018 to 90.74 billion yuan in 2019, marking a 6.11% increase, while net profit surged by 173.71% to 5.15 billion yuan [2] - Fang Rong has been with ZTE since 1997 and has held various significant positions, including non-executive director since June 2018. Her leadership is expected to address the company's strategic needs as it navigates through a challenging phase in the telecommunications industry [9] Group 2: Current Challenges - ZTE is currently facing a dual bottleneck in growth and profitability, with projected revenue for 2024 at approximately 121.3 billion yuan, a decrease of 2.38% year-on-year. Net profit is expected to drop by 9.66% to 8.42 billion yuan, indicating a more significant decline in profitability compared to revenue [7] - The company’s operator network business revenue is projected to decline by 15.0% to 70.33 billion yuan in 2024, influenced by reduced capital expenditure from major domestic operators [7] - ZTE's overall gross margin is expected to fall to 37.91%, down 3.6 percentage points year-on-year, primarily due to declining margins in enterprise business and increased costs from supply chain disruptions and rising raw material prices [8] - The company’s cash flow is under pressure, with net cash flow from operating activities projected at approximately 11.48 billion yuan, a decrease of 34.05% year-on-year, while interest-bearing debt is expected to rise from 53.2 billion yuan in 2023 to 56.9 billion yuan in 2024 [8]