Zhi Tong Cai Jing·2025-09-01 11:28Core Viewpoint - ZTE Corporation (00763) has seen its stock price rise approximately 52% over the past three months, driven by optimism surrounding artificial intelligence and ASIC chip growth, but the second-quarter performance fell short of expectations, indicating market over-optimism [1] Financial Performance - The current net profit forecasts for ZTE for the next two years are 26% and 31% lower than market expectations, respectively [1] - The company's valuation at a 22 times price-to-earnings ratio is not attractive given the projected negative net profit growth over the next three years [1] Investment Rating - The investment rating for ZTE has been downgraded from "Hold" to "Underperform" [1] - The target price for H-shares has been adjusted from HKD 18.82 to HKD 27.27 [1] Revenue and Profitability - Growth in artificial intelligence is expected to double server revenue, but the gross margin is projected to be only 4% to 5%, leading to core operating profit and net profit falling short of expectations [1] - The telecommunications business revenue continues to decline, and decreasing gross margins have prompted a downward revision of the company's profit forecasts [1]