Zhi Tong Cai Jing·2025-09-02 03:57Core Viewpoint - ZTE Corporation reported a revenue of 71.553 billion yuan for the first half of the year, representing a year-on-year growth of 14.51%, while net profit decreased by 11.77% to 5.058 billion yuan, indicating a mixed performance amid market optimism driven by AI and ASIC chip growth [3]. Financial Performance - Revenue for the first half of the year reached 71.553 billion yuan, up 14.51% year-on-year [3]. - Net profit was 5.058 billion yuan, down 11.77% year-on-year [3]. - Gross margin stood at 32.45%, a decline of 7.99% compared to the previous year [3]. Market Analysis - Jefferies reported that ZTE's stock price has risen approximately 52% over the past three months, fueled by expectations surrounding AI and ASIC chip growth [3]. - The second quarter performance fell short of market expectations, suggesting that the market may have been overly optimistic [3]. - Jefferies has lowered its investment rating from "Hold" to "Underperform" and adjusted the target price to 27.27 HKD, citing a 22x P/E ratio that appears unattractive given projected negative net profit growth over the next three years [3]. Future Outlook - Nomura's report indicates that ZTE is maintaining effective cost management, particularly in R&D, which partially offsets the impact of declining gross margins [3]. - The company is expected to face continued pressure on profit margins in the second half of the year, with a gradual recovery anticipated starting next year due to improved cost optimization [3]. - Nomura has raised its revenue forecasts for ZTE from 2025 to 2027 by 8.5% to 10%, reflecting increased demand for AI servers, but has lowered its profit forecasts for the same period by 4% to 21% due to margin dilution [3].