Guan Cha Zhe Wang·2025-10-30 11:04Core Viewpoint - ZTE Corporation is experiencing a stark contrast in performance, with significant revenue growth but a drastic decline in net profit, raising concerns among investors [1][2]. Group 1: Financial Performance - In the first three quarters, ZTE's revenue exceeded 100 billion yuan, with a remarkable 180% increase in computing revenue [1]. - However, net profit for a single quarter plummeted by 88%, leading to a more than 30% decline in net profit for the first three quarters [1][2]. - The market reacted negatively, with ZTE's A-shares dropping over 6% and its market value falling below 220 billion yuan [2]. Group 2: Market Dynamics - The telecommunications sector, particularly the operator network business, has been ZTE's cash cow, but investment from operators is tightening [3]. - Capital expenditure from the three major domestic operators fell by over 16% year-on-year, marking the highest decline in nearly three years [3]. - As 5G coverage exceeds 90% in administrative villages, the large-scale investment wave is receding, leading to a shift in investment focus towards computing and AI infrastructure [3][4]. Group 3: Business Segments - ZTE's operator network revenue has seen a decline, with a year-on-year drop of 15.02% last year and 5.99% in the first half of this year [4]. - The operator network business's revenue share fell below 50% for the first time in a decade, indicating a significant shift in the company's revenue structure [4]. - The overall gross margin for ZTE decreased to 25.85% in the third quarter, reflecting the pressure from declining high-margin business [4]. Group 4: Strategic Focus - ZTE is now focusing on growth in computing, digital energy, and terminal segments as part of its "second growth curve" strategy [5]. - The company acknowledges the urgency of transitioning from a full connectivity model to a "connectivity + computing" model in response to the AI-driven industrial revolution [6][7].