Great Wall Securities·2024-08-20 04:09Investment Rating - The report maintains a "Buy" rating for ZTE Corporation, indicating an expected stock price increase of over 15% relative to the industry index within the next six months [4][14]. Core Views - ZTE Corporation's performance in the first half of 2024 shows steady growth, with revenue reaching 62.487 billion yuan, a year-on-year increase of 2.94%, and a net profit attributable to shareholders of 5.732 billion yuan, up 4.76% year-on-year [2][3]. - The company is focusing on the "connection + computing power" strategy, enhancing its digital and AI technology innovation capabilities to support long-term development [3][8]. - ZTE is actively expanding its market share in both domestic and international markets, leveraging opportunities in traditional businesses and new AI-related sectors [3][8]. Financial Summary - For the first half of 2024, ZTE's overall gross margin was 40.47%, a decrease of 2.75 percentage points year-on-year, primarily due to changes in revenue structure and varying margins across different business segments [3]. - The company's operating costs increased by 7.92% year-on-year, driven by rising costs in government and consumer sectors [3]. - Domestic market revenue was 43.061 billion yuan, remaining stable year-on-year, while overseas market revenue grew by 10.44% to 19.426 billion yuan [3]. Revenue and Profit Forecast - The report forecasts ZTE's net profit attributable to shareholders for 2024, 2025, and 2026 to be 10.117 billion yuan, 11.253 billion yuan, and 12.568 billion yuan, respectively [8]. - The current stock price corresponds to a price-to-earnings (P/E) ratio of 14, 13, and 12 for the years 2024, 2025, and 2026, respectively [8].