ZTE(000063) 天风证券·2025-03-03 07:27Investment Rating - The report maintains a "Buy" rating for ZTE Corporation (000063) with a target price not specified [9]. Core Views - ZTE Corporation's revenue for 2024 is reported at 121.3 billion yuan, a year-on-year decline of 2.38%, with a net profit attributable to shareholders of 8.42 billion yuan, down 9.66% year-on-year [1]. - The company is facing pressure in its operator business but is experiencing rapid growth in consumer and government enterprise sectors, driven by a strategic shift towards AI and computing power [2][3]. - The overall gross margin for 2024 is reported at 37.91%, a decrease of 3.57 percentage points year-on-year, influenced by the revenue structure and declining margins in the government enterprise business [4]. Summary by Sections Revenue Performance - Operator business revenue for 2024 is 70.33 billion yuan, down 15.02% year-on-year, primarily due to the overall investment environment for operators [2]. - Government enterprise business revenue reached 18.57 billion yuan, an increase of 36.68% year-on-year, with significant growth in domestic government enterprise revenue [2]. - Consumer business revenue is reported at 32.41 billion yuan, up 16.12% year-on-year, with strong sales in AI-enabled products [3]. Profitability Analysis - The gross margin for the operator network business is 50.90%, up 1.79 percentage points year-on-year, while the government enterprise business gross margin is 15.33%, down 19.58 percentage points [4]. - The net profit margin for 2024 is 6.89%, a decrease of 0.55 percentage points year-on-year, with a focus on controlling expenses [5]. Strategic Initiatives - ZTE is integrating AI into its operations, focusing on the "Connection + Computing Power" strategy, which is expected to drive growth in the ICT industry over the next 3-5 years [6]. - The company is expanding its AI product offerings, including AI smartphones and smart home devices, to enhance market competitiveness [7]. Financial Health - The asset-liability ratio has decreased from 73.1% at the end of 2019 to 64.7% at the end of 2024, indicating improved financial stability [8]. - Operating cash flow for 2024 is reported at 11.48 billion yuan, maintaining a positive cash flow for 25 consecutive quarters [8]. Future Outlook - The profit forecast for 2025-2026 has been adjusted to 9.2 billion yuan and 10.5 billion yuan respectively, reflecting the challenges in the operator business and the ongoing transition towards AI [9].