ZTE(000063) 天风证券·2025-03-03 08:20Investment Rating - The report maintains a "Buy" rating for ZTE Corporation (000063) with a target price not specified [9]. Core Views - ZTE Corporation reported a revenue of 121.3 billion yuan for 2024, a year-on-year decline of 2.38%, and 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 AI integration and a shift towards "connection + computing" strategies [2][3]. Summary by Sections Revenue Breakdown - Operator Business: Revenue of 70.33 billion yuan in 2024, down 15.02% year-on-year, primarily due to the overall investment environment for operators [2]. - Government Enterprise Business: Revenue of 18.57 billion yuan, up 36.68% year-on-year, with significant growth in sectors like internet and finance [2]. - Consumer Business: Revenue of 32.41 billion yuan, up 16.12% year-on-year, with over 40% growth in mobile phone product revenue [3]. Profitability Analysis - The overall gross margin for 2024 was 37.91%, a decrease of 3.57 percentage points year-on-year [4]. - The operator business gross margin was 50.90%, an increase of 1.79 percentage points, while the government enterprise business gross margin fell to 15.33%, down 19.58% year-on-year [4]. Cost Management - The net profit margin for 2024 was 6.89%, a decline of 0.55 percentage points year-on-year, with a reduction in expense ratios across various categories [5]. - R&D expenses reached 24.03 billion yuan, accounting for approximately 20% of revenue, with over 5,000 AI patent applications filed [5]. AI and Future Growth - The company is deeply integrating AI into its operations, focusing on building a diverse domestic intelligent computing ecosystem and expanding its product offerings in AI terminals [6][7]. - ZTE is actively participating in the construction of intelligent computing centers and enhancing its market competitiveness in AI-enabled products [6][7]. Financial Health - The asset-liability ratio has been decreasing, 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 was 11.48 billion yuan, maintaining a positive net cash flow for 25 consecutive quarters [8]. Earnings Forecast - The forecast for net profit attributable to shareholders is adjusted to 9.2 billion yuan for 2025 and 10.5 billion yuan for 2026, with a projected PE ratio of 20/18/16 times for the respective years [9].