KAIYUAN SECURITIES·2026-03-09 12:41Investment Rating - The investment rating for ZTE Corporation is "Buy" (maintained) [1] Core Insights - ZTE Corporation reported a significant growth in computing power business, with a year-on-year revenue increase of 10.38% to CNY 133.895 billion in 2025, although net profit decreased by 33.32% to CNY 5.618 billion [4][5] - The company is expected to see a rebound in net profit, with projections of CNY 6.889 billion, CNY 8.252 billion, and CNY 9.590 billion for 2026, 2027, and 2028 respectively, alongside an increase in EPS [4][5] - The company is focusing on enhancing its competitiveness through high R&D investment, which reached CNY 22.76 billion, accounting for approximately 17% of revenue [6] Revenue and Profitability - In 2025, ZTE's revenue from operator networks was CNY 62.86 billion, accounting for 46.9% of total revenue, while the enterprise business saw a doubling in revenue to CNY 37.22 billion [5] - The computing power-related business achieved a remarkable growth of approximately 150%, contributing 24.6% to total revenue, with server and storage revenue increasing over 200% [5] - The gross margin and net margin for 2025 were reported at 30.25% and 4.16%, respectively, reflecting a decrease of 7.66 percentage points and 2.73 percentage points year-on-year [4] Market Position and Strategy - ZTE's domestic and international markets achieved revenues of CNY 89.74 billion and CNY 44.16 billion, respectively, with year-on-year growth of 9.4% and 12.4% [6] - The company maintains a leading position in the global 5G FWA & MBB market, with a strong focus on AI terminal layout in consumer business [5][6] - The company is expected to benefit from the commercial rollout of 5G-A and ongoing construction of computing power infrastructure, supporting long-term growth in its second curve business [4]