Investment Rating - The investment rating for ZTE Corporation is "Buy" with a target price of HKD 23.80, which corresponds to a price-to-earnings ratio of 10.5x for 2024, 9.5x for 2025, and 8.2x for 2026 [1][5]. Core Insights - ZTE's Q1 2024 performance met expectations, with revenue of RMB 30.578 billion, a year-on-year increase of 4.9%. The gross margin decreased by 2.5 percentage points to 42.0%. Net profit attributable to shareholders rose by 3.7% to RMB 2.741 billion, while net profit excluding non-recurring items increased by 7.9% [1]. - The company is focusing on innovation and expansion based on connectivity, maintaining a leading position in wireless and fixed-line sectors, and is expected to excel in next-generation ICT technologies such as 5G-A, all-optical networks, and 6G [1]. - ZTE is poised to continue expanding in the intelligent computing sector, launching products such as intelligent servers, high-performance storage, and AI integration solutions, which are anticipated to drive growth in its computing business [1]. Summary by Sections Financial Performance - For Q1 2024, ZTE reported revenue of RMB 30.578 billion, a 4.9% increase year-on-year. The gross margin was 42.0%, down 2.5 percentage points. Net profit attributable to shareholders was RMB 2.741 billion, up 3.7% year-on-year, with a 7.9% increase in net profit after excluding non-recurring items [1]. Business Strategy - ZTE is leveraging its strong capabilities in chips, algorithms, and architecture to innovate and expand its market presence. The company aims to maintain its leadership in the ICT market through continuous research and development [1]. Product Development - The company is actively developing products in the intelligent computing space, including intelligent servers and high-performance data center switches, which are expected to enhance its competitive edge in the market [1].
2024财年第一季度业绩符合预期，服务器及存储业务或超预期