Summary of ZTE (0763.HK) Conference Call Company Overview - **Company**: ZTE Corporation (0763.HK) - **Market Cap**: HK$174.9 billion / $22.5 billion - **Enterprise Value**: HK$192.7 billion / $24.8 billion - **Current Price**: HK$36.56 - **12-Month Price Target**: HK$38.40 (Upside: 5.0%) for H-shares; Rmb59.50 (Upside: 30.4%) for A-shares [1][2][20] Key Industry Insights - **Enterprise AI Market**: ZTE has introduced the SuperPod system, a cost-effective solution for AI training and inferencing, which supports interconnection of 64 to 10,000 GPUs. This positions ZTE favorably in the growing enterprise AI market in China [2][21]. - **Revenue Contribution**: The enterprise ICT business is expected to contribute 29% in 2025, 31% in 2026, and 33% in 2027 to total revenue, with a projected CAGR of 17% from 2025 to 2027 [2][19]. Financial Performance - **Revenue Estimates**: - 2025E: Rmb147.84 billion (up 1% from previous estimate) - 2026E: Rmb164.13 billion (up 1%) - 2027E: Rmb177.93 billion (up 1%) [3][19]. - **Net Income Estimates**: - 2025E: Rmb8.76 billion - 2026E: Rmb9.90 billion - 2027E: Rmb11.01 billion [3][19]. - **Earnings Per Share (EPS)**: - 2025E: Rmb1.83 - 2026E: Rmb2.07 - 2027E: Rmb2.30 [3][19]. Margins and Ratios - **Gross Margin**: Expected to decrease slightly due to a change in product mix, with 2027E gross margin at 30.5% [3][19]. - **P/E Ratios**: - 2025E: 18.3x - 2026E: 16.2x - 2027E: 14.5x [13][19]. - **Dividend Yield**: Projected to be 1.9% in 2025, increasing to 2.4% by 2027 [7][19]. Market Outlook - **Valuation**: The current valuation is considered fair, leading to a Neutral rating despite positive growth prospects in the enterprise AI sector [2][19]. - **Risks**: Key risks include demand fluctuations in telecom infrastructure, market share changes, and margin improvements. Non-operating gains or losses could also impact estimates significantly [31][19]. Additional Insights - **Revenue Mix**: There is an increasing contribution from non-telecom business segments, indicating diversification in revenue sources [21][19]. - **Market Position**: ZTE is ranked 3rd in M&A potential within its sector, reflecting a low probability of being an acquisition target [7][19]. This summary encapsulates the critical insights from the conference call regarding ZTE's strategic positioning, financial outlook, and market dynamics.