\u3000\u3000 Zte Corporation(000063) (000063)
Key elements of the report:
The company released the performance forecast for 2021. It is estimated that the net profit attributable to the common shareholders of listed companies will be 6.5-7.2 billion yuan in 2021, with a year-on-year increase of 52.6% - 69.0%, and the net profit attributable to the common shareholders of listed companies after deducting non recurring profits and losses will be 3-3.5 billion yuan, with a year-on-year increase of 189.7% - 238.0%. EPS is 1.40-1.55 yuan, and the performance is basically in line with expectations.
Key investment points:
The annual performance basically met expectations, and the gross profit margin recovered and improved year-on-year. The company achieved double-digit year-on-year growth in operating revenue in 2021, among which the operating revenue of China, international market and operator networks, government enterprises and consumers all achieved year-on-year growth. (1) In terms of operators, the company is changing from mainstream suppliers to core suppliers, and its market share of key products such as 5g, core network, bearer, server and storage continues to increase. According to the statistics of dell'orogroup, ZTE's telecom infrastructure market share increased to about 11% in the third quarter of 2021, reaching a record high. It is expected that the company's market share in the global operator business will continue to rise in the future. (2) In terms of government and enterprise business, the company has continuously strengthened its expansion in the fields of it business, digital energy and terminals, and actively created the second growth curve of the company. In the field of it, Zte Corporation(000063) focuses on building the bottom competitiveness of IT products such as servers and storage, operating systems and databases, and quickly becomes a 10 billion product; At the same time, two special teams of mining, metallurgy and steel industries are established for specific subdivided industries to realize the in-depth expansion of 5g industry application market. (3) In terms of consumers, the company has made major breakthroughs in mobile phones and consumers' home intelligent products this year, expanded into the field of automotive electronics by integrating the advantages of ICT technology software and hardware, and established an automotive electronic product line to help the development of intelligence, networking and electrification in the automotive field. (4) In terms of gross profit margin, with the improvement of production process and the domestic substitution of some core electronic components such as chips, the gross profit margin of the company continued to increase in the first three quarters. We believe that in the future, with the gradual clarity of the market pattern of communication equipment and the continuous improvement of the company's technology and supply chain, the gross profit margin of the company is expected to continue to increase in the future.
Prepare materials in advance to ensure the stability of the supply chain, and withdraw asset impairment in 2021q4 to fully release the risk. In the single quarter of 2021q4, the company expects to realize a net profit attributable to the parent of 647-1347 million yuan and a net profit deducted from non attributable to the parent of -338-162 million yuan. The low profit in the single quarter is mainly due to the asset impairment of 1.1 billion yuan accrued in Q4. Due to the large-scale advance preparation of chips and other key materials by the company, considering the relatively long material preparation and production cycle of the company, consistent with the previous policies, the provision for inventory falling price is made based on the principle of prudence. In 2021, the total asset impairment loss of the company is about 1.4 billion yuan. Although this asset impairment has a certain negative impact on the company's performance in the short term, the provision of asset impairment loss is conducive to releasing risks in advance, improving the quality of statements, and does not affect the company's continuously improved operating conditions. We are still optimistic about the company's future performance growth potential.
Profit forecast and investment suggestions: considering that the company accrued an asset impairment of 1.1 billion yuan in the fourth quarter, we lowered the company's profit expectation. It is estimated that the company's revenue from 2021 to 2023 will be 118.9/132/147.3 billion yuan respectively, the net profit attributable to the parent company will be 69.58/90.27100.02 yuan respectively, the EPS will be 1.47/1.91/2.11 yuan respectively, and the closing price of PE on February 7 will be 20 / 15 / 14, maintaining the "buy" rating.
Risk factors: trade friction intensifies, China's 5g construction fails to meet expectations, and overseas market expansion is less than expected.
