\u3000\u3000 Zte Corporation(000063) (000063)
Events
The company released the performance forecast for 2021. It is expected to realize a net profit attributable to the parent company of 6.5-7.2 billion yuan in 2021, with a year-on-year increase of 52.59% - 69.02%; Deduct non net profit of RMB 3-3.5 billion, with a year-on-year increase of 189.71% - 237.99%.
Our comments are as follows:
Revenue has achieved double-digit year-on-year growth, and the three business segments and China / international markets have achieved positive growth. The company achieved double-digit year-on-year growth in revenue in 2021, mainly from: 1) the market share of key products such as 5g, core network, bearer, server and storage in the Chinese market continued to increase, committed to the transformation from mainstream suppliers to core suppliers, and comprehensively carried out joint R & D and innovation with operators and expansion of digital industry. 2) Overseas market companies grasp the market opportunities such as 4G modernization, 5g new construction, optical fiber transformation of fixed network, bearer network upgrading and home broadband upgrading, so as to further optimize the product and market pattern. 3) In the field of ICT, in addition to the steady development of the traditional CT market, the company has continuously increased the expansion of it, digital energy and terminal fields, created the second growth curve, and achieved the development goal beyond the strategic period. In the field of it, the company focuses on building the bottom competitiveness of servers, storage, operating systems and databases, quickly become a 10 billion product, and expand 5g industry applications Set up automobile electronic product line; In the field of digital energy, the digital energy business department was officially established at the beginning of 2022 to enter the new energy market; In the field of terminals, we will increase the construction of mobile phone brands, set up a new smart home product line, and give full play to the advantages of home broadband network products.
The gross profit margin has increased steadily, the market pattern has been optimized, and the cost reduction of the industrial chain has achieved remarkable results. The gross profit margin is expected to be further improved in the future.
In 2021, the company's gross profit margin recovered and improved year-on-year. According to the data of the previous three quarters, the gross profit margin in the first three quarters of 21 years increased by 4.7 percentage points year-on-year to 36.8%, and the gross profit margin in the third quarter reached 38.0%, which was further improved compared with 36.82% in the second quarter. The market pattern of communication equipment is gradually clear, and the cost reduction effect of the industrial chain is remarkable. The gross profit margin of 5g and other core products is expected to continue to increase, and the trend of quarterly gross profit margin is expected to continue.
The provision of asset impairment losses based on prudent accounting principles has a certain negative impact on short-term apparent profits, but the impact of impairment on overall performance is expected to gradually weaken in the future by improving the quality of statements.
In 2021, the company accrued an asset impairment loss of about 1.4 billion yuan (210 million yuan in 2020), of which an asset impairment loss of about 1.1 billion yuan was accrued in a single quarter in the fourth quarter, which had a great negative impact on the net profit in a single quarter. The provision for impairment loss is mainly due to the company's preparation of key materials in advance under the tight global chip supply. However, considering that the company's material preparation and production cycle are relatively long and consistent with the previous policies, the provision for inventory falling price is made based on the principle of prudence. The prudent accrual policy has a certain impact on short-term performance, but reflects higher statement quality. In the future, with the normalization of the supply chain, the impact of impairment on the overall performance is expected to gradually weaken.
Looking forward to the future, 2022 is the opening year of the company's strategic transcendence period. The company will continue to explore the imagination space and application scenarios of digital economy through continuous innovation investment and digital transformation. 1) the company has outstanding competitiveness in the core business products of operators, and the global share of key products such as 5g wireless, core network and bearer network has increased steadily, laying the foundation for the medium and long-term growth of the company; 2) Government and enterprise businesses will expand it and digital energy, focus on building underlying competitiveness such as servers and storage, operating systems and databases, quickly become 10 billion products and expand 5g industry applications; Set up automobile electronic product line; Establish a digital energy business department to enter the new energy market and create a second growth curve; 3) The consumer business has increased the construction of mobile phone brands and set up a new smart home product line, which is expected to grow steadily.
Profit forecast and investment suggestions
The company's business recovered in an all-round way. After the annual revenue exceeded 100 billion, the gross profit margin rebounded steadily, the cost was rigid, and the scale effect continued to appear. Government enterprise business, automotive electronics and other business sectors continued to make key breakthroughs and open up greater growth space. It is estimated that the net profit attributable to the parent company from 21 to 23 will be 7, 9 and 11 billion yuan, corresponding to 16 times the P / E ratio in 22 years and 13 times the P / E ratio in 23 years. The "buy" rating is reiterated.
Risk tip: trade friction intensifies, the impact of the epidemic exceeds expectations, the capital expenditure of operators is lower than expected, the progress of new business is slower than expected, the performance forecast is not audited, and the final performance is subject to the annual report
