\u3000\u3000 Zte Corporation(000063) (000063)
Event overview: on January 28, 2022, the company released the performance forecast for 2021. It is expected to realize the net profit attributable to the parent company of 6.5-7.2 billion yuan, with a year-on-year increase of 52.59% - 69.02%, and the net profit deducted from the non attributable to the parent company of 3-3.5 billion yuan, with a year-on-year increase of 189.71% - 237.99%.
The performance is in line with expectations and the practice has quality growth. According to the performance forecast, the company's annual revenue achieved double-digit growth, with year-on-year growth in China, international markets and operator networks, government enterprises and consumers; The annual gross profit margin improved year-on-year; The annual net profit attributable to the parent company is expected to reach 6.5-7.2 billion yuan and the net profit deducted from non attributable to the parent company is expected to reach 3-3.5 billion yuan, both reaching a record high, and the profitability and profit quality have been significantly improved. 21q4 is expected to realize the net profit attributable to the parent company of 647-1347 million yuan and the net profit deducted from non attributable to the parent company of - 338-162 million yuan. The low profit in a single quarter is mainly due to the company's large-scale preparation of chips and other key materials in advance and the provision for inventory falling price based on the principle of prudence. In 2021, the impairment loss of the company's assets was about 1.4 billion yuan, an increase of about 1.2 billion yuan year-on-year, Among them, the asset impairment loss of 21q4 in a single quarter was about 1.1 billion yuan. The provision of asset impairment loss is conducive to the full release of risks and reflects the company's good control over the supply chain.
5g construction is advancing steadily, driven by national policies, with good support for medium and short-term performance, and increasing share is the long-term driving force of the operator market. According to the data of the Ministry of industry and information technology, by the end of 2021, China had built and opened 1.425 million 5g base stations. In 21 years, the number of new 5g base stations in China reached 654000, including 48000 / 142000 / 198000 / 166000 stations in Q1 / Q2 / Q3 / Q4 respectively. The construction of 5g was accelerated quarterly. According to the information and communication industry development plan of the 14th five year plan of the Ministry of industry and information technology, the number of 5g base stations per 10000 people will reach 26 in 2025. According to the results of the seventh national census of 1.412 billion people, the number of 5g base stations is expected to be about 3.67 million in 2025 and a net increase of about 2.25 million in 22-25 years. We believe that, on the one hand, the quantitative objectives of the policy specify the lower limit for the development of the industry. With the large-scale application of 5g2b in the future, the construction scale of base stations may exceed expectations. On the other hand, increasing share is the future driving force for the company in the operator market. 2021 is the closing year of the company's high-quality development. The company has deeply participated in the large-scale construction of 5g in China, and its market share of key products such as 5g, core network, bearer, server and storage in China continues to increase. In the future, the company is expected to realize the transformation from mainstream suppliers to core suppliers, and its revenue is far from the top.
Open the strategic transcendence period, accelerate the development of the second curve, and the digital economy is expected to open up new growth space. The strategic positioning of the company is "road builder of digital economy", which coincides with the digital economy plan of the 14th five year plan. The company continues to expand in the fields of it business, digital energy and terminals, focusing on building the bottom competitiveness of IT products such as servers and storage, operating systems and databases; Set up two special teams in mining, metallurgy and steel industries to explore the application market of 5g industry; Establish an automotive electronic product line to promote the development of intelligence, networking and electrification in the automotive field; Set up a digital energy business department to enter the new energy market. Through continuous innovation investment and digital transformation, the company is expected to continuously explore the imagination space and application scenarios of digital economy.
Investment suggestion: we are optimistic about the company as the base of digital economy and realize the transformation from CT leader to ICT leader. Considering the impact of asset impairment, we slightly adjust the profit forecast. It is estimated that the net profit of the company in 21-23 years is 6.8 billion / 8.5 billion / 10.3 billion respectively, the corresponding PE is 21 times / 17 times / 14 times, and the valuation center of the company in recent five years is 31 times. Maintain a "recommended" rating.
Risk tip: the capital expenditure of operators is less than expected, and the business expansion of government and enterprises is less than expected.
