\u3000\u3000 Zte Corporation(000063) (000063)
Event description:
The company released the performance forecast for 2021: the net profit attributable to the parent company in 2021 was 6.5-7.2 billion yuan, with a year-on-year increase of 52.59% – 69.02%; The net profit attributable to the parent company after deducting non profits was 3 billion yuan to 3.5 billion yuan, with a year-on-year increase of 189.71% – 237.99%.
Event comments:
The performance is slightly lower than our previous expectations because the company has made provision for inventory falling price, which affects Q4 performance in the short term, but does not affect the long-term operation of the company. The asset impairment loss in 2021 is expected to be about RMB 1.4 billion, of which the asset impairment loss in the single quarter of the fourth quarter is about RMB 1.1 billion, which is mainly due to the fact that the company prepares the key materials in advance under the tight global chip supply and accrues based on the principle of prudence, which has an impact on the company’s net profit in the short term. The company prepares the materials in advance based on the market conditions and the needs of its own development, It reflects the company’s management ability for supply chain security, which is expected to be reversed if it is digested smoothly in the future.
The company’s performance increased significantly and the gross profit margin improved significantly. The overall operation of the company is stable. In 2021, the operating revenue achieved double-digit growth. Among them, the operating revenue of China, international markets and operators, government enterprises and consumers all achieved year-on-year growth, and the net profit attributable to the parent and non net profit attributable to the parent set a record high. In 2021, Q3’s gross profit margin was 36.82%, an increase of 4.68 percentage points over the same period last year. The increase in gross profit margin is mainly due to the improvement of business profit margin of operators. It is expected that the gross profit margin will continue to improve throughout the year.
Diversified business layout is expected to open the second growth curve and achieve leapfrog development towards the world’s top 500.
The operator’s business “fixed capital”. The company has deeply participated in the large-scale construction of 5g in China, continuously optimized the overseas products and market pattern, maintained the steady growth of network business of operators, and maintained the basic development of the company.
Government and enterprise businesses have strengthened their expansion, strengthened the comprehensive competitiveness of channels around key industries such as finance and the Internet, focused on traditional advantageous products, and expected to achieve high-speed growth. At the same time, special teams of mining, metallurgy and steel industries have been established for specific subdivided industries to realize the in-depth expansion of 5g industry application market.
In the field of consumers, the company has increased brand and channel construction, established a smart home product line, and vigorously expanded consumer oriented home intelligent products. At the same time, the company established a new digital energy business department to officially enter the new energy market. And set up an automotive electronic product line to help the intelligent development of the automotive field.
Investment suggestions:
We expect the operating revenue of the company from 2021 to 2023 to be 114.1 billion yuan, 131.3 billion yuan and 150.8 billion yuan respectively, and the net profit attributable to the parent company to be 7.08 billion yuan, 8.43 billion yuan and 10.01 billion yuan, corresponding to PE of 19.7x, 16.6x and 13.9x. Maintain the “buy” rating.
Risk tips:
Operator investment slows down; The epidemic caused the growth of overseas business to be lower than expected.
