\u3000\u300 Shenzhen Zhenye(Group)Co.Ltd(000006) 3 Zte Corporation(000063) )
Company announcement: the company released the annual report of 2021, during which the operating revenue reached 114.52 billion yuan, a year-on-year increase of 12.9%; The net profit attributable to ordinary shareholders of listed companies was 6.81 billion yuan, a year-on-year increase of 59.9%; The net profit attributable to ordinary shareholders of listed companies after deducting non recurring profits and losses was 3.31 billion yuan, a year-on-year increase of 219.2%; The basic earnings per share is 1.47 yuan; The net cash flow from operating activities was 15.72 billion yuan, a year-on-year increase of 53.7%.
The performance is in line with expectations and the profitability continues to improve. The annual net profit attributable to the parent company was close to the median value of the notice, with a gross profit margin of 35.24%, an increase of 3.63 PCT year-on-year, and a net profit margin of 6.14%, an increase of 1.49 PCT year-on-year. The company achieved year-on-year growth in the two major markets in China and internationally, as well as in the three major businesses of operator networks, government enterprises and consumers. China and the international market achieved revenue of 78.07 billion yuan and 36.45 billion yuan respectively, with a year-on-year increase of 14.7% and 9.1% respectively. In terms of business, the operator business achieved a revenue of 75.712 billion yuan, a year-on-year increase of 2.29%, the government enterprise business achieved a revenue of 13.08 billion yuan, a year-on-year increase of 16.03%, and the consumer business achieved a revenue of 25.731 billion yuan, a year-on-year increase of 59.22%. The gross profit margins of the operator business, government enterprise business and consumer business were 42.45% / 27.05% / 18.2% respectively, of which the gross profit margin of the operator business increased by 8.66 PCT year-on-year, The gross profit margin of the other two businesses decreased slightly compared with the same period. In terms of expenses, the company accelerated the internal digital transformation of the enterprise and continued to reduce expenses and increase efficiency. The sales / management / R & D / financial expense rates were 7.63% / 4.75% / 16.42% / 0.84% respectively, with a year-on-year increase of + 0.16 / – 0.17 / + 1.83 / + 0.42 PCT respectively. Quarterly, 2021q1-q4 achieved net profit attributable to the parent company of RMB 2.182 billion / 1.897 billion / 1.774 billion / 960 million respectively. In the fourth quarter, it was mainly affected by the provision of asset impairment loss of RMB 1.1 billion for key materials such as chips, which showed that the company had sufficient stock of key materials to ensure the safety of supply. The impact of asset impairment loss in the whole year was about 1.521 billion yuan, and the income from investment income and changes in fair value was 2.663 billion yuan.
Give full play to the advantages of ICT in the field of digital economy. Adhering to the principle of consolidating the foundation and expanding the new, the company is committed to becoming a road builder of digital economy, helping operators and partners build a digital intelligence base of “connection + computing power + capability”, enabling digital transformation in all walks of life. In terms of operator network, the company has deeply participated in the large-scale construction of 5g and digitization in the world, consolidated its position as a strategic supplier, dug deep into the overseas value market and realized the rapid growth of wireless and wired services. Among them, qcell series small station products ranked first in the small cell rating of GlobalData, and the core router won the bid for China Telecom Corporation Limited(601728) cn2 backbone network China Mobile collects high-end routers. In terms of government and enterprise business, the company seized market opportunities such as new infrastructure and industry digital transformation, focused on core products and top customers, strengthened channel capacity-building, and achieved overall rapid growth in energy, transportation, government affairs, finance, Internet, large enterprises and other markets. The revenue of China’s government and enterprise business increased by more than 40% year-on-year. Among them, servers and storage products have entered the leading enterprises in finance, Internet, energy and other industries, and the operating revenue has doubled year-on-year. Goldendb distributed database was rated as the first brand in the domestic distributed database financial industry, enhancing the company’s brand influence and gradually expanding from finance to other fields. In terms of consumer business, the company continued to make efforts in terms of brands, products and channels, promoted the sales of personal and family products, and achieved rapid growth. Among them, the revenue of household terminals increased by more than 80% year-on-year, and the revenue of mobile phone products increased by nearly 40% year-on-year.
Continue to increase R & D investment and actively promote the second growth curve. Based on technology, the company continues to strengthen R & D investment in key fields such as underlying core technology and pan 5g digitization, so as to strengthen its core competitiveness. In 2021, the R & D investment was 18.8 billion yuan, a year-on-year increase of 27.08%, and the R & D expense rate was 16.42%, an increase of 1.8 PCT year-on-year. By the end of 2021, the company had about 84000 global patent applications, and about 42000 global authorized patents over the years. According to the report of iplytics, an internationally renowned patent data company, the company disclosed to ETSI that the number of necessary patent declarations of 5g standard ranked fourth in the world. In the future, the company will continue to adhere to long-term ism and sustainable development, continuously consolidate its core competitiveness, optimize the market pattern, increase investment in core technologies such as chips, algorithms and network architecture, maintain technology leadership in key fields and improve its value market share, and consolidate the first growth curve. At the same time, expand the capability boundary and transaction boundary, strengthen the business expansion in new fields such as it, automotive electronics, digital energy and smart home, and actively promote the second growth curve. The company continues to promote in the field of energy. Through its own digital and intelligent technology accumulation, the company has launched three business segments: communication base station energy, data center energy and new energy for green power storage for government and industrial customers, actively embracing the development trend of carbon neutrality and injecting new impetus into the long-term and healthy development of the company.
Investment suggestion: the company is the leader of ICT in China, focusing on continuous business restructuring, deepening competitive advantage, actively responding to industrial trends and exploring new markets. The company strengthened cost control and continuously improved its profitability. At the same time, it plans to repurchase a shares. According to the latest 5g and other information infrastructure planning, we adjusted the profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 8.719 billion yuan, 10.062 billion yuan and 11.331 billion yuan respectively, and the corresponding EPS will be 1.84 yuan, 2.13 yuan and 2.39 yuan respectively, maintaining the buy rating.
Risk warning: Sino US trade risk, operator investment less than expected risk, customer credit risk, exchange rate risk, competition risk and technology risk
