\u3000\u300 Shenzhen Zhenye(Group)Co.Ltd(000006) 3 Zte Corporation(000063) )
Key investment points
The company’s steady and compliant operation, and the probation period will not be revoked
The company announced that on March 22, 2022 (US time), the company received the court’s judgment and ruled not to revoke Zte Corporation(000063) ‘s probation (i.e. the probation will expire on March 22, 2022 (US time) without any penalty), and confirmed that the term of office of the inspector will end on March 22, 2022 (US time). In March 2017, the company reached an agreement with the Bureau of industry and security (BIS), the Department of Justice (DOJ) and the office of overseas assets management (OFAC) of the U.S. Department of Finance on matters related to the decision of the Bureau of industry and security of the U.S. Department of Commerce to implement export restrictions on the company.
In June 2018, the company reached an alternative settlement agreement with BIS to replace the settlement agreement reached between the company and bis in March 2017; In October 2018, DOJ amended the supervision conditions according to the alternative settlement agreement and extended the term of office of the supervisor appointed by the court until March 22, 2022.
In the announcement on the settlement agreement issued in March 2017, the company said that the agreement reached between the company and DOJ will take effect after being approved by the U.S. District Court for the Northern District of Texas. The court’s approval of the agreement reached between the company and DOJ is a prerequisite for BIS to issue the settlement order. The ruling result reflects the effect of the company’s steady and compliant operation and ensures the company’s future operation.
Entering the surpassing period, the second growth curve is worth looking forward to
The three-step strategy of the company achieved excellent results in the recovery period and development period. In 2021, the company continued high-quality growth, achieved a revenue of 114.52 billion yuan, a year-on-year increase of 13%, and a net profit attributable to the parent company of 6.81 billion yuan, a year-on-year increase of 60%. It should be noted that due to the material preparation of key materials and the principle of cautious withdrawal, the asset impairment loss is 1.52 billion yuan in 2021 (210 million yuan in 2020). In 2022, the company will enter the surpassing period, and is expected to start a new round of growth in the digital tide based on the strong comprehensive strength of “end / network / cloud / platform”. The traditional CT business will steadily consolidate its foundation, and accelerate the expansion of it business (IT hardware bottom / automotive electronics / industry digital transformation), digital energy, terminals and other new fields, so as to inject stronger impetus into quality growth.
Profit forecast and investment suggestions
It is estimated that the net profit attributable to the parent company in 202224 will be 8.04 billion yuan, 9.38 billion yuan and 10.88 billion yuan, and PE will be 15 times, 13 times and 11 times, maintaining “buy”.
Risk tip: the impact of China US trade policy exceeded expectations; The development of new business is not as expected.
