\u3000\u300 Shenzhen Zhenye(Group)Co.Ltd(000006) 3 Zte Corporation(000063) )
Performance review
The company released the first quarter report of 2022 on April 25. During the reporting period, the company achieved an operating revenue of 27.93 billion yuan, a year-on-year increase of 6.4%; The net profit attributable to ordinary shareholders of listed companies was 2.22 billion yuan, a year-on-year increase of 1.6%; The net profit attributable to ordinary shareholders of listed companies after deducting non recurring profits and losses was 1.95 billion yuan, a year-on-year increase of 117.1%. Deduction non growth exceeded expectations.
Business analysis
The start was sound and the upward trend of profits was further confirmed. During the reporting period, the company achieved a revenue growth of 6.4%, which slowed down compared with the revenue growth rate of 13% in 21 years. Considering the global geopolitical changes in the first quarter and the repeated impact of the Chinese epidemic on the ICT supply chain, the company achieved stable operation as a whole. Q1 is the off-season of traditional communication business, and the company achieved an increase of 117.1% in net profit deducted from non parent company, indicating that the company further confirmed the upward trend of profit after experiencing the bottom of gross profit at the initial stage of China's 4 / 5G upgrade from 2020 to 2021. In terms of business, the company's operators, government enterprises and consumer businesses all achieved year-on-year growth. The performance of consumer business was relatively outstanding, and the operating revenue in overseas markets increased by 30% year-on-year. Benefiting from the spread of overseas 5g construction to the developing market and the continuous improvement of China's 5g market share, it is expected that the operator's business is still expected to achieve steady growth in 22 years under the background that the operator's capital expenditure remains stable. Government and enterprise businesses benefit from the deepening digitization of the industry and the enhancement of the company's competitiveness. It is expected that the annual growth rate of 22 years is expected to return to 20% +.
Core advantages are stable and new businesses are developing. In terms of 5g, the company's 5g base station share continues to rank second in the world, and has launched a new generation of minimalist site unisite Neo scheme, the first accurate 50g PON prototype, etc. In the chip field, the company has the industry-leading chip whole process design ability, the proportion of self-developed terminal chips has reached 50%, and the export share has been increasing. At the same time, under the background of "double carbon", digital economy and "Eastern digital and Western computing", the company has launched new businesses such as server and storage, terminal, digital energy and automotive electronics, in which server and storage have achieved a leading share in recent important centralized procurement projects.
Open a new stage of quality growth. Under the background of stable capital expenditure of global operators, the company's global share improvement is the core logic of growth in the next 3-5 years. Its global wireless market share is expected to evolve from 12% to 20% and China's market share is expected to evolve from 30% to 40%. At the same time, with the overflow of ICT capabilities accumulated by the company in the communication field for many years, the company's second growth curve government enterprise business has entered the fast lane. The capability value of new business areas such as semiconductor and automotive electronics is expected to be gradually recognized by the market. The company will open a new stage of quality growth, and the market valuation center is expected to gradually rise.
Profit adjustment and investment suggestions
It is estimated that the net profit attributable to the parent company in 22-24 years will be 9.1 billion yuan / 11.3 billion yuan / 13.4 billion yuan respectively. The company is optimistic about the rapid growth of new businesses such as government enterprises, semiconductors and automotive electronics while expanding the market share of global and Chinese equipment manufacturers. It is given a 22-year 31 times PE and a target price of 60 yuan, and reiterates the "buy" rating.
Risk tips
The commercialization of 5g was less than expected, the capital expenditure of operators was less than expected, and the expansion of new business was less than expected.
