\u3000\u300 Shenzhen Zhenye(Group)Co.Ltd(000006) 3 Zte Corporation(000063) )
Event:
On April 26, 2022, the company released the first quarterly report of 2022: the operating revenue of the company in 2022q1 was 27.93 billion yuan, a year-on-year increase of 6.43% in a single quarter; The net profit attributable to the parent company was 2.217 billion yuan, a year-on-year increase of 1.60% in a single quarter; The net profit deducted from non parent company was 1.952 billion yuan, with a year-on-year increase of 117.13% in a single quarter. The gross profit margin of the company in 2022q1 was 37.78%, with a year-on-year increase of 2.35pcts in a single quarter; The net interest rate was 7.28%, with a year-on-year decrease of 0.66 PCTs in a single quarter.
Comments:
The non net profit deducted by the company in 2022q1 increased significantly, and the consumer business continued to be large-scale. The net profit attributable to the parent company in 2022q1 was 2.217 billion yuan, an increase of 1.60% compared with 2.182 billion yuan in 2021q1, but 2021q1 included the contribution of about 774 million yuan of pre tax profit confirmed by the transfer of 90% equity of Beijing ZTE GAODA Communication Technology Co., Ltd. The non net profit deducted in 2022q1 was 1.952 billion yuan, a year-on-year increase of 117%, realizing a substantial increase. The company continues to practice its own positioning as a “road builder of digital economy”, grasp the opportunities of digital transformation, deeply focus on ICT infrastructure and “big terminal” products, and continuously improve the company’s operation quality and efficiency. 2022q1 company’s consumer business showed a continuous and large-scale trend, in which the operating revenue of consumer business in overseas markets increased by nearly 30% year-on-year; In addition, the company continued to consolidate its core technical competitiveness. In 2022q1, the R & D investment was 4.7 billion yuan, accounting for 16.8% of the operating revenue.
Consolidate the first curve of core technologies such as chips, algorithms and network architecture, and actively promote the second curve of it, digital energy and smart home business. The company adheres to the leading technology, continues to increase investment in chips, algorithms, basic software and architecture, and accelerates the layout of new businesses while strengthening its core competitiveness. In terms of new business, the company accelerated its efforts in it business, digital energy business and smart home, promoting it to become a new engine for the company’s performance growth. 2022q1 company closely follows the development trends of new infrastructure, East digital West computing, carbon peak carbon neutralization and so on, constructs the “connection + computing power” capability, and develops the “second curve” layout including server and storage, terminal, digital energy, automotive electronics and other businesses. By extending its ICT technology capability, it strengthens cooperation with leading enterprises in the industry, actively promotes industrial digital application and practice, and enables the transformation and upgrading of thousands of industries. Among them, servers and storage have gained a good share in recent important centralized purchase projects, which has formed a strong support for the company’s performance growth.
Capital expenditure of China’s three major operators increased slightly in 2022. China Mobile’s capital expenditure is expected to be 185.2 billion yuan in 22 years, with a year-on-year increase of 0.87% In China Telecom Corporation Limited(601728) 22, the capital expenditure is expected to be 93 billion yuan, with a year-on-year increase of 7.27% China United Network Communications Limited(600050) did not disclose the 22-year capital expenditure plan, but said it would keep the growth of capital expenditure matching the growth of income in 22 years. As the leader of China’s main equipment, the operator’s business is expected to achieve stable growth. Profit forecast, valuation and rating: we are optimistic about the market prospect of the company as the world’s top four main equipment manufacturers under the global 5g construction wave and the important role of the company in the field of digital economy. We maintain the net profit forecast of RMB 7.7/84/8.9 billion from 2022 to 2024, with corresponding PE of 14x / 13X / 12x respectively, maintaining the “overweight” rating.
Risk tip: the peak of 5g construction fell, the price of industrial chain fell, and the capital expenditure of operators fell.
