\u3000\u300 Shenzhen Zhenye(Group)Co.Ltd(000006) 3 Zte Corporation(000063) )
Event:
The company released the first quarter report of 2022, and achieved an operating revenue of 27.930 billion yuan in the first quarter of 22 years, with a year-on-year increase of 6.43%; The net profit attributable to the parent company was 2.217 billion yuan, a year-on-year increase of 1.60%; Deducting non net profit of 1.952 billion yuan, a year-on-year increase of 117.13%, a record high.
Our comments are as follows:
Steady growth in revenue, positive growth in the three business segments and China / international markets, deep participation in the construction of global digital economy, and long-term sustainable growth is expected.
In 2021, the overall revenue of the company increased steadily, and the operating revenue of the two major markets in China and the three business segments of operator network, government enterprises and consumers increased year-on-year. Among them, 1) the consumer business continued to expand, and the revenue of overseas consumers increased by nearly 30% year-on-year; 2) With the “second curve” layout of servers and storage, terminals, digital energy, automotive electronics and other businesses, servers and storage have gained a good share in recent important centralized procurement projects, forming a strong support for the company’s performance growth; 3) Looking forward to 22q2 and the whole year, with innovative ICT technology and the rapid increase of superimposed channels and ecological partners, the company is expected to focus on benefiting from the development of global digital economy.
The gross profit margin continued to improve year-on-year, the absolute amount of gross profit continued to improve, and the scale effect continued to reflect.
In the first quarter of 2022, the company’s overall gross profit margin was 37.78%, an increase of 2.34 percentage points year-on-year. The absolute gross profit in the first quarter was 10.552 billion yuan, an increase of 13.5% year-on-year and 1.253 billion yuan year-on-year. From the perspective of cost, the overall cost rate in the first quarter of 2022 was 29.3%, a year-on-year decrease of 1.1 percentage points, and the absolute value of cost increased by 193 million yuan year-on-year. With the rapid increase of the absolute gross profit of the company, the cost is relatively rigid, and the scale effect is expected to continue to be reflected. Looking forward to the future, from the perspective of the market development law of operators, the gross profit margin of 5g equipment of the company is expected to continue to increase. With the rapid growth of revenue scale, the scale effect of government enterprise and consumer business is expected to continue to appear. In the future, the company will continue to optimize costs and gradually ease the pressure on raw material costs, and the gross profit margin of each business of the company is expected to increase steadily.
In the early stage, the company announced that the suspension of supervision of the company by the U.S. Department of justice ended, and the term of office of the supervisor ended on March 22, 2022. The company continues to strengthen compliance construction, continuously improve operation and management, and the market’s concerns about the impact of external factors are expected to be gradually eliminated.
Profit forecast and investment suggestions:
2022 is the opening year of the company’s strategic transcendence period. The company 1) has outstanding market competitiveness and is expected to steadily increase its global share; 2) Government and enterprise businesses will expand it, 5g industry applications and automotive electronics to create a second growth curve; 3) Remarkable achievements have been made in the construction of consumer business brands, channels and products. Under the absolute growth of income and gross profit, the cost is relatively rigid, the scale effect is expected to continue to appear, and the operating profit is expected to continue to grow rapidly. It is estimated that the net profit attributable to the parent company in 22-24 years will be 9.0 billion yuan, 11.0 billion yuan and 12.8 billion yuan, corresponding to the price earnings ratio of 11 times in 22 years and 9 times in 23 years. The “buy” rating is reiterated.
Risk tip: the capital expenditure of operators is lower than expected, the impact of the global epidemic is higher than expected, the progress of new business is slower than expected, and the risk of international political factors
