ZTE (0763) AI Stock Analysis

• Market Cap: $226.36B
• Dividend Yield: 1.91%
• Average Volume (3M): 38.45M
• Price to Earnings (P/E): 20.0
• Beta (1Y): 1.30
• Revenue Growth: 3.20%
• EPS Growth: -19.51%
• Country: HK
• Employees: 68,375
• Sector: Technology
• Sector Strength: 85
• Industry: Communication Equipment
• EPS (TTM): 0.59
• Shares Outstanding: 755,502,560
• 10 Day Avg. Volume: 84,868,794
• 30 Day Avg. Volume: 38,453,709
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 0.64
• Enterprise Value/Revenue: 1.17
• Enterprise Value/Gross Profit: 3.25
• Enterprise Value/Ebitda: 11.62
• 1Y Price Target: $29.32
• Price Target Upside: -16.28% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

• Rating: 78 Outperform
• Price Target: HK$40.00 ▲(14.22% Upside)

ZTE's strong financial performance and bullish technical indicators are the primary drivers of its stock score. The company's solid profitability and stable balance sheet support its financial health, while technical analysis indicates strong market momentum. However, the valuation is moderate, which slightly tempers the overall score.

Positive Factors

Financial Performance

Revenue increased by 2.9% YoY to RMB62.5bn, while net profit grew by 4.8% YoY to RMB5.7bn.

Valuation

The stock is currently trading below its historical 3-year average P/E, indicating potential value.

Negative Factors

Revenue Challenges

The decline in revenue was mainly due to lower telecom spending in China and the delayed progress in ZTE’s AI servers.

ZTE Business Overview & Revenue Model

Company Description

ZTE Corporation provides integrated communication information solutions in the People's Republic of China, rest of Asia, Africa, Europe, the United States, and Oceania. It operates through three segments: Carriers' Networks, Government and Corporate Business, and Consumer Business. The Carriers' Network segment provides wireless access, wireline access, bearer networks, core networks, telecommunication software systems and services, and other innovative technologies and product solutions. The Consumer Business segment offers smart phones, mobile data terminals, home information terminals, and innovative fusion terminals, as well as related software application and value-added services. The Government and Corporate Business segment focuses on providing informatization solutions for the government and corporations through the application of products, such as communications networks, Internet of Things, big data, and cloud computing. The company was founded in 1985 and is headquartered in Shenzhen, the People's Republic of China.

How the Company Makes Money

ZTE makes money through the sale of telecommunications equipment and solutions to network operators, enterprises, and consumers. Its revenue streams are primarily derived from three segments: Carrier Networks, Government and Corporate Business, and Consumer Business. Carrier Networks, which includes wireless and wired network solutions, is the largest contributor to ZTE's revenue. The company also earns from its Government and Corporate Business segment by providing ICT solutions, including cloud computing and data center services. Additionally, ZTE generates revenue from its Consumer Business through the sale of smartphones and other mobile devices. Strategic partnerships with telecommunications operators and enterprises globally also play a significant role in enhancing ZTE's market presence and revenue.

ZTE Financial Statement Overview

Summary

ZTE demonstrates strong financial health with robust profitability, stable revenue growth, and a solid balance sheet. However, cash flow management presents a moderate concern, with declining free cash flow impacting liquidity.

Income Statement

ZTE demonstrates strong profitability with a Gross Profit Margin of 35.9% and a Net Profit Margin of 6.6% for TTM (Trailing-Twelve-Months). The EBIT Margin stands at 7.3%, while EBITDA Margin is at 10.0% indicating efficient operations. Revenue growth is modest, with a slight increase from 2024 to TTM. The company maintains stable profitability, although there was a slight decline in gross profit margin from 2023 to TTM.

Balance Sheet

The balance sheet reflects a stable financial structure with an Equity Ratio of 33.2% and a manageable Debt-to-Equity Ratio of 0.75 in TTM. ROE is strong at 11.3%, showcasing efficient use of equity to generate profits. The company maintains a healthy balance between debt and equity, though total debt has increased over the years, which could impact future leverage.

Cash Flow

Operating Cash Flow to Net Income Ratio is 0.49 in TTM, indicating room for improvement in cash generation efficiency. The Free Cash Flow to Net Income Ratio stands at 0.63, showing positive but moderate cash flow health. Free Cash Flow decreased from the previous year, indicating potential cash flow management challenges.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	123.69B	121.30B	124.25B	122.95B	114.52B	101.45B
Gross Profit	44.44B	45.99B	50.80B	45.73B	40.36B	32.07B
EBITDA	12.41B	17.65B	18.27B	15.08B	14.57B	10.53B
Net Income	8.14B	8.42B	9.33B	8.08B	6.81B	4.28B
Balance Sheet
Total Assets	217.92B	207.32B	200.96B	180.95B	168.76B	150.63B
Cash, Cash Equivalents and Short-Term Investments	59.47B	57.65B	78.70B	56.86B	52.07B	36.70B
Total Debt	54.16B	53.06B	56.11B	46.54B	40.36B	36.00B
Total Liabilities	145.35B	134.21B	132.63B	121.41B	115.48B	104.51B
Stockholders Equity	72.28B	72.81B	68.01B	58.64B	51.48B	43.30B
Cash Flow
Free Cash Flow	5.08B	7.47B	13.40B	2.63B	10.04B	3.76B
Operating Cash Flow	4.02B	11.48B	17.41B	7.58B	15.72B	10.23B
Investing Cash Flow	-15.00B	-28.67B	-20.90B	-1.29B	-10.59B	-7.08B
Financing Cash Flow	-6.87B	-5.82B	7.37B	1.45B	2.78B	-289.90M

ZTE Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 35.02
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0763, the sentiment is Positive. The current price of 35.02 is above the 20-day moving average (MA) of 29.59, above the 50-day MA of 26.69, and above the 200-day MA of 24.20, indicating a bullish trend. The MACD of 2.97 indicates Negative momentum. The RSI at 64.46 is Neutral, neither overbought nor oversold. The STOCH value of 78.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:0763.

ZTE Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
0763	78 Outperform	$226.36B	20.04	10.66%	1.91%	3.20%	-19.51%
Sector *	61 Neutral	$35.48B	7.63	-10.11%	1.88%	8.73%	-9.23%
COBJF	―	$966.11M	―	-10.70%	1.29%	―	―
YZOFF	―	$7.57B	15.12	5.20%	3.66%	―	―
1473	70 Outperform	HK$580.14M	15.92	13.21%	2.02%	53.77%	―
1617	59 Neutral	HK$243.94M	5.64	5.02%	―	1.01%	660.00%
1613	41 Neutral	HK$105.45M	―	-29.38%	―	86.85%	-36.65%

ZTE Corporate Events

ZTE Completes Issuance of Convertible Bonds to Boost R&D

ZTE Corporation has successfully completed the issuance of RMB3,584 million zero-coupon USD-settled convertible bonds due 2030, with net proceeds amounting to approximately US$494.30 million. The funds raised will be directed towards research and development investments in computility products, potentially strengthening ZTE’s technological capabilities and market competitiveness. The bonds are expected to be listed on the Hong Kong Stock Exchange, reflecting ZTE’s strategic financial management and commitment to innovation.

The most recent analyst rating on (HK:0763) stock is a Hold with a HK$25.00 price target. To see the full list of analyst forecasts on ZTE stock, see the HK:0763 Stock Forecast page.

ZTE Announces RMB3.584 Billion Convertible Bond Issuance to Boost R&D

ZTE Corporation has announced the proposed issuance of RMB3,584 million USD settled zero coupon convertible bonds due 2030 under a general mandate. The bonds are convertible into H Shares at an initial conversion price of HK$30.25 per H Share, potentially increasing the company’s H share capital by approximately 17.17%. The proceeds from this issuance are intended to enhance ZTE’s R&D investments in computility products, potentially strengthening its market position and innovation capabilities.

The most recent analyst rating on (HK:0763) stock is a Hold with a HK$25.00 price target. To see the full list of analyst forecasts on ZTE stock, see the HK:0763 Stock Forecast page.

ZTE Appoints Ms. Li Miaona as Employee Director for Tenth Board Session

ZTE Corporation announced the election of Ms. Li Miaona as the employee director for the Tenth Session of its Board of Directors. Her term will begin on May 23, 2025, and end on March 27, 2028. Ms. Li has been with ZTE since 2000 and has held various management roles, bringing extensive experience to her new position. This appointment is part of ZTE’s ongoing efforts to involve employees in its governance structure, potentially enhancing its operational effectiveness and stakeholder engagement.

The most recent analyst rating on (HK:0763) stock is a Sell with a HK$19.47 price target. To see the full list of analyst forecasts on ZTE stock, see the HK:0763 Stock Forecast page.

ZTE Corporation Announces Board of Directors and Committee Roles

ZTE Corporation has announced the composition of its Board of Directors and the roles each member will play in various committees. This announcement is crucial as it outlines the leadership structure and governance framework that will guide the company’s strategic decisions and compliance efforts, potentially impacting its operational efficiency and stakeholder confidence.

The most recent analyst rating on (HK:0763) stock is a Sell with a HK$19.47 price target. To see the full list of analyst forecasts on ZTE stock, see the HK:0763 Stock Forecast page.