ZTE (0763) AI Stock Analysis

• Market Cap: $170.26B
• Dividend Yield: 2.57%
• Average Volume (3M): 9.68M
• Price to Earnings (P/E): 14.2
• Beta (1Y): 1.26
• Revenue Growth: -2.65%
• EPS Growth: -14.96%
• Country: HK
• Employees: 68,375
• Sector: Technology
• Sector Strength: 94
• Industry: Communication Equipment
• EPS (TTM): 0.56
• Shares Outstanding: 755,502,560
• 10 Day Avg. Volume: 12,708,055
• 30 Day Avg. Volume: 9,675,141
• PEG Ratio: 0.54
• Price to Book (P/B): 1.22
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 27.33
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $26.91
• Price Target Upside: 3.49% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 79 Outperform
• Price Target: HK$30.00 ▲(15.38%Upside)

ZTE's overall score reflects strong financial performance with effective profitability and stable growth. Technical indicators suggest positive momentum but also hint at potential overbought conditions. The valuation is fair, providing a balanced investment outlook.

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 (0763) is a leading global provider of telecommunications equipment and network solutions. The company operates primarily in the sectors of telecommunications, enterprise, and consumer technology. ZTE's core products and services include wireless networks, wired networks, cloud computing solutions, and mobile devices. The company is known for its innovations in 5G technology and has a presence in over 160 countries, catering to telecommunications operators, enterprises, and consumers.

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: 26.00
• 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 26 is above the 20-day moving average (MA) of 24.32, above the 50-day MA of 23.44, and above the 200-day MA of 22.92, indicating a bullish trend. The MACD of 0.63 indicates Negative momentum. The RSI at 66.07 is Neutral, neither overbought nor oversold. The STOCH value of 78.85 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	79 Outperform	$170.26B	14.17	11.39%	2.57%	-2.65%	-14.96%
6869	67 Neutral	$26.82B	20.75	6.68%	1.29%	0.24%	-31.74%
1617	59 Neutral	HK$224.42M	5.19	5.02%	―	1.01%	660.00%
Sector *	57 Neutral	HK$14.24B	5.26	-5.75%	5.39%	9.34%	-42.23%
2342	55 Neutral	$5.87B	―	-18.09%	1.26%	-24.30%	-10350.00%
1473	48 Neutral	HK$163.46M	5.44	13.21%	―	61.65%	98.79%
1613	46 Neutral	HK$108.60M	―	-29.38%	―	108.35%	58.07%

ZTE Corporate Events

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.

ZTE Corporation Expands Wealth Management Investments

ZTE Corporation has announced its plans to apply internal funds for the subscription of wealth management products with a total amount not exceeding RMB20 billion in 2024 and RMB30 billion in 2025. These investments, characterized by high security and good liquidity, are part of the company’s strategy to manage its financial resources efficiently. The transactions, conducted with the Bank of Hangzhou, have been classified as discloseable under the Hong Kong Listing Rules, necessitating reporting and announcement requirements due to the aggregated transaction size exceeding the 5% threshold.

ZTE Corporation Concludes First Extraordinary General Meeting of 2025

ZTE Corporation held its First Extraordinary General Meeting of 2025, which was conducted through a combination of on-site and online voting. The meeting, presided over by Ms. Fang Rong, the Chairman of the Board, saw no vetoed or changed resolutions, indicating a smooth decision-making process. This meeting underscores ZTE’s commitment to compliance with legal and regulatory standards, as it adhered to relevant laws and listing rules, ensuring transparency and shareholder engagement.

ZTE Reports Revenue Growth Amid Profit Decline in Q1 2025

ZTE Corporation has released its first quarterly report for 2025, highlighting a 7.82% increase in operating revenue compared to the same period last year. However, the company experienced a decline in net profit attributable to ordinary shareholders by 10.50%, and a significant drop in net profit after extraordinary items by 26.14%. The report also notes a decrease in net cash flows from operating activities by 37.93%. These financial results, influenced by changes in accounting policies, suggest challenges in maintaining profitability despite revenue growth, which could impact the company’s market positioning and stakeholder confidence.