ZTE (0763) AI Stock Analysis

• Market Cap: $269.70B
• Dividend Yield: 1.55%
• Average Volume (3M): 37.40M
• Price to Earnings (P/E): 24.6
• Beta (1Y): 1.26
• Revenue Growth: 3.16%
• EPS Growth: -19.51%
• Country: HK
• Employees: 68,375
• Sector: Technology
• Sector Strength: 88
• Industry: Communication Equipment
• EPS (TTM): 0.59
• Shares Outstanding: 755,502,560
• 10 Day Avg. Volume: 52,988,454
• 30 Day Avg. Volume: 37,401,119
• PEG Ratio: -1.27
• Price to Book (P/B): 1.50
• Price to Sales (P/S): 0.90
• P/FCF Ratio: 14.65
• Enterprise Value/Market Cap: 0.53
• Enterprise Value/Revenue: 1.11
• Enterprise Value/Gross Profit: 3.28
• Enterprise Value/Ebitda: 12.32
• 1Y Price Target: $36.59
• Price Target Upside: -2.43% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 3

• Rating: 73 Outperform
• Price Target: HK$42.00 ▲(12.00% Upside)

ZTE's strong financial performance and positive technical indicators are the primary drivers of its stock score. The company's profitability and stable balance sheet are significant strengths, while cash flow management needs improvement. The stock's valuation is moderate, with a reasonable P/E ratio and dividend yield.

Positive Factors

Revenue Growth

Consistent revenue growth, albeit modest, indicates ZTE's ability to maintain its market position and adapt to industry trends, supporting long-term business sustainability.

Profitability

Strong profitability margins reflect efficient operations and cost management, providing a buffer against market fluctuations and supporting future growth initiatives.

Balance Sheet Health

A stable balance sheet with a healthy equity ratio ensures financial resilience, allowing ZTE to invest in growth opportunities and withstand economic downturns.

Negative Factors

Cash Flow Management

Declining free cash flow suggests challenges in cash management, which could impact ZTE's ability to fund operations and invest in future growth without increasing debt.

Debt Levels

Rising debt levels may limit financial flexibility and increase interest obligations, potentially affecting ZTE's ability to invest in strategic initiatives.

Earnings Growth

Negative earnings growth indicates potential challenges in maintaining profitability, which could affect investor confidence and long-term valuation.

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 generates revenue through multiple streams, primarily by selling telecommunications equipment and providing network solutions to telecom operators and businesses. The company's revenue model includes the sale of hardware such as base stations, routers, and switches, as well as software and services related to network planning, deployment, and maintenance. Additionally, ZTE earns income from its mobile devices, including smartphones and tablets, which are sold in various markets. Significant partnerships with telecom operators and collaborations with government and enterprise clients further enhance its revenue, while ongoing investments in research and development help ZTE to innovate and adapt to the evolving telecommunications landscape.

ZTE Financial Statement Overview

Summary

ZTE demonstrates strong profitability with a Gross Profit Margin of 35.9% and a Net Profit Margin of 6.6% for TTM. The balance sheet reflects a stable financial structure with a manageable Debt-to-Equity Ratio of 0.75. 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	130.36B	121.30B	124.25B	122.95B	114.52B	101.45B
Gross Profit	43.92B	45.99B	50.80B	45.73B	40.36B	32.07B
EBITDA	11.70B	17.65B	18.27B	15.08B	14.57B	10.53B
Net Income	7.75B	8.42B	9.33B	8.08B	6.81B	4.28B
Balance Sheet
Total Assets	216.31B	207.32B	200.96B	180.95B	168.76B	150.63B
Cash, Cash Equivalents and Short-Term Investments	53.93B	57.65B	78.70B	56.86B	52.07B	36.70B
Total Debt	60.26B	53.06B	56.11B	46.54B	40.36B	36.00B
Total Liabilities	141.20B	134.21B	132.63B	121.41B	115.48B	104.51B
Stockholders Equity	74.84B	72.81B	68.01B	58.64B	51.48B	43.30B
Cash Flow
Free Cash Flow	495.00M	7.47B	13.40B	2.63B	10.04B	3.76B
Operating Cash Flow	1.30B	11.48B	17.41B	7.58B	15.72B	10.23B
Investing Cash Flow	-24.96B	-28.67B	-20.90B	-1.29B	-10.59B	-7.08B
Financing Cash Flow	-2.77B	-5.82B	7.37B	1.45B	2.78B	-289.90M

ZTE Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 37.50
• 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 37.5 is above the 20-day moving average (MA) of 37.19, above the 50-day MA of 33.95, and above the 200-day MA of 26.92, indicating a bullish trend. The MACD of 2.00 indicates Negative momentum. The RSI at 51.39 is Neutral, neither overbought nor oversold. The STOCH value of 47.37 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	73 Outperform	$269.70B	24.62	10.66%	1.55%	3.16%	-19.51%
1473	63 Neutral	HK$486.38M	13.43	13.21%	2.41%	53.77%	―
6869	62 Neutral	HK$52.17B	47.94	5.20%	0.72%	12.10%	-44.33%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
1617	59 Neutral	HK$200.03M	2.86	7.40%	―	-9.34%	605.26%
2342	54 Neutral	$9.49B	―	-10.70%	0.21%	-13.99%	-32.74%
1613	41 Neutral	HK$94.24M	―	-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.