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Depth-Company-ZTE (000063): First-quarter results continued to improve 5G transformation competitiveness and promotion

Depth * Company * ZTE (000063): First quarter performance continued to improve 5G transformation competitiveness and promotion

The company released the first quarter performance report, reporting a series of companies achieving operating income of 222.

02 million, a decrease of 19 per year.

34%; net profit attributable to mother is 8.

63 ppm, an increase of 115 per year.

95%.

Key points of support levels In the first quarter, operations continued to improve, and management efficiency continued to improve.

The company’s net profit attributable to its mother for the first quarter was 8.

63 trillion US dollars, a substantial increase of 115 throughout the year.

95%.

The company’s selling expenses decreased by 29 compared with the same period last year.

8%, the cost control continued to be strengthened, management costs increased by 93 compared with the same period last year.

1%, mainly due to the increase in legal fees and personnel costs due to compliance requirements.

In addition, the company’s consolidated gross margin for the first quarter was 39.

97%, an increase of 7 per year.

Most of the 06 are mainly due to the low gross profit margin of consumer businesses such as mobile phones that have not fully recovered after the impact of the storm last year, and their revenue accounted for a relatively small 北京SPA会所 proportion.

As the impact of last year’s events fades, the company’s performance growth will return to normal levels.

R & D investment has continued to increase, and global competitiveness has gradually recovered.

The company’s R & D expenses reached 30 in the first quarter.

9.3 billion, accounting for 13% of operating income.

9%, up 4 from the same period last year.

1 unit.

After the chip embargo last year, the company continued to focus on the development of core chips such as wireless connections, bearer switching, transmission, and fixed network. The related technology has reached the leading level.

At present, the company has launched 5G cooperation with 40 large-scale operators around the world, and recently joined hands with Orange to achieve the first 5G communication in Europe using an independent networking architecture, and the international competitiveness level has been further improved.

The company continues to invest heavily in research and development, which is expected to translate into future core competitiveness in global competition.

5G has a leading level of technology and is committed to realizing the potential of network transformation.

According to statistics from ETSI and the Institute of Information and Communication Technology, the company claims 1,029 patents on the 5G standard, accounting for 9%, ranking second among Chinese companies.

Is the world’s leading supplier of complete 5G end-to-end solutions.

The number of 5G base stations is expected to be larger than 4G base stations. 2019 is the first year of 5G construction. Operators’ investment in 5G network construction will continue to expand at the same time, which will bring more broad market space.

With the gradual decline of 5G, the company’s operators, consumers and other major businesses are expected to continue in the wave of network reorganization.

We estimate that our EPS forecast for 2019-2021 is 0.

98, 1.

32, 1.

61 yuan, corresponding to a price-earnings ratio of 34.

6 times, 25.

7 times, 21.

0x, maintain BUY rating.

The main risks faced by the rating are macroeconomic risks, lower than expected investment from operators, market competition risks, and technical risks.