On April 25, 2022, ZTE (000063) announced that Cathay Fund Wang Qian, Southern Fund Zheng Xiaoxi, Guangdong Hengjian Zhang Jinyuan, China Merchants Securities Yu Jun, Tianfeng Securities Tang Haiqing, Zheshang Securities Wang Jie, Morgan Stanley Meng Yu, Credit Suisse Wang Xiaoqiong investigated our company on April 21, 2022.
The main contents of this survey are:
Q: 2021 is the closing year of the company's development period, the company's various operating and financial indicators performed brilliantly, and successfully achieved the set goals, which is inseparable from the company's adherence to steady operation in the past three years and gradually improving profitability.2022 is the opening year of the company's transcendence period, the company proposed to use 2-3 years to achieve the world's top 500, at the shareholders' meeting at the end of March just past, the company's board of directors and senior management completed the change, the original team remained stable, ushered in a new three-year term, Start a new chapter. We hope that the company can continue to achieve strategic implementation as in the past three years, can the company elaborate on the concept and planning to achieve the strategic goals of the transcendence period?
A: After more than three years of recovery and development, all aspects of the company's operation have been adjusted to a relatively healthy state, which has created favorable conditions for the company to challenge the first goal of the "2-3 years to enter the global top 500" beyond the period. Just now, Ms. Li Ying, the financial director, made a summary of the company's future technology and product competitiveness, market expansion and accelerated organizational evolution in the last part of the report, and everyone generally pays more attention to the company's growth problems. The company's goal of the oversuring period is to "enter the global top 500 in 2-3 years", which has two specific indicators, one is the revenue entry threshold, and the other is that innovative business can support the company's future development. To achieve the goal of the over-period, it means that the company not only needs to further consolidate the first curve business represented by traditional wireless and wired products, but also needs to quickly pull up the second curve business represented by servers and storage, terminals, digital energy, automotive electronics, etc. For the first curve business, the company's strategy is to make steady progress. This is a very certain track, and we are pursuing a higher market share and a better market layout. In the domestic market, the main products can reach more than 40% of the market share, and the overseas market is mainly stable, focusing on improving efficiency and complying with the operation. With the gradual development of 5G in the world and the further improvement of the core competitiveness of the company's products, it is expected that the first curve business will maintain a stable growth of more than 10% and contribute to scale profits in the future. At the same time, for some non-main channel businesses and long-term unprofitable subsidiaries, we will continue to focus on improving efficiency and alleviating the negative impact on the company's operations. For the second-curve business, the company's strategy is to accelerate the expansion. In terms of business choice, we put forward four basic reasons: the first is space, that is, it has market attractiveness and the space is large enough; the second is time, that is, it is in the right time window, such as new infrastructure, low-carbon and other long-term policies to bring market opportunities; the third is ability, that is, it is in line with the company's existing capabilities, which is the expansion of existing deterministic businesses; the fourth is that the company can build a competitive advantage and have the opportunity to enter the forefront of the industry. Based on the above four basic principles, we have selected the track based on the company's original CT business such as server and storage, terminal (including smart home terminal), 5G industry application, automotive electronics, and digital energy as a breakthrough, and strategic expansion along the market or customer's advantageous areas. The company emphasizes that it will promote the rapid incubation and growth of new businesses during the important development opportunity period, better support and meet the needs of operators and government and enterprise customer business transformation and upgrading, as well as the personalized and diversified needs of individual consumers. Server and storage is expected to achieve rapid growth and contribute to the scale of the increase of the business, and strive to maintain a high compound growth rate, in 1-2 years into the company's new tens of billions of products, within 3 years into the domestic mainstream suppliers ranks. We also plan to go in three steps, the first stage is to focus on the operation stage, the company has a good customer base and brand influence in the operator market and the Internet, financial industry, in the short term focus on these two key markets, enhance product competitiveness, to create the company's server easy to use, efficient reputation. The second stage is the differentiated operation stage, launching more categories and more scenario-based servers for different markets, and entering the forefront of some subdivided industries through industry-specific products and solutions to establish their own advantages. The third stage is the channel operation stage, expanding the coverage of key customers, contacting more customers through partners, enhancing brand influence, optimizing customer and market structure, and improving profitability. The performance of the terminal business has begun to rebound, and the future will be based on mobile phones as the core, forming a "1+2+N" development pattern around personal data and family data and smart peripheral ecological products, gradually increasing the expansion of consumer channels, and striving to become another powerful engine driving the company's performance growth. For the potential huge market of smart home terminals, the company hopes to further exert the product advantages of existing home information terminals, build a matrix of connection and video products, focus on advantageous products, and gradually enter the mainstream position of the industry. As the company's medium- and long-term strategic direction, we will accelerate our expansion in key areas such as 5G industry applications, automotive electronics, and digital energy in the future. In these fields, companies have long-term accumulation of technology, products and markets, and will rhythmically extend these accumulations to more subdivided industries, invest in chain unlocking, and become an important participant in industrial digitalization and green economy. In order to adapt to the new business development model of the second curve, the company has also made corresponding adaptations in the organizational form, and has successively set up automotive electronic product lines, smart home product lines, digital energy operation departments and special teams in the mining, metallurgical and steel industries, so that these businesses can obtain sufficient policy and organizational support. The company will also continue to adhere to the "simple, only fast, win-win" business philosophy: attach importance to long-term and sustainable development, and constantly consolidate the core competitiveness, with better digital solutions with customers, industry and ecological partners for in-depth and breadth of cooperation, mutual achievements. Under the clear strategic choice, clear realization path, and sufficient resource investment and organizational guarantee, the company has the confidence and ability to achieve the set goal of the overdue period.
Q: Since its establishment 37 years ago, the company attaches importance to technological innovation, continue to increase R & D investment, I made a statistic, the past ten years, the past five years the company's cumulative R & D investment was 120 billion yuan, 70 billion yuan, converted to the annual average is 12 billion yuan, 14 billion yuan, in recent years, the company's R & D investment amount is in the top ten of A-share listed companies, such a large R & D investment intensity, the company's technological innovation advantages are reflected in what aspects? How to become the driving force for the long-term development of the company?
A: ZTE has always attached great importance to technological innovation and R&D investment to maintain its advantages and competitiveness in core technologies. The company's core view has always been to continuously strengthen end-to-end global R&D investment and innovation. On the one hand, we continue to deepen the field of certainty, including further improving the efficiency of spectrum and spectrum; accelerating the optimization and independent evolution of commercial network performance; continuing the Moore dividend with domain customization, packaging and architecture innovation; and continuously deepening the soft and hard collaborative optimization of chips, algorithms and architectures. On the other hand, in the field of uncertainty such as industrial digital expansion, strengthen the componentization and service of R&D capabilities, and rapidly iterate and innovate continuously around scenarios and key businesses. For the level and return of R&D investment, it can be explained from the following two dimensions. First, looking at the industry, the establishment of the business model in the field of communications is based on high R & D investment, and the company's R & D expense rate has increased compared with before, but there is still a gap compared with the R & D expense rate of companies in the same industry. Second, looking at the direction of investment, we will expound from three levels: point, depth and breadth. At the point level, the company's investment is in key technologies. Only when the key technology has won the recognition of customers in the current product or the new generation of products, solved the customer's pain points, and formed a positive, benign and sustainable cycle, the company can obtain better gross profit margins. At the level of depth, the company focuses more on the thorough grasp of the underlying capabilities and basic capabilities. The emphasis on "thoroughness" is because the thorough grasp of basic capabilities and underlying capabilities determines the height of the company's competitiveness. At present, the company has made strong investment in operating system, database, middle office, algorithm, architecture, key materials and other aspects. At the breadth level, the company's R&D investment includes the first curve of wired, wireless and second curve of terminal services, server business, storage business, digital transformation applications and other technologies. At present, in these areas, companies can meet the needs of the market through the building block transformation of the structure. The future business will be balanced according to the scenario in the cloud, network, terminal configuration, when the company in the cloud, network, terminal three have R & D capabilities, no matter how the future changes, you can freely innovate according to customer needs. In summary, the company pulls the market competitiveness of current products at the point level, keeps the competitiveness of the company's products stable at the depth level, and realizes rapid innovation and iteration in the field of excellence at the level of breadth. We will make good use of R&D investment to enhance product competitiveness and better return investors.
Q: In 2021, the company's net profit after deducting non-deductions increased significantly year-on-year, hitting a record high, and we did see the results of the company's efforts to take into account both scale and profitability, attach importance to the quality of operations, and improve profitability. Below, I would like to ask three questions: (1) Gross profit margin, the company's gross profit margin increased in the first three quarters of 2021, but why did it have a large adjustment in the fourth quarter? How to look forward to the gross margin level in 2022? (2) Expenses, in 2021, the company's sales, management, research and development expenses totaled an increase of about 20% year-on-year, the number of employees in the company is basically stable, the company just explained that the same period in 2020 affected by the epidemic costs are at a low level, if you exclude the low base in 2020, what is the year-on-year increase in the company's three expenses? What are the future trends? (3) Next Monday, the company will disclose the results of the first quarter of 2022, how does the company view the overall operation in the first quarter? How to look forward to the full year 2022 revenue and net profit trends?
A: (1) Gross profit margin In the fourth quarter of 2021, the decline in gross profit margin in the single quarter was mainly affected by the pace of capital expenditure of domestic operators, while the company's consumer business revenue grew rapidly, resulting in changes in product revenue structure in the fourth quarter. In 2021, the capital expenditure of domestic operators in the second half of the year accounted for a relatively large proportion, the scale of 5G base stations was mainly concentrated in the third quarter, and the company's operator network revenue needed to be gradually confirmed according to the delivery rhythm and delivery progress, so the relevant revenue recognition existed across the period; consumer mobile phone products and home information terminals belonged to products with faster delivery and revenue recognition, and the single quarter consumer business revenue in the fourth quarter still maintained a month-on-quarter growth compared with the third quarter. In 2022, we will continue to tap the growth points of gross profit margins, and the challenge goal of improving gross profit margins is also an important consideration for the company's operation, and the value of R&D investment will gradually be realized into the gross profit margin. It is expected that the gross profit margin in 2022 will remain relatively stable compared with 2021, and strive to improve on page 5, but due to the impact of various products, markets, revenue structure and other factors, the gross profit margin may fluctuate between the quarters. (2) If the impact of low base factors in 2020 is excluded, the three expenses of sales, management and research and development in 2021 will have a total increase of 10%--15% year-on-year. The company determines the investment trend and direction of the three expenses according to the rhythm of strategic objectives and budget planning. In 2021, the R&D expense ratio increased, and the sales and management expense ratio was basically flat or slightly reduced, maintaining the same trend in the past three years. The R&D expense rate of 16.4% in 2021 is low compared with the R&D expense ratio of peer main equipment manufacturers. Among the three expenses, the proportion of which is relatively large and the investment is larger is the research and development expense, and the research and development expense rate will comprehensively consider the company's overall profitability, research and development needs, research and development investment intensity and input-output ratio. In the sales cost, the company to expand the consumer market, the need to moderately increase advertising investment, in the past three years, the company's sales cost control effect is better, we are also confident in increasing advertising investment at the same time, continue to effectively control sales costs. In terms of expense management, continuous improvement of management efficiency through digital transformation will continue to improve cost efficiency. (3) 2022 First Quarter Results and Annual Results Guidelines The first quarter results of 2022 will be disclosed next Monday, please pay attention to the company's announcement. In 2022, the company will maintain the leading position in key technologies and the increase in value market share, focus on improving efficiency, seek progress in stability, consolidate the first curve, and actively develop the second curve, we are confident that we will achieve sustained growth in revenue and net profit in 2022.
Q: The company's stock price continues to fall, how does the company think? Does the current share price reflect the value of the company? Does the company have any plans to boost its share price?
A: Regarding stock prices and market capitalization, not only the majority of investors are concerned, but we are also concerned. I would like to share a few views from the company's perspective: First, the company's fundamentals: since the second half of 2018, the company has experienced a recovery period, a period of development, and now entered a period of transcendence, during which the company has been growing steadily and its operating conditions have improved significantly. From the perspective of asset quality, in the past three years, from the end of 2018 to the end of 2021, the company's total assets increased from 129.4 billion yuan to 168.8 billion yuan, an increase of 31%; net assets increased from 22.9 billion yuan to 51.5 billion yuan, an increase of 125%; the return on net assets increased from -26.1% to 14.5%; and the asset-liability ratio fell from 74.5% to 68.4%, a decrease of 6.1 percentage points. From the perspective of operating quality, the report of Ms. Li Ying, the financial director just now, also mentioned that the net profit attributable to the mother in 2021 will reach 6.81 billion yuan, especially after deducting non-operating profits, the operating profit will be from 480 million yuan in 2019 to 1.04 billion yuan in 2020 to 3.31 billion yuan in 2021, reflecting the company's main business profitability in a significant increase and improvement, I believe it will continue to improve! In addition, the operating cash flow from 7.5 billion yuan in 2019 to 10.2 billion yuan in 2020 to 15.7 billion yuan in 2021, the company really focuses on cash flow first and controls operating risks. Second, the company attaches great importance to the interests of shareholders, and cash dividends continue to increase. In 2021, the company intends to pay cash dividends of 0.3 yuan per share, and the company's cumulative cash dividends from 2019 to 2021 are expected to reach 3.3 billion yuan, accounting for about 20% of the net profit attributable to the company's shareholders in the past three years, accounting for about 36% of the company's cumulative cash dividend amount of 9 billion yuan since its listing in 1997. Third, we are also concerned about the trend of stock prices in the technology sector, including companies, year-to-date. Based on its confidence in its own operation and boosting the confidence of the market, the company has submitted to the shareholders' general meeting for consideration of the authorization plan for the repurchase of A-share shares in 2022. The company will consider the implementation of the opportunity according to the market conditions, and we have been considering and arranging these things. Fourth, doing a good job in the company's performance is fundamental. The company's management has always been very concerned about the performance of the company's capital market and strives to strengthen communication and communication with investors. 2022 is the beginning of the company's strategic transcendence period, what the company needs to do is to continue to build the core competitiveness of the company's product technology, comprehensively enhance market share, achieve scale profitability, accelerate the development of government and enterprise and terminal business, increase the intensity of new business expansion, and achieve the strategic goal of entering the global top 500 as soon as possible. We run and develop the company well, and believe that the market will give the company a reasonable valuation.
Q: 2022 is the third year of domestic 5G scale construction, according to the domestic operators' 2021 annual performance promotion materials, operators expect that the total capital expenditure in 2022 will increase by about 4% year-on-year, basically in line with our previous expectations, but the capital expenditure structure has undergone great changes, 5G investment has begun to decline, computing infrastructure-related investment has grown significantly, and under the operator's cloud network transformation strategy, the direction of capital expenditure investment has undergone a substantial change. In the face of the above changes, how can the company achieve revenue growth for traditional advantageous equipment for operators in the context of declining domestic 5G investment? How can the company grasp the new market opportunities brought about by the operator's cloud network transformation strategy, establish the competitive advantage of related equipment, and achieve rapid revenue growth?
A: Just now I talked about the breadth of R&D investment, covering traditional wired and wireless networks, computing power and cloud, home information terminals and mobile phones, and the three points of cloud, network and terminal constitute a stable ICT triangle. No matter how the ICT industry converges, the associated investment and profit are within this triangle. The company adheres to the breadth of R&D investment to ensure that operators and partners still have strong anti-risk capabilities in the process of shifting the value chain from cloud, network and terminal, and can also seize the opportunity points in the transformation process. Indeed, as you said, the investment structure of domestic operators is gradually changing, which is also the deepening of the process of matching the development of the 5G market and the process of industrial digitalization. The essential driver of investment still comes from market demand: according to the consulting firm IDC, the average annual compound growth rate of global data volume in the past decade is close to 50%; the aging of the population and low carbon are accelerating the digitization process; and under the policies or trends of east and west, marginal computing power, and low carbon, operators are playing a more important role. Based on the company's deep understanding of the operator and the company's core competitiveness, it is believed that the company can continue to benefit. Further explanations are taken from two dimensions below. (1) In the traditional network market of operators, we have seen positive changes in the domestic operator market. In 2021, domestic operators mobile and fixed-line ARPU have basically rebounded from the previous year, and the total service revenue has increased by nearly 8% year-on-year. By the end of 2021, 1.425 million 5G base stations will be built and opened in China. In the traditional network market of operators, relying on R&D capabilities and technical capabilities, as well as the understanding of the market for up to 20 years, the company will continue to strengthen the competitiveness of product solutions from performance, efficiency, intelligence, low carbon and security, consolidate and enhance the existing pattern, and strive to achieve the transformation from mainstream suppliers to core suppliers, and more importantly, it is necessary to achieve the transformation of strategic position, from meeting demand to leading demand, from following the market to leading the market, and ultimately supporting performance growth. (2) In the operator cloud network transformation market, domestic operators rely on the advantages of ubiquitous access wireless and end-to-end wired access networks, strengthen the capabilities of cloud and computing, gradually realize cloud-network integration, provide differentiated converged digital services, and evolve to computing power networks. In the process of cloud-network transformation, we understand that operators still take the network as the starting point and combine the capabilities of cloud and computing to carry out efficient coupling construction. The network is the foundation, the cloud is the opportunity, the access network, infrastructure, and the ability of the middle office are the key directions for the transformation of the operator's investment structure, and are still the more competitive parts of the company's cloud, network, and terminal capability triangle. The company is positioned to "harmonious symbiosis" with operators in cloud network transformation, and the cooperation with operators includes an end-to-end, comprehensive and innovative combination. The company deeply understands the changes of operators' cloud network transformation to the network and the construction requirements of cloud network capabilities, deeply combines its own basic ICT equipment capabilities, software development capabilities, integration and innovation capabilities with the operators' cloud network transformation needs, and exerts efforts on the key points of cloud-network integration and computer-network integration, providing suitable products and solutions, including servers and storage, chips, operating systems, video middle offices, data centers, etc., as well as more industrial digital custom networks and customized capabilities of industrial operation domains. In the past two years, the company has quickly customized servers and storage, available database alternatives, and data center solutions for operators. In February 2022, the company ranked in the top two of China Telecom's multiple standard packages for server collection from 2022 to 2023, and ranked first in the "standard package 1" of China Unicom Cloud Server Collection. The company's ability in the field of "network" continues to improve, at the same time, in the transformation of operators' "cloud" and "computing", it maintains cooperation and symbiosis, full joint innovation, full demand understanding, and full market operation. Therefore, whether it is the investment of operators in the network or in the cloud, the company has the ability to obtain a better market share and continue to maintain the overall revenue growth of the domestic operator market.
Q: In the traditional network market of operators
A: We have seen positive changes in the domestic operator market. In 2021, domestic operators mobile and fixed-line ARPU have basically rebounded from the previous year, and the total service revenue has increased by nearly 8% year-on-year. By the end of 2021, 1.425 million 5G base stations will be built and opened in China. In the traditional network market of operators, relying on R&D capabilities and technical capabilities, as well as the understanding of the market for up to 20 years, the company will continue to strengthen the competitiveness of product solutions from performance, efficiency, intelligence, low carbon and security, consolidate and enhance the existing pattern, and strive to achieve the transformation from mainstream suppliers to core suppliers, and more importantly, it is necessary to achieve the transformation of strategic position, from meeting demand to leading demand, from following the market to leading the market, and ultimately supporting performance growth.
Q: In overseas markets, uncertainties such as the COVID-19 pandemic and geopolitics have caused the company's overseas market revenue growth in the past two years to be in single digits, compared with the double-digit growth of domestic market revenue for two consecutive years. The globalization strategy is one of the three insistences of the company, looking forward to the future, has the company's globalization strategy been adjusted? How does the company view the revenue growth trend and momentum in overseas markets in 2022?
A: For overseas markets, the company has always adhered to the globalization strategy. In the past two years, in the face of the new crown epidemic, the challenges of the external environment and the pressure on investment in overseas communication markets, the company's strategy is to remain sober, not to blindly expand, adhere to the focus on efficiency, and operate steadily. In 2022, in the post-epidemic era, the company's view of overseas markets is to embrace change and look forward to the future. The changes in overseas markets are mainly reflected in the following three aspects: First: changes in investment In the past two years, investment has been under pressure under the epidemic, and capital expenditure of overseas operators has declined except for China. At the same time, the outbreak of household demand, the company seized the demand opportunities brought about by the outbreak of home broadband copper to light, bearing and home information terminals, and achieved overseas performance against the trend. In the next 3-5 years, wireless mobile investment demand will rebound. Investment in 5G base stations is expected to grow by a certain amount each year, and these investment changes bring opportunities to the company. Second: Changes in Competition Over the past few years, companies have grown in European, Latin American, Asian and African markets. This is due to the continuous improvement of the competitiveness of the company's products, which has achieved one of the best in the industry. China's 5G construction is moderately advanced, and large-scale complex application scenarios have also allowed the company to reap the dividends of cost leadership, technology leadership and commercial leadership in the global competition. The improvement of product competitiveness has also brought about the growth of market accessibility space and the improvement of market position. Customers choose companies not only for business, but also based on leading product competitiveness and the value of long-term sustainable development to customers. Third: in the past two years, overseas through the focus on efficiency improvement, the operating structure and quality are continuously improved and improved, the big country T revenue accounted for 70%, the impairment of accounts receivable fell sharply, and the overseas per capita efficiency continued to increase for three consecutive years; at the same time, in response to the epidemic, the company continued to pay attention to digitalization, local team building, and the improvement of local team capabilities, and has made great progress. The healthy operation of overseas markets and the consolidation of the foundation give the company the confidence to embrace these changes, strengthen strategic breakthroughs and steady operation around the big T network of big countries, and achieve quality growth.
Q: In the past two years, in the mobile phone business, the company has continued to increase investment in products, brands and channels, hoping to seize the market development opportunities of mobile phone products. We also see Wu Jing hired as an image spokesperson; Launched ZTE Axon40 series mobile phones, and cooperated with Xinhua network to witness the victorious return of Shenzhou 13, how does the company "break the game" in the domestic market to achieve the company's mobile phone business in the domestic and international markets have a good development? How is the specific development path planned?
A: The company's consumer business, including mobile phones, is an important part of the end-to-end complete communication solution and one of the directions supporting future business growth, and the company will firmly develop the consumer business. In 2021, the company's consumer business revenue increased by nearly 60% year-on-year, of which mobile phone product revenue increased by nearly 40% year-on-year. Specific to the mobile phone business, in 2022, the company insisted on making efforts in "product + brand + channel" to promote rapid growth in performance. In terms of products: the company's technology accumulation in the field of communications, years of product research and development capabilities in the consumer field, and capabilities in chips, operating systems, etc., constitute an important pillar of the company's consumer business product competitiveness. In mobile phone products, we insist on creating features from the two most important aspects of display and video. As the pioneer of the under-screen camera phone, in 2020 and 2021, we launched the first and second generation of mass-produced under-screen camera phones Axon20 and Axon30 in the world, respectively; in 2021, the Axon30 series mobile phones took the lead in the industry to launch three-main camera computational photography, and in February 2022, NubiaZ40Pro launched the exclusive custom optical 35mm humanistic imaging master lens in the world. In terms of brand: 2022 ZTE mobile phone strengthens the brand positioning of big country technology, emphasizes the brand gene of daring to innovate, signs Wu Jing as a spokesperson, and carries out online and offline brand launch and product exposure according to the rhythm of new product listing and promotion. In addition to ZTE mobile phones, the company also has two mobile phone brands, Nubia and Red Devils. Among them, the Nubia Z series is positioned in the young population, and we are constantly trying new ways to play to cater to young consumers. The Red Devil brand focuses on the top equipment of mobile games, with the goal of creating the top domestic game mobile phone brand, and has accumulated a certain brand awareness and reputation in the mobile game circle. In the channel: channel construction is very important, since the end of 2020 announced the return to the domestic mobile phone market, the company to promote the construction of domestic offline channels, attach importance to channel quality, choose to believe in the company and willing to cooperate with the company's long-term channel partners, by the end of 2021 to build more than 6,000, is expected to reach 10,000 in 2022. In 2022, the company will still release competitive models, strengthen brand investment and channel construction in the domestic market, and continue to improve the fine operation capabilities in major major countries in overseas markets, and promote the mobile phone business to become an important driving force for the company's revenue growth due to national policies.
Q: In February this year, the National Development and Reform Commission and other departments jointly issued a document to comprehensively launch the East And West Calculation Project; During the two sessions in March, the government work report focused on promoting the development of the digital economy; The digital economy and the eastern and western mathematics have become the key areas of national development. In terms of industry, Huawei has set up a team and the company has also set up a special team, hoping to land 5G industry applications and seize the industrial digital opportunities brought by the digital economy. We have also noticed that the company has been increasing its investment in data center products since the end of 2020, and can now fully participate in the East Counting And West Calculation Project. How will the company grasp the landing opportunities of the digital economy and the East And West Calculation Project in the future?
A: Whether it is the digital economy, the east and the west, the opportunities and outlets are left to those who are prepared, only by accurately understanding the key trend changes, can we achieve the expansion of the "ability boundary" and "market boundary", the most important thing is to create value for customers, in order to better grasp the opportunity and achieve leapfrog development. Let's start with the digital economy. The digital economy covers two parts of digital industrialization and industrial digitalization, both of which are in the period of technological fusion and fission, whether it is cloud, edge, end, computing power and network, or software and hardware, will form a more blurred boundary, mutual synergy and integration evolution has become the key to improving service quality and efficiency. The company's core advantage lies in the continuous accumulation of ICT's end-to-end full-stack core capabilities, as well as products, solutions and systematic service capabilities, which allow us to better embrace this change and seek "change" in "change". Based on this, the company is driven by customer value and combined with its own resource endowments, focusing its business on "efficient digital infrastructure" in digital industrialization and "tradable digital capabilities" in industrial digitalization. "Efficient digital infrastructure" is mainly aimed at digital industrialization, including two technical fields: network and computing power. For network product and solution innovation, the company focuses on building "minimal infrastructure" and "intelligent and efficient operation" to help operators continue to expand the depth and breadth of the network, that is, to build a "good" network; on the other hand, to achieve more efficient and large-scale expansion of different scenario applications, to help operators improve network efficiency and resource realization, that is, "use" a good network. "Tradable Digital Capabilities" is mainly aimed at industrial digitalization. The core demand of industrial digitalization is to reduce costs and improve efficiency and survive and develop, due to the differences in industry scenarios and enterprise development stages, the digital application of the industry obviously shows fragmented characteristics. At the same time, because industrial digitalization is still in the expansion period, it must go through the process of innovation trial and error, business model exploration and ecological incubation. The company's "tradable digital capabilities" will "atomize" digital infrastructure capabilities, "componentize" cloud capabilities, and make secondary innovations in combination with scene applications, so as to achieve capability reuse. At the same time, for specific industries, the company sets up a special team organizational form to ensure the rapid gathering of resources and professional deep ploughing of the industry market. Let's look at the east and west. The simple meaning of the eastern number and western calculation is to send the massive data generated by the economically active area in the eastern region to the western data center with rich green energy for processing, so as to achieve complementary resource advantages, optimize the regional economic layout, drive the coordinated development of the industrial chain, and achieve the green and low-carbon sustainable development of society. As a national key strategic project, the investment scale of Dongshu Xisuan is large, the construction period is long, not only including data centers, but also has corresponding needs for high-speed data center direct connection networks and interconnection networks, and also involves cloud network collaboration and computing network integration; in addition, data center energy conservation and emission reduction are also the key consideration directions. The above core planning, are the advanced products and technologies, multi-technology integration capabilities, overall design, etc. put forward higher requirements, the company in these product areas have a deep technical accumulation and a wide range of market applications, has the ability to play a huge role in the "East number west calculation" project, the company's data center, server and storage, data communications, optical transmission and other products and related solutions also have the opportunity to expand a larger market space.
ZTE's main business: Committed to providing customers with satisfactory ICT products and solutions, integrating "design, development, production, sales, and service", focusing on "operator network, government and enterprise affairs, consumer business"
ZTE's 2022 first quarter report shows that the company's main revenue was 27.93 billion yuan, up 6.43% year-on-year; net profit attributable to the mother was 2.217 billion yuan, up 1.6% year-on-year; deducted non-net profit of 1.952 billion yuan, up 117.13% year-on-year; of which in the first quarter of 2022, the company's single-quarter main revenue was 27.93 billion yuan, up 6.43% year-on-year; single-quarter net profit attributable to the mother was 2.217 billion yuan, up 1.6% year-on-year. In the single quarter, the non-net profit was 1.952 billion yuan, up 117.13% year-on-year; the debt ratio was 69.14%, the investment income was 19.040 million yuan, the financial expense was 53.076 million yuan, and the gross profit margin was 37.78%.
A total of 26 institutions have given ratings, 21 buy ratings and 5 overweight ratings in the last 90 days; the average target price of institutions in the past 90 days has been 36.8.
Here is detailed profit forecast information:
Margin data shows that the stock has a net outflow of 465 million yuan in the past three months, and the balance of financing has decreased; the net outflow of margin is 57.904 million, and the balance of margin has decreased. The Securities Star Valuation Analysis Tool shows that ZTE (000063) has a good company rating of 3 stars, a good price rating of 2.5 stars, and a valuation comprehensive rating of 3 stars. (Rating Range: 1 ~ 5 stars, maximum 5 stars)
The above content is compiled by Securities Star based on public information, if you have any questions, please contact us.
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