> **来源：[研报客](https://pc.yanbaoke.cn)** # ZTE (763 HK) Summary ## Core Content ZTE released its FY25 financial results, showing a revenue increase of 10.4% YoY to RMB134bn, slightly below both the company's and Bloomberg's estimates. However, net profit declined significantly by 33.3% YoY to RMB5.6bn, which is also below the estimates. The gross margin (GPM) dropped to 30.3%, a decline of 7.7ppts from the previous year, primarily due to a higher proportion of sales in the Enterprise & Government (E&G) segment. In 4Q25, ZTE's revenue increased by 6.8% YoY and 15.2% QoQ to RMB33.3bn, while net profit fell by 42.9% YoY but rose by 11.9% QoY to RMB296mn. The company maintains a BUY rating with an adjusted target price (TP) of HK$38.6, down from HK$42, based on a 25.0x 2026E P/E multiple. Peers are trading at a lower multiple of ~24.0x 2026E P/E. ## Main Points - **Revenue Growth**: ZTE reported strong top-line growth, with a 10.4% YoY increase in FY25 and a forecast of 11.3% growth in FY26E. - **Margin Pressure**: The gross margin declined to 30.3% in FY25, and is expected to further drop to ~29% in FY26E due to the increased focus on E&G sales. - **Segment Analysis**: - **Carrier**: Revenue declined by 10.6% YoY in FY25, though overseas carrier revenue remained resilient with double-digit growth. The segment margin dropped to 48.1% from 50.9% in FY24. - **E&G**: Emerged as the second growth engine, with revenue more than doubling to RMB37bn in FY25. AI compute revenue surged by 150% YoY, driven by partnerships with major domestic hyperscalers. However, the segment margin fell to 11.0% from 15.3% in FY24, and is expected to grow by ~30% in FY26E. - **Consumer**: Revenue grew by 4.4% YoY to RMB34bn in FY25, with the segment remaining broadly stable. The consumer segment is expected to grow modestly by mid-single-digit in FY26E, while the family network segment saw margin pressure. ## Key Financial Figures | Metric | FY23A | FY24A | FY25E | FY26E | FY27E | |--------------------|------|------|------|------|------| | Revenue (RMB mn) | 124,251 | 121,299 | 133,895 | 148,992 | 168,360 | | YoY growth (%) | 1.1 | -2.4 | 10.4 | 11.3 | 13.0 | | Gross margin (%) | 41.5 | 37.9 | 30.3 | 29.1 | 28.5 | | Net profit (RMB mn)| 9,326 | 8,425 | 5,618 | 6,496 | 9,041 | | YoY growth (%) | 15.4 | -9.7 | -33.3 | 15.6 | 39.2 | | P/E (x) | 11.4 | 12.7 | 19.2 | 16.5 | 11.9 | ## Outlook and Strategy - The company remains in a transitional phase as its revenue mix evolves. - The focus on E&G and AI server sales is expected to drive future revenue growth, though margin pressure is likely to persist. - Despite margin challenges, the company is maintaining its BUY rating, reflecting continued confidence in its growth potential. ## Analyst Notes - **Target Price**: HK$38.6 (from HK$42). - **Price Performance**: 12-month absolute return of -21.1%, relative to the market of -22.1%. - **Earnings Revisions**: New estimates show a decline in revenue and profit compared to old estimates, with the most significant drop in FY26E net profit. ## Peer Comparison | Company | Mkt Cap (US$ mn) | FY26E P/E | FY27E P/E | FY26E EPS (US$) | FY27E EPS (US$) | FY26E GPM | FY27E GPM | |-----------------|------------------|----------|----------|-----------------|-----------------|----------|----------| | IEIT Systems | 000977 CH | 23.3 | 18.5 | 0.37 | 0.46 | 6.5 | 9.4 | | Huaqin Tech | 603296 CH | 12.698 | 17.3 | 0.72 | 0.89 | 9.4 | 10.8 | | Foxconn | 601138 CH | 156,486 | 17.2 | 0.46 | 0.58 | 6.8 | 6.8 | | Ruijie Network | 301165 CH | 9,807 | 45.2 | 0.27 | 0.37 | 33.5 | 33.5 | | Star-Net | 002396 CH | 2,529 | 16.0 | 0.27 | 0.34 | 32.6 | 32.6 | | Average | - | 23.8 | 18.5 | 0.42 | 0.53 | 17.8 | 17.8 | ## Analyst Certification The research analyst certifies that the views expressed in the report accurately reflect their personal views and confirms no conflicts of interest in relation to the covered securities. ## CMBIG Ratings - **BUY**: Potential return of over 15% over the next 12 months. - **HOLD**: Potential return of +15% to -10% over the next 12 months. - **SELL**: Potential loss of over 10% over the next 12 months. - **NOT RATED**: Not rated by CMBIGM. - **OUTPERFORM**: Industry expected to outperform the relevant broad market benchmark. - **MARKET-PERFORM**: Industry expected to perform in-line with the relevant broad market benchmark. - **UNDERPERFORM**: Industry expected to underperform the relevant broad market benchmark. ## Important Disclosures - The report is not investment advice and does not guarantee accuracy or completeness. - CMBIGM is not a registered broker-dealer in the U.S. and the report is only for major U.S. institutional investors. - The report is distributed in Singapore by CMBISG, an Exempt Financial Adviser, and is subject to Singapore's Financial Advisers Act.