Q3 业绩同环比下滑，随运营商capex 下行短期承压。一方面随着国内运营商5G 投资强度下降以及海外运营商5G 投资高峰暂时经过，公司需要强化“连接+算力”双引擎以巩固短期业绩。另一方面Q3 毛利率40.4%，同比下行4.3pct，环比+1.4pct，或受到政企+消费者业务收入占比提升拉低综合毛利率影响。政企业务收入结构变动对盈利能力造成一定影响。费用率方面，公司Q3 期间费用率环比略有提升， 其中销售/ 管理/ 研发费用率分别为8.0%/3.6%/21.5%，环比分别+1.2pct/+0.2pct/+1.6cpt，总体上公司仍然坚定研发投入，在市场营销上聚焦大国大T 和重点政企渠道伙伴，费用控制较为有效。Key points of investment:
The company released its 2024 three-quarter report. In the first three quarters of 2024, the company achieved revenue of 90.045 billion yuan, +0.73% year over year; net profit to mother of 7.906 billion yuan, +0.83% year over year; net profit of 6.898 billion yuan after deduction, -2.86% year over year. Among them, in the 24Q3 single quarter, the company achieved revenue of 27.557 billion yuan, -3.94% YoY, -13.64%; net profit to mother 2.174 billion yuan, -8.23% YoY, -27.33% month-on-month; net profit after deduction of 1.935 billion yuan, -11.73% YoY and -16.40% YoY.
Incident reviews:
Q3 performance declined month-on-month, putting pressure on operators as capex declined in the short term. On the one hand, as domestic operators' 5G investment intensity declines and overseas operators' 5G investment peak temporarily passes, the company needs to strengthen the “connection+computing power” dual engine to consolidate short-term performance. On the other hand, the Q3 gross profit margin was 40.4%, down 4.3 pcts year on year, and +1.4 pct month on month, which may be affected by the increase in the share of government enterprise+consumer business revenue, which lowered the overall gross margin. Changes in the revenue structure of government and enterprise services have had a certain impact on profitability. In terms of cost rates, the company's expense ratio increased slightly from month to month during Q3. Among them, sales/management/ R&D expenses were 8.0%/3.6%/21.5%, respectively, and +1.2pct/+0.2pct/+1.6cpt month-on-month, respectively. Overall, the company remained firm in R&D investment. In terms of marketing, it focused on Daguan T and key government and enterprise channel partners, and cost control was more effective.
The company has become a leading domestic server manufacturer in the telecommunications sector, and intelligent computing servers are expected to continue to grow.
The company determines intelligent computing as the main channel for long-term strategy and provides full-stack, full-scenario intelligent computing solutions. Based on its channel advantages in the operator market and deep understanding of the business, the company has become a leader in the domestic telecom server market. According to statistics from the Communications Industry Network on May 30, 2024, ZTE is at the top of the domestic telecom server market with a 23.03% share. Among the latest bid results for China Telecom servers (2024-2025), ZTE was shortlisted for 4 bids. Among them, GPU servers (A series) and c86 servers (G series) ranked first. In terms of government and enterprise intelligence, the company developed its own Nebula Big Model and actively expanded the application of models in industry, automobiles, steel, water conservancy, and urban lifeline. ZTE has also formed a differentiated system advantage through self-developed chips. Based on self-developed chips, it launched a 2*200G network card, promoted the OLink high-speed bus interconnection standard, and developed its own high-capacity switching chip, and carried out research on forward-looking technologies such as ultra-10,000 card clusters, native computing power, DCI intelligent computing centers, and inference task distribution.
Looking ahead to 2025:5G-A synergy brings new opportunities, and AI phones and intelligent connected vehicles are building new growth points. Synesthetic integration is the most imaginative and differentiated application scenario for 5G-A base stations. It is expected to deeply empower low-altitude economies, drones, smart cities, and vehicle-road collaboration. ZTE and its partners have verified the application of 5G-A sensing integration in various scenarios of logistics distribution and low-altitude safety in more than 80 pilots in 25 provinces and cities, including Beijing, Nanjing, and Shenzhen. In terms of AI phones, ZTE released the fully upgraded AI omnipotent imaging flagship Nubia Z60 Ultra and the AI+ satellite phone Nubia Z60S Pro, and launched the inclusive 5G phone ZTE Yuanhang 40S. Featured products such as Nubia Neo2, music, and focus will also be deeply exploited in markets such as Argentina, Ethiopia, and Germany. In the automotive electronics sector, the company made many “core” efforts. The joint car manufacturer released the self-developed automotive grade high-performance central computing unit SOC chip “Shake Domain M1”, signed the “Hongqi No. 1” superfluous chip with FAW of China, and achieved mass production of the first domestically produced car-grade dual-core 4G module.
Profit forecasting, valuation analysis, and investment suggestions: We believe that the company is operating steadily, and that the valuation system is expected to be reshaped as market trends improve. We recommend focusing on catalyzing events such as 5G-A, Ai phones, self-developed chips, etc., and re-evaluating the value of the company's intelligent computing business with self-developed chips. The company's net profit for 2024-26 is expected to be 9.53/10.3/11.15 billion yuan, up 2.2%/8.1%/8.2% year on year, corresponding EPS of 1.99/2.15/2.33 yuan, PE 13.5/12.5/11.6 times, maintaining the “Increased holdings -A” rating.
Risk warning: Risk of operators' capital expenditure continuing to decline in the short term; risk of worsening competition in the intelligent computing server market; risk of import control of high-performance GPU chips; risk of declining gross margin due to an increase in the share of non-operator business.
