ICT industry leader, comprehensive layout of the “network, computing, end” industry chain. As a leader in the domestic infrastructure industry, ZTE is gradually developing and transforming into a full-stack full-scenario intelligent computing solution provider, continuously increasing its market share by continuously strengthening the competitiveness of DICT's full range of end-to-end products and digital intelligence solutions. The company continues to cultivate businesses such as servers, switches, smart terminals, automotive electronics, operators, etc., and is actively building ecological integration in the industrial chain. In 2024, the company continued to launch a variety of industry-first products around the four major technological innovation capabilities of AI models, satellite communication, 5G-A, and naked eye 3D, including the world's first 5G+ AI 3D tablet, the Red Magic 9 Pro series, the flagship mobile phone Red Magic 9 Pro series, the all-round imaging flagship Nubia Z60 Ultra with AI multi-scene experience, the small folding Nubia Flip, and the 100 yuan AI smartphone Nubia Maverick. On the server side, the company provides high-performance training servers, cost-effective inference servers, out-of-the-box all-in-one training and promotion machines, a full range of integrated computing servers, and high-performance file storage to meet diverse intelligent computing construction needs from the center to the edge.

Intelligent computing capabilities continue to be upgraded, and low-altitude and chip tracks are gaining momentum. The company has accumulated 5G and intelligent computing technology to enable the development of the low-altitude economy. The company relies on 5G-A integrated technology to build a low-altitude intelligent network, which can achieve the goal of widespread “connection” and easy “management” of drones; it pioneered the self-receiving 128TRAAU device for low altitude, which can support a large 65° angle, which can better balance ground and low-altitude communication requirements, and ensure the stability and reliability of terrestrial and low-altitude communication. The company continues to strengthen investment in advanced process design, advanced architecture and package design, core intellectual property rights, and an efficient digital development platform. It already has industry-leading full-process chip design capabilities, and has set up a subsidiary, ZTE Microelectronics, to focus on developing chip technology. The company uses self-developed chips to accelerate innovation in the fields of wireless, IP networks, switches, automotive electronics, etc.

The company launched the first domestically produced vehicle networking chip and chip-level SoC solution that supports C-V2X, customizing products that meet the application needs of the local market to help create a diversified industrial safety ecosystem; full-stack self-developed 4G vehicle-grade modules have been mass-produced and installed in SAIC passenger cars, as well as brands such as SAIC Chase, Dongfeng Nissan, and FAW Hongqi, and launched the first automotive-grade 5GR16 module built on a full-stack self-developed chip platform in China.

Profit forecasting and investment ratings. We predict that the company's net profit for 2024-2026 will be 10.117/11.253/12.568 billion yuan, and the current stock price is 14/13/12 times PE, respectively. As a leader in the domestic ICT industry, we are continuously accelerating the expansion from connectivity to computing power, focusing on the rapid development of Daguo Dagang's Big T strategy. The company's performance may maintain steady development and maintain a “buy” rating.

Risk warning: risk of new product development falling short of expectations; risk of international political and trade conflict; risk of increased competition; risk of intellectual property disputes.