[ET Net News Agency, 29 August 2019] Citi Research lifted its target price for ZTE
Corporation (00763) to HK$15 from HK$14 and maintained its "sell" rating.
The research house said ZTE's 1H net profit of Rmb1.5bn was largely in line with
consensus. Gross margin increased to 37.1% in 1H from 36% in 2H 2018.
ZTE guided Rmb2.3bn-Rmb3.1bn net profit in 3Q, mainly driven by a gain of Rmb2.6bn to
Rmb2.9bn on sale of land. Positive was stable China sales growth and 4G sales recovery in
developing markets. However, benefits from 5G could disappoint the market partly due to
possible network sharing of China telcos.
Citi raised its FY2019 earnings by 17% after incorporating Rmb2.75bn gain on sale of
land and increased FY2020-21 earnings by 1-5% mainly on higher revenue assumptions. (KL)