[ET Net News Agency, 17 March 2021] BofA Global Research cut its target price for ZTE
Corporation (00763) to HK$30 from HK$34 and reiterated its "buy" rating.
The research house said the three domestic mobile operators began the deployment of 600k
5G base stations since 2Q 2020 (rollout was impacted in 1Q due to Covid-19 outbreak).
Therefore, BofA noted the notable increase in operating revenue from 2Q onwards.
BofA trimmed its 2021-22 EPS forecasts by 8-14% to reflect (1) that 5G rollout in ASEAN
markets is only at the infancy stage; (2) sales of 5G products to overseas markets (eg,
Europe) may experience hiccups due to regulatory constraints; (3) higher selling expenses
to promote ZTE's 5G products to ex-China markets; and (4) R&D costs remain at roughly
13-15% of operating revenue. (KL)