Macquarie Research expects the net income of ZTE Corporation (00763) will increase to Rmb4,386m in 2017 (vs. net loss of Rmb2,211m in 2016) mainly driven by overseas expansion in US, EU and emerging markets with sustainable market share in domestic carrier networks.
The research house believes the share gain story against major overseas peers such as Nokia/Ericsson should continue on the company's comprehensive product lines and the ease of clients' concerns about the investigation.
In May, ZTE won China Mobile's massive purchase for 2017 PTN (Package Transport Network) projects with 70% order allocation guaranteed. Macquarie expects the PTN bidding win to strengthen ZTE's supply chain position in the domestic wireline market.
Macquarie maintained its target price of HK$17.5 and a rating of "outperform" for ZTE.
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