ZTE’s (000063) Investment Value Analysis Report: A Great Power of the Country, Phoenix Nirvana

ZTE’s (000063) Investment Value Analysis Report: A Great Power of the Country, Phoenix Nirvana

ZTE: The operation resumed, and the leading level was stable.

The company is the world’s fourth largest telecommunications equipment manufacturer by revenue scale, and its historical revenue scale has steadily increased.

In July 2018, the ZTE embargo reached a settlement. ZTE paid a US $ 1.4 billion fine to the US, and the US merchandise sales ban was lifted.

With the optimization of the company’s operation 杭州夜网 management and the restoration of production operations, ZTE has successively won bids for operators’ equipment collection orders, which is expected to continue to deeply benefit from 4G capacity expansion and 5G construction.

In January 2019, the company announced that it will restart the fixed increase, supplement the company’s liquidity and increase its 5G R & D efforts.

The company’s 19Q1 net profit was 8.

6.3 billion, with previous losses and net cash flow from operating activities.

600 million, a significant improvement in performance.

  5G: Investment scale is expected to reach 1.

2 trillion, the Huawei incident catalyzed the significant acceleration of China’s 5G construction.

  In June 2019, the Ministry of Industry and Information Technology stated that it will issue 5G commercial licenses.

We estimate 夜来香体验网 that the scale of China’s domestic 5G construction period is expected to reach 1.

2 trillion, which is 1 in the 4G period.

5 times.

At present, the three stages of domestic 5G technology verification tests have been basically completed, and domestic equipment manufacturers have passed most of the tests with continuous performance standards. The three major operators have obtained 5G test spectrum licenses, and 19 years will become the first year of 5G construction.

All major mobile phone manufacturers in MWC2019 have launched 5G terminals, which is expected to promote the commercial process of 5G.

  Main equipment: 5G construction has benefited significantly, and domestic manufacturers have performed well.

The main equipment accounted for 50% of the investment in 5G, which is the largest investment in the industrial chain.

After years of global mergers and acquisitions of major equipment manufacturers, Huawei, Ericsson, Nokia, and ZTE have become the world’s top four. R & D capabilities and product performance have become the keys to obtaining orders.

Based on the technology and product advantages accumulated in the 4G cycle, Huawei ZTE has abundant foreign alternatives in 5G test and verification, and the number of commercial contracts.

  ZTE: 5G construction weathervane, it is estimated to increase the space for improvement.

The company’s operator business has always been a mainstay, and the development of 5G network construction will drive the company’s performance to achieve significant growth.

In terms of 5G technology accumulation, ZTE’s massive MIMO technology has been commercialized in many countries around the world.

Under the estimation of ZTE’s 3G and 4G construction period, we found that before the peak construction period, the average PE of ZTE is estimated to be about 30X?
35X, PE estimates that the offset is around 45X, there is always the possibility of improvement.

  Profit forecast, evaluation and rating.

The Huawei incident has accelerated the construction of 5G. We believe that the embargo event will not change the pattern of ZTE ‘s industry giants. The company is still the vane of 5G construction and will benefit significantly from 5G construction.

We expect ZTE 19?
Net profit attributable to mother 48 in 21 years.

90, 60.

50 and 70.

3.3 billion yuan, corresponding to EPS1.

17 yuan / 1.

44 yuan / 1.

68 yuan.

According to current expectations, ZTE has a market value of about 117.6 billion yuan, corresponding to 2019?
PE will be 26X, 21X, 18X in 2021, maintaining the “Buy” rating.

  Risk warning: Trade friction escalates, 5G progress is less than expected, fierce competition affects profitability