The bank lowered ZTE 2018 to 2020 revenue forecast between 8% and 9%. It is expected that this year will achieve a loss of 1.06 yuan per share, while reducing the 2019 to 2020 earnings between 18% and 22% to reflect exports The ban affected and related fines, and the target price dropped from 27 yuan to 16 yuan. The bank stated that ZTE still has opportunities for development in the 5G era, but there are short-term uncertainties and the rating remains "neutral."
CCB International lowered the target price of ZTE Corporation (00763) from RMB23.8 to RMB14.96. Ratings remain "neutral." CCB International stated that ZTE will pay a total fine of 1.4 billion U.S. dollars and reorganize management. It is estimated that the company will have 30 billion yuan in cash by the end of 2017, which is enough to pay the fine, but it is estimated that the recovery of overseas business will take time and the current overseas business will account for Zhongxing. The 30% share of telecommunications network revenue is expected to respond to overseas customers' confidence in ZTE. The bank also expects that ZTE will restructure its business and place limited resources on the core telecommunications equipment market. Short-term operations face challenges while reorganizing the entire management team, which also exacerbates the uncertain outlook for 2018.
The bank predicts that in 2018, ZTE will shed about 7.4 billion yuan, and the original forecasted net profit will be 4.8 billion yuan. At the same time, the 2019 net profit forecast will be lowered by 21% to 4.641 billion yuan, and the target price will be lowered accordingly. Now it corresponds to 2019. The price-earnings ratio is 12 times. However, it is believed that ZTE will still be the main beneficiary of China's 5G investors. It is now recommended that investors wait until China buys a good signal for 5G investment.
Goldman Sachs issued a report that ZTE (00763) recently reached a settlement with the BIS (US Department of Commerce's Industry and Security Bureau) and was fined a total of 1.4 billion U.S. dollars and that the board of directors must be restructured in exchange for the U.S. cancellation of the seven-year export ban. Goldman Sachs issued a research report and expects that ZTE will resume operations within 60 to 90 days. It also said that after China's 5G demand has declined three years from 2016 to 2018, it expects to start recovery next year. It is believed that ZTE can benefit from this.
However, the report predicts that Zhongxing’s path is full of thorny roads. After two months of “shock” due to a ban on U.S. parts exports, the overseas business environment will become increasingly difficult, especially in Europe. ZTE has just started to obtain from local leading telecommunications operators. Growth momentum.
Goldman Sachs stated that, contrary to its earlier estimate of ZTE’s expansion in overseas markets, ZTE currently expects to gradually lose out of markets outside China and predicts that ZTE will face more stringent terms for customers and suppliers in pricing and payment. According to the bank's recent channel survey, some European telecommunications providers may have submitted claims to ZTE for delay in delivery. ZTE may also be barred from participating in certain bids. The channel survey also stated that some suppliers require ZTE to pay in advance before shipment of parts and components.
In addition, ZTE is required to appoint a special compliance coordinator for a period of ten years. Goldman Sachs expects this move to affect market sentiment, and the market may worry about future internal compliance issues or external customer/supplier disputes.
In response to the downward forecast of revenue and ZTE’s agreement to pay a total of US$1.4 billion in fines, Goldman Sachs lowered its revenue forecast for ZTE 2018 to 2020 by 6%, 9% and 12% respectively, and its earnings per share fell by 148%, 15% and 14% respectively. Earnings per share for this year were first estimated to be RMB 1.25 per person, downgraded to a loss of RMB 60; in order to reflect the company’s difficulties, the valuation basis of H shares was reduced from 20x to 10x, and the target price of H shares was correspondingly reduced. %, from 34 yuan to 15 yuan, ZTE H shares investment rating also dropped from "buy" to "neutral."
Sina Hong Kong News June 15 News