ZTE(000063) 民生证券·2024-04-28 05:00Investment Rating - The report maintains a "Recommended" rating for the company [2][3]. Core Views - The company achieved steady growth in Q1 2024, with operating revenue of 30.58 billion yuan, a year-on-year increase of 4.9%, and a net profit attributable to shareholders of 2.74 billion yuan, up 3.7% year-on-year [2]. - The company is accelerating its transition from full connectivity to "connectivity + computing power," expanding its market space [2]. - The company has seen a resurgence in rapid growth in its government and enterprise sectors, with both segments returning to a fast growth trajectory [2]. - The gross profit margin for Q1 was 42.0%, reflecting a 6.0 percentage point increase quarter-on-quarter, although it decreased by 2.5 percentage points year-on-year [2]. - The company reported a net profit margin of 9.03%, which is an increase of 0.1 percentage points year-on-year and 4.8 percentage points quarter-on-quarter [2]. - The company’s operating cash flow for Q1 reached 2.98 billion yuan, a year-on-year increase of 28.3%, indicating healthy cash flow [2]. Summary by Sections Financial Performance - Q1 2024 operating revenue was 30.58 billion yuan, with a year-on-year growth of 4.9% [2]. - The net profit attributable to shareholders was 2.74 billion yuan, reflecting a 3.7% year-on-year increase [2]. - The company’s gross profit margin was 42.0%, with a quarter-on-quarter increase of 6.0 percentage points [2]. - The net profit margin improved to 9.03%, with a quarter-on-quarter increase of 4.8 percentage points [2]. Business Strategy - The company is focusing on enhancing its capabilities in the connectivity sector, particularly in 5G-A, optical networks, and 6G technologies [2]. - In the computing power sector, the company is enhancing its ability to provide full-stack solutions, including hardware infrastructure and AI applications [2]. - The company’s R&D expenses for Q1 were 6.38 billion yuan, representing a 20.9% R&D expense ratio, which supports ongoing product innovation [2]. Future Outlook - The company expects net profits attributable to shareholders to reach 10.84 billion yuan in 2024, 12.45 billion yuan in 2025, and 13.85 billion yuan in 2026, with corresponding PE multiples of 13, 11, and 10 [2][3].