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G Sachs Cuts ZTE (00763.HK) TP to HKD37.5; 1Q Gross Margin Under Pressure but Computing Business Sees Strong Growth
Recommend 13 Positive 11 Negative 13 |
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Goldman Sachs published a research report stating that ZTE (00763.HK) recorded 1Q revenue of RMB35 billion, up 6% YoY, in line with the brokers expectations. Revenue from computing-related businesses accounted for 27% of total revenue, higher than 24.6% for full-year 2025. However, gross margin fell to 28.3%, from 29.4% in 4Q last year and 34.3% in 1Q last year. Management attributed the decline to reduced domestic telecom capital expenditure, which led to lower revenue contribution from domestic network products. In response to the 1Q results, Goldman Sachs lowered its earnings forecasts for ZTE for 20262028 by 8%, 7% and 6%, respectively, mainly reflecting a downward revision in gross margin assumptions. The TP for its Hong Kong shares was cut by 7% from HKD40.4 to HKD37.5, based on an unchanged projected 2027 price-to-earnings ratio of 18.2x. The TP for its A-shares was reduced from RMB62.6 to RMB58.2. The broker maintained a Neutral rating on both ZTEs H-shares and A-shares. (ec/da) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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