Mixed 3Q results

（以下内容从招银国际《Mixed 3Q results》研报附件原文摘录）
中兴通讯(000063)
ZTE released its 3Q23 results. Quarterly revenue of RMB28.7bn (-12.4% YoYand -9.1% QoQ) was below market expectation, largely due to lower-thanexpected telecom revenue. 3Q net profit was RMB2.4bn, with 5.1% YoY and -16.3% QoQ. GPM was resilient at 44.6% in 3Q23 (vs. 38.1%/42.0% in 3Q22/2Q23), showing Company’s competitiveness in the telecom market. We reviseddown our EPS forecast for 2023-25E by 5%/7%/9%, reflecting a slowdown ingrowth in 3Q23. Maintain BUY with adjusted TP of RMB36.9.
3Q revenue missed market expectations, mainly due to 1) server revenuemissed expectations, 2) lower-than-expected telecom sales as a result ofdelayed 5G tender, 3) ongoing pressure on consumer and enterprise/government segments under macro headwinds. We think the 5G tenderdelay was a temporary impact on seasonality. However, we trimmed ourrevenue forecasts by 9%/13%/14% for 2023, 2024 and 2025, respectively,reflecting greater-than-expected headwinds on non-carrier revenue andslower-than-expected server business ramp-up.
Resilient GPM continued to be the spotlight. Despite the decline inrevenue, GPM remained at 44.6% for 3Q23. We expect full-year GPM to be42.8%. Looking forward, considering the Company’s competitiveness in thetelecom market, we believe the Company’s margin will remain stable at thecurrent level.
Maintain BUY, with revised TP to RMB36.9, based on the 16.5x (3-yearavg.) FY24E P/E. We trim our net profit forecasts by 5%/7%/9% for2023E/24E/25E, due to cautious outlook for global telecom spending andsoft consumer/ corporates spending. Potential downside risks include SinoUS trade tensions, additional component restriction/technology ban, and 5Gdeployment delays.