The Zhitong Finance App learned that CMB International released a research report saying that ZTE (00763)'s third-quarter revenue increased 34% year on year, down 9.8% from quarter to quarter, and net profit rose 394.5% year on year and fell 9.4% quarterly; in response to strong revenue momentum and the impact of short-term business portfolio changes that continued to dilute profit margins, the bank lowered its target price from HK$35.5 to HK$31, maintaining a “buy” rating.

The bank pointed out that ZTE's non-net profit for the third quarter increased 363.7% year on year, fell 53.8% from quarter to quarter, and gross margin improved 1.3 percentage points quarterly to 24.6% during the period. The bank pointed out that computing power is still the main driving force for growth. Revenue related to computing power increased by more than 70% year-on-year in the first nine months, accounting for 38% of total revenue. Server and storage revenue grew by more than 70%, and data center revenue increased by nearly 130%. The consumer business was also an important pillar of growth, with household and personal terminals accounting for 23% of total revenue in the first nine months.

The bank raised ZTE's revenue forecast for this year and next two years by 1.1% and 1%, respectively, lowered its net profit forecast for the full year of this year by 8.7%, and raised its net profit forecast for 2027 by 2.5% to make these target price adjustments.

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