标题:ZTE CorporationResults missed; export curb lifted for now but uncertainty remains
发布日期:2016-04-08 9:58:55
内容: Action We downgrade both ZTE-A/-H to HOLD. Reasoning Results below preannouncement due to highernon-operating cost. 2015 revenue +23% YoY toRmb100.19bn, in line with preannouncement. NP +21.8% YoY toRmb3.207bn, missing the preannouncement by 15%. EPS wasRmb0.78, vs. the preannounced Rmb0.92. 2015 GM was 31%,0.8ppt below our forecast. It will resume trading on April 7. Export restriction temporarily lifted but uncertaintyremains. The US Department of Commerce imposed a ban onUS companies exporting equipment to ZTE after alleging thatZTE violated sanctions on trade with Iran. Recently, ZTE receivedtemporary relief from the export restriction. The issue will beresolved by mid-2016 and the possibility of negative impact fromsupply chain remains during the negotiation. This restriction, ifimplemented, could have a significant impact on ZTE given itsheavy reliance on the US supply chain, especially for chipsets.ZTE’s ability to source from non-US companies will be anotherkey to consider. Earnings forecast and valuation Slightly cut 2016e/17e GM by 0.4/0.3ppt to 31.3/31.1%,and EPS by 1.3/2.4% to Rmb0.95/1.06. ZTE received a temporary relief, but the issue won’t be resolveduntil mid-2016 and the possibility of negative impact remains.Thus, we downgrade both ZTE-A/-H to HOLD. We cut theH-share TP by 28.5% to HK$14.87, based on 13.9x 2016eEPS. Based on an average historical A-H premium of 21%, cutthe A-share TP by 25% to Rmb15.83, 16.7x 2016e EPS. Risks Uncertainty in the negotiation.
发布日期:2016-04-08 9:58:55
内容: Action We downgrade both ZTE-A/-H to HOLD. Reasoning Results below preannouncement due to highernon-operating cost. 2015 revenue +23% YoY toRmb100.19bn, in line with preannouncement. NP +21.8% YoY toRmb3.207bn, missing the preannouncement by 15%. EPS wasRmb0.78, vs. the preannounced Rmb0.92. 2015 GM was 31%,0.8ppt below our forecast. It will resume trading on April 7. Export restriction temporarily lifted but uncertaintyremains. The US Department of Commerce imposed a ban onUS companies exporting equipment to ZTE after alleging thatZTE violated sanctions on trade with Iran. Recently, ZTE receivedtemporary relief from the export restriction. The issue will beresolved by mid-2016 and the possibility of negative impact fromsupply chain remains during the negotiation. This restriction, ifimplemented, could have a significant impact on ZTE given itsheavy reliance on the US supply chain, especially for chipsets.ZTE’s ability to source from non-US companies will be anotherkey to consider. Earnings forecast and valuation Slightly cut 2016e/17e GM by 0.4/0.3ppt to 31.3/31.1%,and EPS by 1.3/2.4% to Rmb0.95/1.06. ZTE received a temporary relief, but the issue won’t be resolveduntil mid-2016 and the possibility of negative impact remains.Thus, we downgrade both ZTE-A/-H to HOLD. We cut theH-share TP by 28.5% to HK$14.87, based on 13.9x 2016eEPS. Based on an average historical A-H premium of 21%, cutthe A-share TP by 25% to Rmb15.83, 16.7x 2016e EPS. Risks Uncertainty in the negotiation.