SEHK:763

Stock Analysis Report

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Executive Summary

ZTE Corporation provides integrated telecommunications and information technology (IT) solutions worldwide.


Snowflake Analysis

Adequate balance sheet with limited growth.


Similar Companies

Share Price & News

How has ZTE's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 763's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

4.8%

763

1.3%

HK Communications

3.4%

HK Market


1 Year Return

7.9%

763

5.2%

HK Communications

-7.8%

HK Market

Return vs Industry: 763 exceeded the Hong Kong Communications industry which returned 5.2% over the past year.

Return vs Market: 763 exceeded the Hong Kong Market which returned -7.8% over the past year.


Shareholder returns

763IndustryMarket
7 Day4.8%1.3%3.4%
30 Day-1.8%-9.8%-1.4%
90 Day-34.0%-10.6%-5.8%
1 Year7.9%7.9%8.0%5.2%-4.8%-7.8%
3 Year35.4%35.4%-10.5%-18.2%-2.6%-12.4%
5 Year4.7%1.6%-20.2%-30.7%-13.6%-27.0%

Price Volatility Vs. Market

How volatile is ZTE's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is ZTE undervalued compared to its fair value and its price relative to the market?

32.51x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: 763 (HK$21.8) is trading above our estimate of fair value (HK$7.06)

Significantly Below Fair Value: 763 is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: 763 is poor value based on its PE Ratio (32.5x) compared to the Communications industry average (19.6x).

PE vs Market: 763 is poor value based on its PE Ratio (32.5x) compared to the Hong Kong market (9.3x).


Price to Earnings Growth Ratio

PEG Ratio: 763 is poor value based on its PEG Ratio (1.9x)


Price to Book Ratio

PB vs Industry: 763 is overvalued based on its PB Ratio (4.3x) compared to the HK Communications industry average (0.9x).


Next Steps

Future Growth

How is ZTE forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

16.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 763's forecast earnings growth (16.9% per year) is above the savings rate (1.6%).

Earnings vs Market: 763's earnings (16.9% per year) are forecast to grow faster than the Hong Kong market (16.7% per year).

High Growth Earnings: 763's earnings are forecast to grow, but not significantly.

Revenue vs Market: 763's revenue (8.1% per year) is forecast to grow slower than the Hong Kong market (10.6% per year).

High Growth Revenue: 763's revenue (8.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 763's Return on Equity is forecast to be low in 3 years time (16.1%).


Next Steps

Past Performance

How has ZTE performed over the past 5 years?

-11.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 763 has a large one-off gain of CN¥2.4B impacting its March 31 2020 financial results.

Growing Profit Margin: 763 became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: 763's earnings have declined by -11.5% per year over the past 5 years.

Accelerating Growth: 763 has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: 763 has become profitable in the last year, making it difficult to compare its past year earnings growth to the Communications industry (-24.2%).


Return on Equity

High ROE: 763's Return on Equity (12.4%) is considered low.


Next Steps

Financial Health

How is ZTE's financial position?


Financial Position Analysis

Short Term Liabilities: 763's short term assets (CN¥107.1B) exceed its short term liabilities (CN¥78.0B).

Long Term Liabilities: 763's short term assets (CN¥107.1B) exceed its long term liabilities (CN¥23.6B).


Debt to Equity History and Analysis

Debt Level: 763's debt to equity ratio (86.7%) is considered high.

Reducing Debt: 763's debt to equity ratio has reduced from 86.8% to 86.7% over the past 5 years.

Debt Coverage: 763's debt is not well covered by operating cash flow (17.2%).

Interest Coverage: 763's interest payments on its debt are well covered by EBIT (11.9x coverage).


Balance Sheet


Next Steps

Dividend

What is ZTE's current dividend yield, its reliability and sustainability?

0.52%

Current Dividend Yield


Upcoming Dividend Payment


Dividend Yield vs Market

Notable Dividend: 763's dividend (0.52%) isn’t notable compared to the bottom 25% of dividend payers in the Hong Kong market (2.55%).

High Dividend: 763's dividend (0.52%) is low compared to the top 25% of dividend payers in the Hong Kong market (7.26%).


Stability and Growth of Payments

Stable Dividend: 763 is not paying a notable dividend for the Hong Kong market, therefore no need to check if payments are stable.

Growing Dividend: 763 is not paying a notable dividend for the Hong Kong market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: 763 is not paying a notable dividend for the Hong Kong market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of 763's dividend in 3 years as they are not forecast to pay a notable one for the Hong Kong market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.2yrs

Average management tenure


CEO

Ziyang Xu (47yo)

1.92yrs

Tenure

CN¥7,769,000

Compensation

Mr. Ziyang Xu has been President of ZTE Corp. since July 5, 2018 and its Executive Director sine August 28, 2018. Since July 2018, Mr. Xu has been director of ZTE Microelectronics Technology Company Limite ...


CEO Compensation Analysis

Compensation vs Market: Ziyang's total compensation ($USD1.09M) is above average for companies of similar size in the Hong Kong market ($USD765.21K).

Compensation vs Earnings: Ziyang's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Zixue Li
Chairman2yrsCN¥5.81mno data
Ziyang Xu
President & Executive Director1.92yrsCN¥7.77m0.0018% CN¥3.2m
Ying Li
EVP & CFO2.42yrsCN¥5.64m0.0012% CN¥2.1m
Junying Gu
Executive VP & Executive Director2yrsCN¥5.67mno data
Xiyu Wang
Executive Vice President2.42yrsCN¥7.21m0.00090% CN¥1.6m
Junshi Xie
Executive Vice President0.75yrCN¥5.50mno data
Jianzhong Ding
Company Secretary0.92yrCN¥1.74mno data
Matthew Bell
Chief Export Compliance Officer and Legal Counsel3.67yrsno datano data
Wang Dong
Senior VP2.17yrsno datano data
Xiaoyue Xia
Deputy Head of Dept of HR4.33yrsno data0.0011% CN¥2.0m

2.2yrs

Average Tenure

44.5yo

Average Age

Experienced Management: 763's management team is considered experienced (2.2 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Zixue Li
Chairman2yrsCN¥5.81mno data
Ziyang Xu
President & Executive Director1.92yrsCN¥7.77m0.0018% CN¥3.2m
Junying Gu
Executive VP & Executive Director2yrsCN¥5.67mno data
Xiaoyue Xia
Deputy Head of Dept of HR4.33yrsno data0.0011% CN¥2.0m
Ng Gordon
Independent Non-Executive Director2yrsCN¥250.00kno data
Daxiong Xie
Chairman of Supervisory Committee7.25yrsCN¥2.63m0.011% CN¥19.1m
Rong Fang
Non-Executive Director2yrsCN¥100.00kno data
Buqing Li
Non-Executive Director2yrsCN¥100.00kno data
Manli Cai
Independent Non-Executive Director2yrsCN¥250.00kno data
Bao Yuming
Independent Non-Executive Director2yrsCN¥250.00kno data

2.0yrs

Average Tenure

49.5yo

Average Age

Experienced Board: 763's board of directors are not considered experienced ( 2 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 10%.


Top Shareholders

Company Information

ZTE Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: ZTE Corporation
  • Ticker: 763
  • Exchange: SEHK
  • Founded: 1985
  • Industry: Communications Equipment
  • Sector: Tech
  • Market Cap: CN¥163.547b
  • Listing Market Cap: CN¥177.878b
  • Shares outstanding: 4.61b
  • Website: https://www.zte.com.cn

Number of Employees


Location

  • ZTE Corporation
  • No. 55, Hi-tech Road South
  • Shenzhen
  • Guangdong Province
  • 518057
  • China

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
63SZSE (Shenzhen Stock Exchange)YesDomestic SharesCNCNYSep 1998
63XSEC (Shenzhen Stock Exchange - Shenzhen-Hong Kong Stock Connect)YesDomestic SharesCNCNYSep 1998
763SEHK (The Stock Exchange of Hong Kong Ltd.)Foreign Shares-Foreign ListedHKHKDDec 2004
ZTCO.FOTCPK (Pink Sheets LLC)Foreign Shares-Foreign ListedUSUSDDec 2004
FZMDB (Deutsche Boerse AG)Foreign Shares-Foreign ListedDEEURDec 2004
763SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)Foreign Shares-Foreign ListedHKHKDDec 2004
FZMWBAG (Wiener Boerse AG)Foreign Shares-Foreign ListedATEURDec 2004
ZTCO.YOTCPK (Pink Sheets LLC)UNSP ADR EACH REPR 2 ORDUSUSDOct 2008
FZMADB (Deutsche Boerse AG)UNSP ADR EACH REPR 2 ORDDEEUROct 2008

Biography

ZTE Corporation provides integrated telecommunications and information technology (IT) solutions worldwide. It operates through three segments: Carriers’ Networks, Consumer Business, and Government and Corporate Business. The company offers wireless products, such as baseband units, AAU series, ultra-broadband radio series, indoor coverage, small cell base station series, and microwave products. It also provides cloud core network products that comprise hardware devices, cloud platform systems, and SDN controllers; HD voice and video, intelligent pipeline, and user data convergence; CloudStudio GSO, NFVO, and VNFM; and cloud integration products. In addition, the company offers fixed network services, including optical and copper access, and smart home products; transport network, such as optical network, mobile backhaul, router, Ethernet switch, and network control and management systems; multi-media solutions; energy solutions comprise telecom power and data centre; and data management solutions. Further, it provides cloud computing products that include cloud platform, storage, and desktop products; cloud video products, such as video conferencing and IoT platform, contact centre, coalition emergency response systems, and meeting infrastructure; and smart phone and mobile internet products, as well as 5G, consulting and integration, technical, digital operation, intelligent O&M customer support, and learning services. Additionally, the company offers wireless access, cloud core and transport network, fixed access, and AI and bigdata solutions. The company was founded in 1985 and is headquartered in Shenzhen, the People’s Republic of China. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/06/02 12:37
End of Day Share Price2020/06/02 00:00
Earnings2020/03/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.