ZTE’s 2021 profit likely increased on rising sales – Earnings Snapshot

By Anniek Bao


ZTE Corp. is expected to release its fourth-quarter and full-year results on Tuesday. Here’s what you need to know:


NET PROFIT FORECAST: The Chinese telecommunications company is expected to post net profit of 1.38 billion yuan ($218.4 million) in the fourth quarter, according to analysts polled by FactSet, compared to 1.55 billion yuan the last year. For the full year, ZTE estimated net profit in the range of CNY 6.50 billion to CNY 7.20 billion, compared to CNY 4.26 billion in 2020. After extraordinary items, ZTE estimated net profit between 3, 00 billion CNY and 3 billion CNY. 50 billion, compared to CNY 1.04 billion in 2020.


REVENUE FORECAST: Analysts expect quarterly revenue of 30.44 billion yuan, up from 27.32 billion yuan a year earlier. For the full year, analysts expect revenue of CNY 116.69 billion, up from CNY 101.45 billion in 2020.


WHAT TO WATCH:

Landline business: ZTE’s landline business has gained market share in an area that deserves higher valuation in the current phase of 5G development, Jefferies said in a research note. The brokerage firm expects that more than half of the industry’s capital expenditure planned for the current telecommunications investment cycle will be devoted to fixed telephony equipment, as fewer wireless base stations are required.

Margins: ZTE said in its preliminary results for 2021 that the rise in expected revenue is partly due to a recovery in gross profit margin. In 2020, ZTE posted a gross profit margin of 31.6%, compared to 37.2% in 2019.


Write to Anniek Bao at [email protected]

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