ZTE (000063): 5G Chaoyang Red Looks at the Leader again
1. 5G leads a new wave of science and technology and a new economic wave. It is a combination of national will and market economy. It is not late.
5G is the beginning of a new wave of technology and the engine of a new economic wave. It has attracted the attention of the global market. As a first-tier country, China has basically achieved the pace of developing 5G in sync with the world.
In the Chinese market, the development of 5G is not only the spontaneous demand of the market economy, but also the will of the country.
We believe that 5G, as a combination of national will and market economy, has the smallest industrial development scale and relatively clear industrial trends.
2. After the embargo, the supply chain basically returned to normal, and the basic risks were reduced.
After the settlement of the chip embargo, the operator’s 武汉夜生活网 engineering construction / collection and mining began to resume, ZTE’s production line resumed, and ZTE’s suppliers began to resume normal supply. The impact of Huawei / Datang itself was not great, and the industrial chain had returned to normalOperational status.
According to Delll’Oro statistics, ZTE ‘s wireless access network RAN business market share increased by 5 percentage points in the third quarter of 2018, which could reverse the overall market share lost to Samsung in the second quarter.
The normalization of the supply chain is the trend, and once again encounters the risk cost of chip embargo.
3. In the medium and long term, the company is one of the four major leaders of global communications master equipment vendors, capable of providing 5G end-to-end solutions.
The increase in the capitalization of R & D funding shows that the company’s 5G and other R & D are smooth and gradually enter the commercial stage.
The Ministry of Industry and Information Technology and the Development and Reform Commission require that 5G be used commercially in 2020, and the company is expected to benefit in the long run.
5G deployment is higher and higher, base station density is greatly improved, a large number of new technologies are dated, and the added value of equipment technology is expected to increase significantly.
The company’s 18H1 R & D promotes capitalization ratio 19.
2%, an increase of 9 per year.
2 units, showing that the company’s 5G and other related research and development are progressing smoothly, gradually entering the commercial stage, and reaching the capitalization standard.
According to the information disclosed by the company on its official website on September 25, ZTE recently disclosed the first batch of 3GPP 5G SEPs (standard essential patents) to ESTI to more than 1,000 families.
As a result, ZTE became one of the four patentees holding more than 1,000 families of 5G NR standard patents.
At the same time, the company is one of the few manufacturers that can provide 5G end-to-end solutions, and the transition to 5G commercialization has gradually landed. The core business of the company’s operators and consumers promotes the development of new opportunities.
Investment suggestion: Through the development of the 2G to 4G network construction era, the company has become the world’s top four and the top two domestic telecommunications equipment vendors. In the new era of 5G construction, the 5G end-to-end solution layout will be realized.Committed to leading global 5G development and continuously increasing global market share.
Recently, the company’s release of edge computing servers is another major breakthrough in the 5G layout, adding even more strength to 5G competition.
At the same time, the company is basically eliminated due to the chip embargo at this stage, and its operations are basically restored. In the future, compliance risks are reduced, and the burden is basically lifted and started again.
We are firmly optimistic about the company’s long-term growth prospects after 2020’s expanded commercial use of 5G.
It is estimated that the net profit for 19-21 will be 54, 66 and 84 trillion, corresponding to 26 times 19 years. Maintain “Buy” rating.
Risk reminders: operational compliance risks, potential risks, low expectations of operator capital expenditures, escalating trade frictions between the US and China, and reduced order capacity in overseas markets