ZTE Corporation (000063)

Equity Research Report　|　Industry: Communications Equipment and ICT Solutions　|　Report Date: September 13, 2026　|　As of the September 11, 2026 close; technical indicators, fund flows and market data are based on the methodology specified in the research notes, with some indicators sourced from third-party pages or estimated using historical closing prices.

This report was automatically compiled by AI based on publicly available information and is for reference only. It does not constitute investment advice.

1. Executive Summary

ZTE’s latest operating performance shows “revenue growth but earnings pressure”: revenue in the first half of 2026 was RMB 78.025 billion, up 9.05% year on year, while net profit attributable to the parent was RMB 2.753 billion, down 45.57% year on year. Non-recurring-adjusted net profit attributable to the parent fell 45.89% year on year. Overall gross margin declined to 25.48%, while operating costs rose 20.29%, outpacing revenue growth. For full-year 2025, revenue increased 10.38% while net profit attributable to the parent declined 33.32%, indicating that the most significant issue for decision-making is that the rapid scale-up of the computing-power business has not yet translated into corresponding profit growth.

The business mix is shifting from traditional carrier networks toward “connectivity + computing power.” In the first half of 2026, computing-power revenue increased by more than 55% year on year, accounting for 35.1% of total revenue. Revenue from servers and storage and from data-center products increased by nearly 60% and more than 90%, respectively. However, the gross margin of the enterprise business was 15.84%, while carrier-network revenue declined 9.41% year on year and had a gross margin of 38.06%. In 2025, computing-power revenue increased by approximately 150% year on year and accounted for approximately 24.6% of total revenue. Enterprise-business revenue increased 100.49%, but gross margin was only 10.97%. The expansion of low-margin hardware businesses, combined with pressure on the high-margin carrier-network business, caused overall gross margin to fall from 37.91% in 2024 to 30.25% in 2025.

The company continues to possess integrated capabilities across communications equipment, carrier networks, enterprise ICT, computing-power infrastructure and terminals. Domestic revenue accounted for 67.02% of total revenue in 2025, while international revenue accounted for 32.98%; the two increased 9.4% and 12.4%, respectively. Customer concentration declined from 2022–2024 levels, with sales to the five largest customers accounting for 44.87% in 2025. Nevertheless, the carrier-network business remains dependent on centralized procurement by major carriers and large enterprise and government projects. Meanwhile, inventory was approximately RMB 41.258 billion at the end of 2025, and the carrying value of accounts receivable was RMB 21.670 billion. Inventory rose further to approximately RMB 54.65 billion at the end of June 2026, warranting continued attention to working-capital usage and inventory expansion.

As of September 11, 2026, the share price was RMB 32.17, well below the 52-week high of RMB 55.44. The closing price was below the MA5, MA10 and MA20, MACD was below the zero axis, and main-force funds recorded net outflows on most recent trading days, indicating weak short-term technical conditions. The current share price is near the RMB 31.80–32.20 support range, while RMB 33.30–33.70 represents resistance from moving averages and areas of concentrated trading volume. Some technical indicators show that RSI is near oversold territory, but differences across data sources are considerable and insufficient to confirm a trend reversal.

2. Company Overview

2.1 Basic Information

2.2 Core Businesses and Product Portfolio

• Carrier networks: Revenue of RMB 62.857 billion in 2025, accounting for 46.9% of total revenue, down 10.62% year on year; gross margin was 48.09%. Main areas include wireless access, wireline access, core networks, fixed networks, optical transmission, core routers, servers and storage, data centers and digital energy.
• Enterprise business: Revenue of RMB 37.222 billion in 2025, up 100.49% year on year; gross margin was 10.97%. Serving customers in the internet, financial, power, transportation, government and other sectors, the business provides servers and storage, intelligent-computing infrastructure, data-center switches, cloud computing, databases, operating systems, cybersecurity and industrial digitalization solutions.
• Consumer business: Revenue of RMB 33.822 billion in 2025, up 4.4% year on year; gross margin was approximately 18.31%. Main products include home information terminals, PON and FTTR terminals, Wi-Fi terminals, mobile phones, mobile-internet products, cloud computers and personal peripherals. The company uses a dual-brand strategy comprising “ZTE + nubia.”
• Regional structure: Domestic revenue was RMB 89.734 billion in 2025, accounting for 67.02% of total revenue; international revenue was RMB 44.161 billion, accounting for 32.98%. Domestic and international revenue increased 9.4% and 12.4%, respectively.
• Computing-power business: Revenue increased approximately 150% year on year in 2025 and accounted for approximately 24.6% of total revenue; server and storage revenue increased by more than 200%, while data-center product revenue increased by approximately 50%.

2.3 Position in the Upstream and Downstream Value Chain and Cost-Profit Structure

ZTE occupies a midstream to downstream position in the communications-equipment, ICT systems-integration and intelligent-computing-infrastructure value chains. Through R&D in communications chips, algorithms, network architecture and systems software, as well as the integration of wireless, wireline, optical communications, core-network, server, storage, data-center and terminal products, the company provides equipment, systems and solutions to carriers, enterprise and government customers and consumers. Traditional carrier-network businesses have relatively high value added and gross margins, while servers, storage and terminal businesses have relatively high hardware-cost ratios and face more direct price competition.

• Major purchases include electronic components, communications chips, processors and related chips, optical modules, optical components, radio-frequency components, filters, antennas, printed circuit boards, structural components, displays, batteries and terminal components, as well as server and storage equipment components.
• The company also purchases cabinets, power supplies, cooling systems and data-center supporting equipment, and incurs procurement expenses for outsourced processing, project implementation and delivery services.
• In 2025, operating costs were RMB 93.391 billion, of which raw-material costs were RMB 76.947 billion, accounting for 82.39% of operating costs; engineering costs were RMB 13.270 billion, or 14.21%; and other costs were RMB 3.174 billion, or 3.40%.
• In 2025, purchases from the largest supplier amounted to RMB 4.871 billion, accounting for 4.98% of total purchases; purchases from the five largest suppliers amounted to RMB 19.088 billion, accounting for 19.53%. These data are from the 2025 annual report; the research notes provide no other source for further cross-checking.
• Supplier concentration declined from 2022 levels: purchases from the largest supplier and the five largest suppliers accounted for 9.12% and 22.98%, respectively, in 2022, and 6.10% and 23.22%, respectively, in 2023. Overall, the company is not excessively dependent on a single supplier. However, high-end chips, processors, GPUs, optical components and core server components may face long certification and substitution cycles.
• The company has some scale-based purchasing power for general electronic components, structural components and outsourced manufacturing. However, its bargaining power over high-end chips, processors, GPUs and key optoelectronic components is not unequivocally strong, and some links may be affected by global chip supply, technology licensing and industry cycles. The annual report does not disclose the names of all key component suppliers or substitution rates; therefore, it cannot be concluded that all core components have achieved complete domestic substitution or full multi-supplier sourcing.
• Major customers include China Mobile, China Telecom, China Unicom and overseas carriers; government and large enterprises; internet companies; financial customers such as banks, securities firms and insurers; power, transportation, energy and manufacturing customers; household users and individual consumers; overseas distributors, retailers and terminal operators.
• Carrier-network businesses generally use centralized procurement, tendering and framework agreements. Customer concentration is relatively high, project delivery cycles are long, and revenue recognition and collections are affected by carrier capital expenditure. Enterprise-business customers are more numerous, but individual projects face higher competition and delivery and customization requirements. Consumer businesses face competition in brands, channels, prices and inventory.
• In 2025, sales to the largest customer amounted to RMB 27.395 billion, accounting for 20.46% of total sales; sales to the five largest customers amounted to RMB 60.085 billion, accounting for 44.87%. These figures are based on the 2025 annual report; the research notes provide no other source for cross-checking.
• Customer concentration declined from 2022–2024 levels: the largest customer’s share fell from 30.20% in 2022, 27.95% in 2023 and 27.45% in 2024 to 20.46% in 2025; the five largest customers’ share declined from 61.13%, 62.45% and 55.72% in 2022, 2023 and 2024, respectively, to 44.87% in 2025.
• Overall customer concentration has become more diversified as the enterprise, international and consumer businesses expanded. However, the carrier-network business remains relatively dependent on major customers and centralized-procurement projects. The annual report does not fully disclose the names of the five largest customers, so the decline in overall concentration cannot be equated with the elimination of customer dependence in the carrier-network segment.
• Carriers and large enterprise and government customers typically have strong purchasing bargaining power. Tendering, technical certification, project delivery and total-cost-of-ownership requirements constrain equipment vendors’ ability to pass through costs. Consumer businesses are affected by brand, rebates, inventory turnover and promotional requirements imposed by distributors and retailers.
• As of December 31, 2025, consolidated accounts receivable had a carrying value of RMB 21.670 billion, equivalent to approximately 16.18% of 2025 revenue, with accounts-receivable turnover of approximately 57.8 days. Credit terms are generally 0–90 days and may be extended to as long as one year. Inventory was approximately RMB 41.258 billion, or approximately 30.82% of revenue; accounts payable were approximately RMB 22.372 billion and notes payable approximately RMB 10.959 billion. Accounts receivable plus inventory, less accounts payable and notes payable, amounted to approximately RMB 30.0 billion, or approximately 22.4% of annual revenue, indicating notable working-capital usage related to project delivery, inventory preparation and the supply chain. At year-end 2025, accounts receivable aged more than three years amounted to approximately RMB 4.996 billion, or approximately 17.85% of the carrying balance, with corresponding provisions for bad debts of approximately RMB 6.323 billion. Average turnover days alone therefore cannot be used to conclude that collection pressure is low. Net cash generated from operating activities was RMB 11.48 billion in 2025, partially offsetting working-capital usage.
• As of 2025, purchases from the five largest suppliers accounted for 19.53%, and the largest supplier accounted for 4.98%; sales to the five largest customers accounted for 44.87%, and the largest customer accounted for 20.46%. Concentration data mainly come from the company’s 2022–2025 annual reports, and the research notes provide no independent cross-checking source. Overall, the supply side is not excessively dependent on a single supplier, although substitution cycles for key chips, optical components and core server components may be long. Overall demand concentration has declined, but the carrier-network segment remains affected by centralized procurement by major carriers and the bargaining power of large enterprise and government customers.

ZTE is a midstream player in the communications-equipment and intelligent-computing value chains. It is an integrated ICT equipment provider with strong R&D, systems-integration and global delivery capabilities, positioned in the midstream to downstream portion of the value chain. It is relatively high value-added, but is neither an upstream resource company nor a downstream consumer-brand company. Profit improvement will depend primarily on higher gross margins after the computing-power business achieves scale, recovery in carrier networks, product-mix upgrades, supply-chain cost control and expansion of high-value overseas projects, rather than simply on increased hardware sales.

3. Financial Data and Valuation Analysis

3.1 Recent Operating Performance

The 2026 interim report was disclosed on August 21, 2026, covering January 1–June 30, 2026; the financial statements were unaudited. Non-recurring-adjusted net profit attributable to the parent in the first half of 2026 was RMB 2.221 billion, down 45.89% year on year; net cash generated from operating activities was negative RMB 127 million, compared with RMB 1.299 billion in the same period last year; basic EPS was RMB 0.58, down 45.28% year on year. Full-year 2025 non-recurring-adjusted net profit attributable to the parent was RMB 3.370 billion, down 45.45% year on year, and basic EPS was RMB 1.17, down 33.52% year on year.

The latest financial results show “revenue growth without profit growth”: revenue in the first half of 2026 increased 9.05% year on year, while net profit attributable to the parent declined 45.57%. Overall gross margin was 25.48%, down 6.97 percentage points year on year, while operating costs increased 20.29%, outpacing revenue. Carrier-network revenue was RMB 31.765 billion, down 9.41% year on year, with a gross margin of 38.06%; enterprise-business revenue was RMB 27.631 billion, up 43.51%, with a gross margin of 15.84%; consumer-business revenue was RMB 18.629 billion, up 8.09%, with a gross margin of 18.35%. Computing-power revenue increased by more than 55% year on year and accounted for 35.1% of total revenue; server and storage revenue increased by nearly 60%, while data-center product revenue increased by more than 90%. Factors behind the profit decline included pressure on the high-margin carrier-network business, a shift in revenue mix toward lower-margin computing-power hardware, increased foreign-exchange losses caused by exchange-rate volatility, and increased inventory preparation associated with expansion of the computing-power business. Period-end inventory was approximately RMB 54.65 billion, up approximately 16.2% from the beginning of the year. As of June 30, 2026, net assets attributable to the parent were RMB 76.976 billion, up 2.06% from the end of 2025; the debt-to-assets ratio was 67.94%, up 2.68 percentage points from the end of 2025.

3.2 Earnings Forecasts

The above figures are the average forecasts from institutions compiled by Tonghuashun F10 over the six months through September 12, 2026. Eleven institutions participated in the 2026 forecasts and nine participated in the 2028 forecasts. These are sell-side forecasts rather than company guidance. Forecast ranges for net profit attributable to the parent are RMB 5.456–8.470 billion in 2026, RMB 6.080–10.020 billion in 2027 and RMB 6.842–8.633 billion in 2028. EPS forecast ranges are RMB 1.14–1.77 in 2026, RMB 1.27–2.09 in 2027 and RMB 1.43–1.80 in 2028.

3.3 Valuation and Institutional Ratings

At the September 11, 2026 close, the share price was RMB 32.17, total market capitalization was approximately RMB 153.886 billion, free-float market capitalization was approximately RMB 129.569 billion, trailing P/E was approximately 46.42x, static P/E approximately 27.40x and P/B approximately 2.04x. Based on the institutional EPS averages compiled by Tonghuashun, forward P/E for 2026–2028 was approximately 24.9x, 21.6x and 20.2x, respectively. The substantial gap between trailing and forward P/E mainly reflects declining profits in 2025 and the first half of 2026, while institutional forecasts assume a gradual recovery in future profits. As of September 10, 2026, Lixinger showed a trailing P/E of approximately 46.85x, at approximately the 98.21st historical percentile; P/B was approximately 2.06x, at approximately the 35.26th historical percentile. The publicly verifiable A-share target price includes Huatai Securities’ RMB 43.48. Futubull’s aggregated data show an average three-month target price of RMB 48.90, a high of RMB 67.37 and a low of RMB 40.61, but the data do not disclose complete institutional details and should only be used as a reference for the market target-price range. If the computing-power business remains low margin and the carrier business fails to stabilize, forward P/E may rise mechanically. If scale effects in computing power and overseas operations drive profit recovery, valuation may decline as earnings grow. Valuation assessment should focus on the gross margin of the computing-power business, enterprise-business profitability, stabilization of the carrier-network business, overseas revenue growth, inventory and receivables turnover, operating cash flow and profit improvement following the introduction of in-house chips.

4. Recent News and Announcements

4.1 Few Formal Announcements in September; Mainly Monthly Hong Kong Securities Movement Reports

On September 2, 2026, ZTE disclosed the “Announcement on Publishing the Monthly Securities Movement Report for August 2026 Pursuant to the Hong Kong Listing Rules,” together with the Hong Kong securities movement report as of August 31, 2026. The announcement was primarily a synchronized domestic and overseas disclosure and did not constitute a new major operating event. As of September 13, 2026, no new earnings forecast, share-repurchase update, major asset restructuring or major acquisition announcement had been identified. Based on the publicly disclosed summary of the monthly report, the company’s share-capital structure remained broadly stable in August 2026, with no major changes involving new issuance, repurchases or cancellation of shares. The specific monthly-report figures should be based on the original disclosure by the Hong Kong Stock Exchange.

4.2 First-Half 2026 Results: Revenue Growth, Net Profit Attributable to the Parent Down Year on Year

The company disclosed its 2026 interim report on August 21, 2026. Revenue in the first half of 2026 was approximately RMB 78.025 billion, up approximately 9.05% year on year; net profit attributable to ordinary shareholders of the listed company was approximately RMB 2.753 billion, down approximately 45.57% year on year; and net profit after non-recurring items was approximately RMB 2.221 billion, down approximately 45.89% year on year. These figures were disclosed in the company’s interim report and public report summaries.

4.3 No Interim Dividend or Capitalization in 2026

The company stated in its 2026 interim report that it would not distribute profits or capitalize its capital reserve in the 2026 interim period. This does not mean that the company has canceled its annual dividend arrangements.

4.4 No Third-Quarter Earnings Forecast Identified as of September 13

As of September 13, 2026, no formal earnings forecast, preliminary earnings increase announcement or preliminary earnings decrease announcement for the third quarter of 2026 had been identified. This conclusion only means that no relevant announcement was found among the public sources searched and does not mean that the company has explicitly stated that it will not issue an earnings forecast.

4.5 A-Share Repurchase Completed; No New Repurchase Plan Identified

The company’s previously initiated A-share repurchase was completed in July 2026. As of July 20, 2026, the company had repurchased approximately 28.6594 million A shares, representing approximately 0.60% of total share capital, for a cumulative consideration of approximately RMB 1.0 billion. The repurchased shares were intended for an employee shareholding plan or equity incentive scheme. As of September 13, 2026, no announcement had been identified regarding a new share repurchase, an increase in the repurchase quota or cancellation of repurchased shares. Within the scope of the repurchase implementation results announcement, the controlling shareholder, directors, senior executives and other relevant parties did not buy or sell company shares during the repurchase period.

4.6 Shareholders and Ownership Changes: Slight Increase in A-Share Shareholder Count; Change in Hong Kong Shareholding Interests

As of August 31, 2026, the company had approximately 638,969 shareholders, an increase of approximately 1,060 from 637,909 as of July 31, 2026, or approximately 0.17% month on month. This figure comes from market-data and shareholder-count compilation pages, and the statistical methodology should be based on subsequent company announcements or periodic reports. In early September 2026, Hong Kong shareholding-interest disclosures indicated that JPMorgan Chase & Co. reduced its ZTE H-share holdings by approximately 1.3358 million shares on September 2, 2026, leaving approximately 44.1775 million long positions after the event. This was a change in an H-share shareholder’s interests and does not constitute a disposal by the company’s controlling shareholder or actual controller. As of September 13, 2026, no major announcement had been identified regarding a new A-share increase or reduction plan, or completed increase or reduction, by controlling shareholder ZTE Holdings, directors or senior executives.

4.7 USD 50 Million Performance Guarantee for Overseas Business

On August 1, 2026, the company disclosed the “Announcement on Providing Guarantees for a Subsidiary.” The company provided a joint and several liability guarantee for the performance obligations of its wholly owned subsidiary ZTE Corporation (Hong Kong) Limited under a framework agreement related to UAE mobile operator e& Group. The guarantee amount does not exceed USD 50 million, and the guarantee period is generally until completion of the relevant obligations; if the obligations are not fulfilled on schedule, the guarantee period may be extended. The guarantee falls within the previously approved USD 600 million sales-business guarantee quota and does not constitute a new excess guarantee quota. It cannot be directly equated with new revenue or profit.

4.8 Proposed 2026 Guarantee Quota of No More Than USD 1.93 Billion

The company proposed providing subsidiaries with an aggregate guarantee quota of no more than USD 1.93 billion in 2026, equivalent to 17.89% of audited net assets attributable to the parent as of December 31, 2025. The quota includes guarantees for sales, procurement and debt financing, among other categories. The quota is an annual authorization ceiling and does not equal the actual outstanding guarantee balance.

4.9 No Major Acquisition, Restructuring or Major Regulatory-Penalty Announcement Identified

As of September 13, 2026, no announcement had been identified regarding a major asset restructuring, major acquisition, sale of core assets or change of control. Nor had any special A-share announcement been identified concerning major violations, securities-regulatory penalties or major regulatory measures. This conclusion is based on searches of the company’s website, the Shenzhen Stock Exchange, CNINFO and major announcement aggregation pages, and cannot exclude smaller-value, non-material or not-yet-indexed regulatory matters.

4.10 Company Releases “Four-V” Strategic Framework for the AI Era

On September 8, 2026, ZTE held its global summit and user conference in Kuala Lumpur, Malaysia, and released its “Four-V” strategic framework for the AI era: VISION, VOLUME, VALUE and VENTURE. The company continued to emphasize its dual-engine “connectivity + computing power” strategy. The information came mainly from company website news and was not an order or earnings announcement subject to mandatory disclosure by the Shenzhen Stock Exchange. The company did not disclose specific contract values, order sizes or quantitative impacts on 2026 profit.

4.11 Participation in China Unicom Partner Conference; Display of Computing-Network Integration Solutions

From September 9 to 10, 2026, the company participated in the 2026 China Unicom Partner Conference, showcasing solutions in computing-power networks, all-optical interconnection, integrated air-space-ground networks, intelligent operations and maintenance, and 6G-oriented network capabilities. It also emphasized advancing computing-network integration with China Unicom. The company did not disclose specific contract values, order sizes or quantitative impacts on 2026 profit. The information was more strategic and promotional in nature.

5. Share-Price Performance and Technical Analysis

5.1 Price Overview

5.2 Technical Indicators

As of September 11, 2026, ZTE’s share price showed a retreat from highs, consecutive lower closes and declining moving averages. The closing price was below MA5, MA10 and MA20 and near the lower Bollinger Band. MACD was below the zero axis, and main-force funds recorded net outflows on most recent trading days, indicating weak short-term technical and fund-flow conditions. Some RSI methodologies show near-oversold conditions, but results differ considerably and cannot independently confirm a reversal. The current price is close to the RMB 31.8–32.2 support area. Subsequent assessment should consider the effectiveness of this support, changes in trading value and main-force fund flows when evaluating the possibility of a technical rebound or further downside.

5.3 Short-Term Outlook (Next Week, Scenario Analysis for Reference Only)

⚠️ Risk warning: The following is a subjective scenario analysis based on closing data as of September 11, 2026. It does not constitute investment advice or a buy/sell instruction.

1. Key Technical Levels

2. Scenarios for the Coming Week (Subjective Weights, Not Statistical Probabilities)

• Range-bound consolidation (relatively higher weight, approximately 50%; a subjective heuristic weight based on current technical conditions and fund flows, not a statistical probability): The observed price range is RMB 31.80–33.50. Trigger conditions include holding the RMB 31.80–32.00 area, trading value remaining near the recent norm of approximately RMB 1.4–2.0 billion, narrowing main-force net outflows and repeated fluctuations between RMB 32.50 and RMB 33.30. If support forms near the lower Bollinger Band, the rebound may still be capped by MA10 and MA20.
• Weak downward movement (medium weight, approximately 30%; a subjective heuristic weight based on current technical conditions and fund flows, not a statistical probability): The observed price range is RMB 31.40–31.80. Trigger conditions include an effective close below RMB 31.80, continued consecutive net outflows from main-force funds, increased trading value with the close near the intraday low, or simultaneous weakness in communications equipment, computing power and technology-growth sectors. If the RMB 31.40–31.80 area is also broken on heavy volume, the price may further test below the 52-week low of RMB 31.39.
• Stronger rebound (lower weight, approximately 20%; a subjective heuristic weight based on current technical conditions and fund flows, not a statistical probability): The observed price range is RMB 33.60–34.00, with further attention to RMB 34.00–34.90. Trigger conditions include reclaiming the moving-average cluster around RMB 32.80–33.30, breaking above RMB 33.60–33.70, daily trading value rising above RMB 2.2 billion and remaining elevated for at least two consecutive trading days, a clear shift from main-force net outflows to net inflows, and a simultaneous recovery in communications equipment, computing power, AI or broader technology sectors. RSI near oversold alone is insufficient to confirm a reversal.

3. Fund-Flow and Liquidity Background

As of September 11, 2026, the recent turnover rate was approximately 1.1%–1.4%, and average trading value over the past five days was approximately RMB 1.685 billion, representing moderate liquidity among large-cap stocks. Shareholder-structure data as of June 30, 2026 show 635,458 total shareholders. The ten largest tradable shareholders collectively held approximately 1.978 billion shares, representing approximately 41.34% of tradable shares; institutions collectively held approximately 391 million shares, or approximately 9.70% of the free float, including approximately 202 million shares held by funds and approximately 56.7266 million shares held by insurers. This indicates the presence of mainstream institutions such as public funds and insurers, but the overall institutional control ratio is not particularly high, and secondary-market holdings remain relatively dispersed. The shareholder data lagged the September 11, 2026 market data by approximately two and a half months. Fund, insurer and Shenzhen-Hong Kong Stock Connect holdings may have changed and should not be regarded as a real-time ownership structure. Given total market capitalization of more than RMB 150 billion, bid-and-ask depth is generally good under normal trading conditions. However, recent consecutive net outflows from main-force funds indicate weak short-term absorption, and prices may remain affected by shifts in index funds, sector funds and market sentiment.

A volume-confirmation signal to monitor is the following: if the share price stabilizes near RMB 31.80–32.20, daily trading value expands consecutively to above RMB 2.2 billion, turnover reaches approximately 1.8% or higher, and the closing price reclaims RMB 33.30–33.60, this may indicate improved fund absorption. If volume expands but the close continues to fall below RMB 31.80, the move should instead be interpreted as the release of selling pressure rather than simply as a fund-entry signal.

4. Points to Monitor (Observation Framework Only, Not Trading Instructions)

• Observe whether the area near RMB 32.00 provides support and whether the strong-support zone of RMB 31.40–31.80 is effectively broken; this is an observation framework, not a trading instruction.
• Observe whether the share price can reclaim the approximately RMB 32.80–33.60 area corresponding to MA5, MA10 and MA20; this is an observation framework, not a trading instruction.
• Observe whether main-force net outflows narrow, particularly whether daily net outflows remain above RMB 200 million; this is an observation framework, not a trading instruction.
• Observe whether trading value reaches above RMB 2.2 billion for consecutive sessions while the share price recovers RMB 33.30–33.60; this is an observation framework, not a trading instruction.

The above scenario analysis is based on closing data and historical-price and technical-indicator calculations as of September 11, 2026. Short-term share prices will also be affected by news, fund flows, the broader market and other factors. Technical indicators themselves have lagging effects and limitations. This analysis does not guarantee actual future performance or constitute investment advice. Investors should independently assess the latest market information and bear investment risks themselves.

6. Industry Landscape and Competitive Analysis

6.1 Industry Overview

The communications-equipment industry is characterized by high concentration and strong technology barriers. Key competitive factors include accumulated expertise in radio access networks and core-network technologies; 5G/5G-A and future 6G standards and patents; optical transmission and optical access; data-center networks; coordination among chips, operating systems and databases; AI software and hardware capabilities; global carrier certification and delivery services; and supply-chain stability and compliance capabilities. In 2024, the global telecommunications-equipment market was mainly composed of Huawei, Nokia, Ericsson, ZTE, Cisco, Ciena and Samsung. Huawei, Nokia, Ericsson and ZTE were in the first tier, and the largest players collectively held approximately 70% of the global telecommunications-equipment market. Because institutions differ in market definitions and in whether enterprise networks, servers and terminals are included, specific market shares vary, and data from any single institution should not be treated as a unified industry standard.

6.2 Competitive Landscape

• In China’s carrier-network market, Huawei and ZTE form a relatively stable duopoly, while Ericsson, Nokia Shanghai Bell and CICT Mobile participate in selected segments.
• Major competitors in the global integrated communications-equipment market include Huawei, ZTE, Ericsson and Nokia. Cisco, Ciena and Samsung are competitive in data communications, optical networks or specific regional markets.
• Entry barriers arise from communications standards and patents, chip and software-hardware coordination, global carrier certification, long-term delivery and after-sales capabilities, and supply-chain and compliance systems.
• ZTE’s market competitiveness in 5G base stations, 5G core networks and fixed-network products remained second globally in 2025. Its market share in core-router centralized-procurement projects at China Mobile, China Telecom and China Unicom ranked second in each case. Its server and storage products ranked first by share in a China Mobile centralized-procurement project for domestically produced computing-power servers. These rankings were disclosed or cited in the company’s annual report and were not independently verified against all third-party statistical methodologies.
• Competition in consumer and home-terminal markets focuses on brands, channels, prices, inventory turnover and product iteration. The company has disclosed that its market share in 5G FWA&MBB continues to rank first globally, but the statistical methodology and original third-party report were not fully obtained in this search and should be identified as company-disclosed data.

6.3 Major Competitors

Compared with Huawei, ZTE’s advantages are more evident in China’s carrier market, cost efficiency, carrier-network delivery, selected emerging overseas markets and its communications-equipment portfolio. Compared with Ericsson and Nokia, ZTE is more competitive in China, fixed-network access, home terminals, terminals and selected emerging markets. Compared with Cisco, its strengths are more concentrated in carrier networks, China’s enterprise and government market, communications-equipment cost efficiency and home terminals. CICT Mobile and FiberHome compete in selected wireless, optical-communications and carrier-network segments, but their overall business scale and globalization are lower than ZTE’s. Industry market shares and rankings such as “global first/second” are affected by statistical scope, region and timing. Some are based on company disclosures or cited third-party methodologies, and specific figures should be confirmed against the relevant original reports and latest annual reports.

7. Risk Factors

• Risk that the computing-power business grows rapidly but remains insufficiently profitable: In the first half of 2026, computing-power revenue increased by more than 55% year on year and accounted for 35.1% of total revenue, while overall gross margin fell to 25.48% and enterprise-business gross margin was 15.84%. If servers, storage and data-center products continue to scale at relatively low margins, revenue growth may continue to outpace profit growth.
• Risk of continued decline in the carrier-network business: Carrier-network revenue declined 9.41% year on year in the first half of 2026 and 10.62% for full-year 2025. This business has a relatively high gross margin. If major carrier capital expenditure, centralized-procurement schedules or the company’s project share do not improve, the business may continue to weigh on overall gross margin and net profit.
• Risk of rising inventory and working-capital usage: Inventory was approximately RMB 41.258 billion at the end of 2025 and increased to approximately RMB 54.65 billion at the end of June 2026, up approximately 16.2% from the beginning of the year. If inventory preparation associated with expansion of the computing-power business cannot be converted into sales and collections in a timely manner, impairment, cash-flow and leverage pressure may increase.
• Accounts-receivable aging and collection risk: At the end of 2025, accounts receivable had a carrying value of RMB 21.670 billion, with approximately RMB 4.996 billion aged more than three years, representing approximately 17.85% of the carrying balance. Large carriers and enterprise and government customers also have strong bargaining power. Delays in project acceptance, settlement or customer payment could increase bad-debt provisions and operating cash-flow pressure.
• Supply-chain and key-component substitution risk: Raw-material costs accounted for 82.39% of operating costs. High-end chips, processors, GPUs, optical components and core server components may have long technical-certification and substitution cycles. Adverse changes in global chip supply, technology licensing or key-component prices could affect delivery, costs and gross margins.
• Customer concentration and dependence on large projects: Sales to the five largest customers accounted for 44.87% in 2025, and the largest customer accounted for 20.46%. The carrier-network business remains dependent on centralized procurement by major carriers and large enterprise and government projects. Although overall customer concentration declined from 2022–2024 levels, changes in the procurement pace or project delivery of a single large customer could still materially affect revenue recognition and collections.
• Overseas-business performance and guarantee risk: The company proposed providing subsidiaries with guarantee quotas of no more than USD 1.93 billion in 2026 and provided ZTE Corporation (Hong Kong) Limited with a joint and several liability guarantee of no more than USD 50 million under a framework agreement related to UAE mobile operator e& Group. These quotas do not equal actual guarantee balances, but problems with overseas project performance or collections could create additional financial risk.
• Risk that earnings forecasts and valuation recovery fall short of expectations: As of September 11, 2026, the company’s trailing P/E was approximately 46.42x, significantly above the 2026–2028 forward P/E based on institutional forecasts. The current valuation incorporates expectations of future profit recovery. If computing-power gross margins, carrier-network revenue or operating cash flow fail to improve as expected, earnings forecasts may be revised downward and valuation pressure may intensify.
• Risk of further technical weakness in the share price: As of September 11, 2026, the share price was below MA5, MA10 and MA20, while main-force funds recorded net outflows on most recent trading days. RMB 31.80–32.20 is an important observation range. An effective break below RMB 31.40–31.80 could lead to a further test of the 52-week low of approximately RMB 31.39.

8. Conclusion and Outlook

ZTE’s medium-term growth thesis is primarily driven by expansion in computing-power infrastructure, servers and storage, data centers, enterprise business and overseas markets, further supported by the company’s “connectivity + computing power” strategy, computing-network integration solutions and “Four-V” framework for the AI era. The institutional forecast averages project 2026–2028 revenue of approximately RMB 149.703 billion, RMB 169.142 billion and RMB 191.622 billion, respectively, and net profit attributable to the parent of approximately RMB 6.186 billion, RMB 7.134 billion and RMB 7.622 billion. The core assumptions are that scale effects in the computing-power business will gradually emerge, the carrier-network business will stabilize, and product mix and profitability will improve.

However, the company’s results remain in a transition period. In the first half of 2026, revenue growth diverged significantly from profit growth. Declining carrier-network revenue, relatively low gross margins on computing-power hardware, exchange-rate volatility and increased inventory preparation all pressured profitability. Going forward, investors should focus on whether computing-power gross margin and enterprise-business profitability can improve, whether carrier-network revenue stabilizes, whether overseas projects continue to expand, and whether inventory, accounts receivable and operating cash flow improve.

Valuation and market performance are highly sensitive to earnings recovery. As of September 11, 2026, the share price implied a trailing P/E of approximately 46.42x, while the 2026–2028 forward P/E based on institutional forecasts was approximately 24.9x, 21.6x and 20.2x. The large difference reflects that the market already has some expectations for future profit recovery. If profit recovery materializes, valuation pressure may gradually ease. If the computing-power business remains low margin or the carrier business continues to face pressure, both earnings forecasts and the valuation rationale may require adjustment.

Data Sources

• ZTE (000063)_Company Announcements_ZTE: 2026 Interim Report Summary_Sina Finance_Sina.com
• ZTE (000063)_Company Announcements_ZTE: 2026 Interim Report_Sina Finance_Sina.com
• ZTE (000063)_Company Announcements_ZTE: 2025 Annual Report Summary_Sina Finance_Sina.com
• ZTE (000063) Earnings Forecast_F10_Tonghuashun Financial Services
• ZTE (000063) Stock Forecast and Analyst Ratings - Futubull
• ZTE (000063) Price-to-Book Ratio | Valuation | Fundamentals - Lixinger
• Securities Code (A/H): 000063/00763　　Securities Abbreviation (A/H): ZTE　　Announcement No.: 202656
• ZTE (000063)_Company Announcements_Sina Finance_Sina.com
• ZTE updates August 2026 share-movement monthly report; share capital remains stable - Tiger Brokers
• ZTE (000063)_Company Announcements_ZTE: Announcement on Completion of A-Share Repurchase and Share Changes_Sina Finance_Sina.com
• ZTE_Individual Stock Calendar_East Money_Data Channel
• ZTE (HK0763) Latest Developments_F10_Tonghuashun Financial Services
• ZTE Corporation Overseas Regulatory Announcement: Announcement on Proposed Use of Own Funds for Entrusted Wealth Management in 2026; Announcement on Proposed Guarantee Quotas for Subsidiaries in 2026; Special Report of the Board of Directors on Securities Investment in 2025
• ZTE Deepens Its “Connectivity + Computing Power” Dual-Engine Strategy and Leads the AI Era’s Value Leap with the Four-V Framework
• ZTE President Xu Ziyang: Deepening Computing-Network Integration Across the Full Stack and Domain, Advancing Intelligently with China Unicom
• ZTE (000063) - Historical Trading Data | Daban Ke
• ZTE (000063) Stock Price, Technical Analysis, Future Forecast and Trading Suggestions - Investing.com
• ZTE (000063)_Fund Flows_Securities Star
• ZTE (000063) Latest Developments_F10_Tonghuashun Financial Services

This report was automatically searched, compiled and generated by AI based on publicly available information. Information is current as of the September 11, 2026 close; technical indicators, fund flows and market data are based on the methodology specified in the research notes, with some indicators sourced from third-party pages or estimated using historical closing prices. There may be timing differences, and specific data should be verified against the company’s official announcements and authoritative data terminals. This report is for information and research reference only and does not constitute investment advice. Investors should make independent judgments and bear investment risks themselves.