ZTE Corporation (000063): Set to increase the number of landing 5G R & D 5G construction to start the company’s core benefits
Event: The company issued an announcement on the evening of August 22 that the application for the non-public issuance of A shares was approved by the issuance committee of the China Securities Regulatory Commission.
Comments: 1. The application for the non-public issuance of A shares was approved. The company is scheduled to increase and land in February 2018. The company released the “Preliminary Plan for the Non-public Issuance of A Shares in 2018.”The budget for the raised funds shall not exceed 13 billion yuan (inclusive).
Among them, 9.1 billion are planned to be used for “5G network access-oriented technology research and product development projects”, covering project R & D equipment and software purchase ($ 2.8 billion) and capitalized R & D investment ($ 6.3 billion), and 3.9 billion for supplementaryWorking capital.
After the completion of this non-public offering, the major shareholder, ZTE Xin, has a 26% shareholding under the maximum diluted amount.
07%, still the company’s controlling shareholder.
In February 2018, the company issued the “Instructions on the Issuance Price of Non-public Issuance of A Shares in 2018”. The above-mentioned issue price of the proposed shares will be no less than RMB 30 per share (inclusive).The issue price of the reserve price has reached a transaction with the subscription object, and the company will terminate the offering.
On January 17, 2019, the company was established by extending the validity period of this issue for twelve months to March 27, 2020, and combining the capital market environment and the company’s own situation, and canceling the issue of the reserve price (30 yuan / share).
On August 22, 2019, the CSRC reviewed and approved the company’s application for non-public issuance of A shares.
2. The company’s capital structure has been further improved. The strength of 5G R & D has been strengthened by 5G R & D, which has further consolidated and strengthened the company’s advantages in the process of 5G network transformation.
This fixed increase is mainly invested in 5G project research and development, which totals 428.
USD 7.8 billion, with a three-year implementation period. The fundraising plan for the project raised in 2018, 2019, and 2020 will be 95, respectively.
4.2 billion, 130.
79 trillion and 174.
5.7 billion, for a total of 400.
7.8 billion, of which capitalization investment (raised capital investment) was 16 respectively.
00 ppm, 21.
700,000 yuan and 25.
30 yuan, a total of 6.3 billion yuan.
Affected by the bill in 2018, the R & D project investment schedule has decreased, but since the second half of 2018, the company’s production and R & D activities have returned to normal.
Raised funds of US $ 9.1 billion for the first time. The 5G project included US $ 2.8 billion in R & D equipment and software purchases, US $ 6.3 billion in capitalized R & D, and reduced future R & D expenditure.
The fixed addition will increase 5G research and development, consolidating the foundation for competition in the next decade.
In addition, the 3.9 billion funds raised will be used to supplement the company’s liquidity needs for business development and optimize the company’s capital structure.
After the completion of this non-public offering, it is expected that the company’s net assets and asset size will increase, the asset-liability ratio will decrease, and the company’s capital structure is expected to be further optimized, which will help strengthen the company’s ability to defend against financial risks: 1) Financial expenses: remainingAt the end of March 19, the company’s short-term loans were 318 trillion and long-term loans were 25 trillion. In 2017 and 2018, the index expenditure was 11 respectively.
6 and 13.
US $ 300 million, with a comprehensive interest rate exceeding 5%. The fundraising will save the company over US $ 600 million in expenditures; 2) Cash flow: After the completion of the non-public offering, it is expected that the company ‘s cash inflows from financing activities in the year will increase and the company willCash flow from activities will also increase.
The company’s cash injection from operating activities is expected to increase; 3) Asset-liability ratio: As of the end of March 2019, the company’s assets-liabilities replaced 76.
41%. After the fundraising is completed, the company’s total assets and net assets will increase at the same time, which will reduce the company’s asset-liability ratio and further optimize the financial position and capital structure. 4) Investment participants: The non-public offering willWith more than 10 investors, the issue size does not exceed 13 billion.
Due to the contradiction in the amount of funds, ZTE is also the core force of the 5G national strategy. We judge that, except for institutional investors, participation does not exclude the possibility of industrial or national capital entry.
3. The pace of domestic 5G investment has accelerated, overseas demand has been released, and the company ‘s performance has been continuously promoted. The communications industry has ushered in an inflection point in 19 years, 4G prosperity has increased, and 5G business is imminent.Benefit.
According to the latest capital expenditure plans of the three major domestic operators, the capital expenditure budget (including 5G capital expenditure) for 2019 is approximately 302 billion, an increase of 5.
2%, of which wireless capital expenditure has grown rapidly and will become the focus of investment for operators in 2019. 5G investment is expected to be US $ 33 billion, and industry investment is picking up.
At present, the company has grown more than 25 5G commercial contracts worldwide and shipped more than 50,000 5G base stations.
In the 5G network-oriented preset process, the 5G leader segmentation is gradually realized.
The overseas market 北京夜生活网 is expected to continue to break through, consolidating ZTE’s global market share promotion logic.
The company has maintained its leadership in 5G wireless, core network, bearer, chip and other core technologies.
In the international telecommunications market, the company adheres to the strategy of a large population country and a mainstream global operator, and conducts 5G cooperation with more than 60 operators, covering major 5G markets such as China, Europe, Asia Pacific, and the Middle East.
According to Gartner’s related research report, the investment scale of communication networks and equipment expenditures of global communication operators will maintain a steady growth momentum. ZTE Corporation continues to break through overseas markets through leading technological advantages and fully enjoy the 5G construction bonus.
4. The industry is gradually turning 成都桑拿网 to key points. Equipment leaders are expected to take advantage of their core advantages and maintain the “Strongly Recommended-A” rating for 4G network construction support performance in 2019. The 5G cycle will gradually start supporting transformation. As the top two main equipment vendors in the internal scale, the companyPerformance is expected to re-enter the rising channel under the support of the domestic market.The company’s overseas share continues to break through. ZTE is expected to achieve a share of more than 15% in the global communications equipment market in the 5G era, and achieve a competitive layout of mainstream operators worldwide.
The company’s new leadership continues to focus on the 5G and core operator markets, consolidates its technical strength, focuses on compliance and standardized management, and rides on the industry’s spring breeze. ZTE has entered a new era of development.
It is estimated that the net profit for 2019-2021 will be 51.
0 billion, 68.
400 million, 84.
300 million, assuming an increase of 13 billion in capital raised, the company’s net profit is not inconsistent, corresponding to the company’s PE for 2019-2021 is 27.
The current market value corresponds to 24 PE in 2019-2021.
2X and 14.
At 8X, the company estimates that it will still improve the space and maintain the “strongly recommended-A” rating. Risk reminder: the overseas market has expanded less than expected, the 5G advancement rate has fallen short of expectations, and the operator’s capital expansion has continued to decline