External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul><li>China’s stock markets (both A/H shares) have soared recently on government stimulus policies.</li><li>Per Reuters, Chinese stocks recorded their biggest single-day gains since 2008, with highest turnover (domestic A-share) on 30 Sep.</li><li>As of 2 Oct 2024, HSI and CSI 300 have surged 32.2% and 18.5% YTD, respectively, currently ranking as top performing indices globally. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China’s stock markets (both A/H shares) have soared recently on government stimulus policies.Per Reuters, Chinese stocks recorded their biggest single-day gains since 2008, with highest turnover (domestic A-share) on 30 Sep.As of 2 Oct 2024, HSI and CSI 300 have surged 32.2% and 18.5% YTD, respectively, currently ranking as top performing indices globally. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Semiconductors - Sector Valuation Revisit After Recent Rally; Potential Rerating Opportunities Ahead

Equity Bottom-Up

<ul><li>ZTE released its 3Q23 results. Quarterly revenue of RMB28.7bn (-12.4% YoY and -9.1% QoQ) was below market expectation, largely due to lower-thanexpected telecom revenue.</li><li>3Q net profit was RMB2.4bn, with 5.1% YoY and - 16.3% QoQ. GPM was resilient at 44.6% in 3Q23 (vs. 38.1%/42.0% in 3Q22/ 2Q23), showing Company’s competitiveness in the telecom market.</li><li>We revised down our EPS forecast for 2023-25E by 5%/7%/9%, reflecting a slowdown in growth in 3Q23.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZTE released its 3Q23 results. Quarterly revenue of RMB28.7bn (-12.4% YoY and -9.1% QoQ) was below market expectation, largely due to lower-thanexpected telecom revenue.3Q net profit was RMB2.4bn, with 5.1% YoY and - 16.3% QoQ. GPM was resilient at 44.6% in 3Q23 (vs. 38.1%/42.0% in 3Q22/ 2Q23), showing Company’s competitiveness in the telecom market.We revised down our EPS forecast for 2023-25E by 5%/7%/9%, reflecting a slowdown in growth in 3Q23.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

<ul><li>ZTE’s recent update on AI-related development: At a recent investor relations event, the Company shed light on its progress in AI development for the B2B sector.</li><li>The Company featured a foundational AI model, a R&amp;D model (AI-assisted programming), a telecom model (streamline telecom carriers’ operations), and an industry-specific model (focusing on urban governance) aimed to be rolled out between year-end and early 2024.</li><li>Capitalizing on the AI momentum spurred by ChatGPT in 1H23, the Company is set to debut new computational products and is on track to launch an AI server, specifically engineered for intensive model training. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZTE’s recent update on AI-related development: At a recent investor relations event, the Company shed light on its progress in AI development for the B2B sector.The Company featured a foundational AI model, a R&amp;D model (AI-assisted programming), a telecom model (streamline telecom carriers’ operations), and an industry-specific model (focusing on urban governance) aimed to be rolled out between year-end and early 2024.Capitalizing on the AI momentum spurred by ChatGPT in 1H23, the Company is set to debut new computational products and is on track to launch an AI server, specifically engineered for intensive model training. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZTE (000063 CH) – A Defensive Play with Long Runway for Growth

<ul><li>ZTE released 1H23 results, posting revenue/NP (Rmb60.7bn)/NP (Rmb5.4bn), growth of 1.5%/19.9% YoY.</li><li>The top-line growth was muted, mainly due to the slowdown in overseas capex spending and macro pressures. Geographically, domestic sales grew 6.2% YoY, while overseas sales declined by 8.5% YoY.</li><li>The bottom-line growth was strong, driven by improving GPM (6.18ppts higher than 1H22), a result of favourable segment mix and cost optimization. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZTE released 1H23 results, posting revenue/NP (Rmb60.7bn)/NP (Rmb5.4bn), growth of 1.5%/19.9% YoY.The top-line growth was muted, mainly due to the slowdown in overseas capex spending and macro pressures. Geographically, domestic sales grew 6.2% YoY, while overseas sales declined by 8.5% YoY.The bottom-line growth was strong, driven by improving GPM (6.18ppts higher than 1H22), a result of favourable segment mix and cost optimization. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ZTE (763 HK) – 1H23 Earnings Lifted by Improved Gross Margin

<ul><li>Our view on China telecom sector is unchanged. We think this sector is a defensive play amid macro-economic pressure.</li><li>We expect China telcos to be the most favorable defensive picks with stable operations, strong FCF, high dividend yield and potential share repo opportunities.</li><li>China Mobile and China Telecom’s (941 HK/ 728 HK, not rated) share prices grew 25.5%/23.8% YTD.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Our view on China telecom sector is unchanged. We think this sector is a defensive play amid macro-economic pressure.We expect China telcos to be the most favorable defensive picks with stable operations, strong FCF, high dividend yield and potential share repo opportunities.China Mobile and China Telecom’s (941 HK/ 728 HK, not rated) share prices grew 25.5%/23.8% YTD.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China 5G Sector – China telecom sector remains as a defensive play

China

ZTE Corporation develops and markets switches, access servers, videoconferencing systems, mobile communication systems, data communication devices, and optical communication devices.  The Company also offers networking solutions for setup, refurbishment and optimization of networks.

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ZTE Corp H (763 HK)

Semiconductors - Sector Valuation Revisit After Recent Rally; Potential Rerating Opportunities Ahead

China’s stock markets (both A/H shares) have soared recently on government stimulus policies. Per Reuters, Chinese stocks recorded their biggest...

CMB International

ZTE (000063 CH) – Mixed 3Q Results

ZTE released its 3Q23 results. Quarterly revenue of RMB28.7bn (-12.4% YoY and -9.1% QoQ) was below market expectation, largely due to lower...

CMB International

ZTE (000063 CH) – A Defensive Play with Long Runway for Growth

ZTE’s recent update on AI-related development: At a recent investor relations event, the Company shed light on its progress in AI development for...

CMB International

ZTE (763 HK) – 1H23 Earnings Lifted by Improved Gross Margin

The bottom-line growth was strong, driven by improving GPM (6.18ppts higher than 1H22), a result of favourable segment mix and cost optimization.

CMB International

China 5G Sector – China telecom sector remains as a defensive play

We expect China telcos to be the most favorable defensive picks with stable operations, strong FCF, high dividend yield and potential share repo...

CMB International

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