Chinese 5G equipment companies rally, ZTE hit three-year high

 

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Shares of Chinese 5G equipment companies stage a strong rally. ZTE Corporation surged 8% to hit a new high in nearly three years. Nanjing Huamai Technology, Eastern Communications, Tongyu Communication surge by the daily limit of 10%.

China Mobile’s 5G New Calling, or commercial VoNR services, have been commercially tested in pilot provinces in June this year, and in terms of its 5G+satellite network integration, base station on-satellite prototype and satellite-ground integrated network prototype will be completed by December this year, said Bian Yannan, China Mobile’s Deputy General Manager of Planning and Construction Department.

Jefferies said in a note that, although ZTE’s shares have surged by about 63% so far this year, there is more upside for the stock price given the company’s expanding share in telecommunication equipment, servers and the consumer end market, improving gross profit margin and strict cost control.

The broker raised the forecast of ZTE’s revenue in 2023 – 2026 and raised the target price of ZTE’s H-shares to HK$37.25 from HK$32.43, with a Buy rating.