ZTE (000063) H1 2025 earnings summary

Executive summary

• Operating revenue for the first half of 2025 rose 14.51% year-on-year to RMB71.55 billion, driven by strong growth in government/corporate and consumer segments, despite a 5.99% decline in carriers' network revenue.

• Net profit attributable to ordinary shareholders fell 11.77% year-on-year to RMB5.06 billion, with net profit after extraordinary items down 17.32%.

• Gross profit margin decreased by 7.99 percentage points to 32.45%, mainly due to changes in revenue mix and lower margins in government/corporate and consumer businesses.

• R&D investment remained high at RMB13.54 billion, representing 18.92% of operating revenue.

Financial highlights

• Operating revenue: RMB71.55 billion (+14.51% YoY); net profit: RMB5.06 billion (-11.77% YoY).

• Net cash flows from operating activities dropped 81.44% YoY to RMB1.30 billion, mainly due to increased cash outflows for goods and services.

• Basic and diluted EPS: RMB1.06 (-11.67% YoY); net asset per share: RMB15.64 (+6.25% YoY).

• Weighted average return on net assets: 6.85% (down 1.43 percentage points YoY).

• Total assets: RMB216.31 billion (+4.33% from end-2024); owners' equity: RMB74.84 billion (+2.79%).

Outlook and guidance

• Management expects revenue to return to growth for the full year 2025, with stable operations.

• Focus will remain on expanding intelligent computing, cloud, and AI-driven products, while maintaining leadership in wireless and wireline segments.

• Continued investment in R&D and innovation, especially in AI, cloud computing, and smart terminals.