massive 5g development in [table s 2018, upgrade …...capex investment cycle is estimated to begin...

See the last page for disclaimer of 6

中

外

运

输

Eq

uit

y R

ese

arc

h

Eq

uit

y R

ese

arc

h R

ep

ort

证券

研究

报告

Co

mp

an

y R

ep

ort

股

票

研

究

公

司

报

告

证

券

研

究

报

告

[Tab

le_I

nfo1

] 通

信

设

备

行

业

Te

lec

om

mu

nic

ati

on

Eq

uip

me

nt

Se

cto

r

[Tab

le_I

nfo2

]

中

兴

通

讯

ZT

E (

00

76

3 H

K)

[Table_Title] Company Report: ZTE (00763 HK)

Ricky Lai 黎柏坚

(852) 2509 2603

公司报告：中兴通讯 (00763 HK) [email protected]

29 January 2018

[Table_Summary] Massive 5G Development in 2018, Upgrade to “Buy” 2018年大规模地发展5G网络，上调至“买入”

ZTE is estimated to benefit from the rollout of 5G telecom network

development in 2018. Three Chinese telecom operators separately

announced plans of building 5G telecom networks in 2018 by following the

NDRC’s instructions of 5G telecom networks covering at least 5 cities in

2018.

Benefit from extensive global partnerships and networks. ZTE has

formed strategic alliances and partnerships with many key international

telecom players to develop a 5G network. ZTE has passed many feats in

China’s 5G development and has obtained large scale projects.

Gross profit margin is estimated to improve by 0.8 ppt/ 0.3 ppt to 30.4%/

30.7% in FY18-FY19, respectively, thanks to 5G network equipment

contributions. We expect overseas projects and 5G network equipment

contributions to increase, which outweighs lower margin projects, which are

positive to the Company’s development.

Upgrade the Company’s investment rating to “Buy” and revise up the

TP from HK$23.00 to HK$33.00. We revise up FY18-FY19 EPS by 4.3%/

5.5%, respectively, due to revisions to revenue forecasts. The new TP

represents 21.0x FY18 PER and 19.1x FY19 PER.

预计中兴通讯将从 2018 年 5G 电信网络发展中受益。三家中国电信运营商根据国家发改

委指示 2018 年 5G 电信网络覆盖至少 5 个城市的计划，分别宣布了其建设 5G 电信网络的

计划。

受益于广泛的全球伙伴关系和网络。中兴通讯与多家重要的国际电信运营商结成战略联盟

和伙伴关系，共同开发 5G 网络。中兴通讯在中国已经通过了多个 5G 网络测试，并获得

大规模的投标项目。

由于 5G 网络设备的贡献，预计 2018 至 2019 财年的毛利率分别升 0.8 个百分点/ 0.3 个

百分点至 30.4%/ 30.7%。我们预计海外项目和 5G 网络设备的贡献将会超过低利润项目的

贡献，并有利公司的发展。

上调公司的投资评级至“买入”及目标价从 23.00 港元上调至 33.00 港元。基于营收预测的

调整，我们分别上调 2018 至 2019 财年的每股净利润 4.3%/5.5%。新目标价相当于 21.0

倍 2018 年市盈率及 19.1 倍 2019 年市盈率。

[Table_Rank] Rating: Buy

Upgraded

评级：买入 (上调)

[Table_Price] 6-18m TP 目标价: HK$33.00

Revised from 原目标价: HK$23.00

Share price 股价: HK$28.000

Stock performance

股价表现

[Table_PriceChange] Change in Share Price

股价变动

1 M

1 个月

3 M

3 个月

1 Y

1 年

Abs. % 绝对变动 %

5.7 19.3 149.2

Rel. % to HS Index 相对恒指变动 %

(5.5 ) 2.6 108.5

Avg. Share price(HK$) 平均股价（港元）

30.0 28.6 20.6

Source: Bloomberg, Guotai Junan International.

[Table_Profit] Year End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE

年结收入股东净利每股净利每股净利变动市盈率每股净资产市净率每股股息股息率净资产收益率

12/31 (RMB m) (RMB m) (RMB) (△ %) (x) (RMB) (x) (RMB) (%) (%)

2015A 100,186 3,208 0.777 21.8 32.3 7.186 3.5 0.250 1.0 11.8

2016A 101,233 (2,357) (0.567) n.a. n.a. 6.347 3.7 0.000 0.0 (8.4)

2017F 114,237 4,620 1.111 n.a. 21.4 7.458 3.2 0.330 1.4 16.1

2018F 126,149 5,546 1.333 20.0 17.9 8.791 2.7 0.400 1.7 16.4

2019F 132,933 6,111 1.469 10.2 0.0 10.260 0.0 0.440 0.0 15.4

[Table_BaseData] Shares in issue (m) 总股数 (m) 4,192.7 Major shareholder 大股东 Zhongxingxin 30.4%

Market cap. (HK$ m) 市值 (HK$ m) 117,395.6 Free float (%) 自由流通比率 (%) 69.6

3 month average vol. 3 个月平均成交股数 (‘000) 18,197.0 FY18 Net gearing (%) FY18 净负债/股东资金 (%) Net Cash

52 Weeks high/low (HK$) 52 周高/低 (HK$) 33.200 / 11.700 FY18 Est. NAV (HK$) FY18 每股估值（港元） 38.0

Source: the Company, Guotai Junan International.

(20)

0

20

40

60

80

100

120

140

160

180

Jan-17 Apr-17 Jul-17 Oct-17 Jan-18

% of return

HSI Index ZTE CORP-H

Co

mp

an

y R

ep

ort


[Table_RightMar1]

29

Ja

nu

ary

20

18

[Table_RightMar2]

ZT

E 中

兴通

讯 (0

07

63

HK

)

[Table_PageHeader] ZTE (00763 HK)

ZTE is estimated to benefit from the rollout of 5G telecom network development in 2018. Three Chinese telecom operators

separately announced their plans of building 5G telecom networks in 2018. China Mobile (00941 HK) is planning to construct 500

5G base stations covering five cities: Beijing, Shanghai, Guangzhou, Suzhou and Ningbo. China Telecom (00728 HK) plans to

develop 5G trial networks in Xiong An, Shenzhen, Shanghai, Suzhou, Chengdu and Lanzho. China Unicom (00762 HK) plans to

carry out the 5G trial networks in 7 cities: Beijing, Tianjin, Shanghai, Shenzhen, Hangzhou, Nanjing and Xiong An. The launch of

the abovementioned 5G development plans from the three Chinese telecom operators are expected to help ZTE to ramp up its

carriers’ network revenue growth in 2018. In Dec. 2017, ZTE signed a strategic cooperation agreement with China Mobile in the

fields of smart city, smart home, secure terminal service platform, smart next-generation network operation and next-generation

network technologies. ZTE is expected to receive more project orders from China Mobile thanks to their partnership and strong

technology support. China Mobile and ZTE will work together on the study of operation and maintenance guarantees and user

experience improvement, and the development of IoT, 5G standards and network cloud virtualization. In Nov. 2017, ZTE won 47%

of the total share of China Unicom’s IMS project. ZTE is expected to provide products to China Unicom with various product

solutions including VoLTE, VoWiFi, and 5G voice services. China is undergoing the third stage of 5G trial testing in 2018 and ZTE

has passed many standard requirements. Having the need to develop a 5G telecom network, we estimate Chinese telecom

operators will raise their CAPEX in 2018. There are many applications that require the usage of 5G telecom networks including

AR/ VR, immersive data transfer (requires at least 1Gb/s data speed rate), autonomous driving, vehicle-to-vehicle

communications, IOT and smart cities.

ZTE has partnered with many overseas telecom operators for 5G network development. ZTE launched pre-5G telecom

network products in more than 40 countries by partnering with 60 telecom operators in 2017. ZTE formed strategic alliances with

many global telecom operators for launching their 5G network, including Softbank in Japan, Spain telecom, Wind Tre in Italy,

Orange in France and KT in Korea. In Oct. 2017, ZTE acquired 48.0% equity interest in a Turkish telecom equipment company,

NETAS, to enhance its overseas distribution network and manufacturing capacity for their 5G business. ZTE launched the 5G core

network Cloud ServCore project based on service-oriented architecture in Jan. 2018. ZTE, in Jan. 2018, launched its 5G Core

ServCore product based on Service-Based Architecture (SBA) which is compliant with the 3GPP R15 standard. ZTE Cloud

ServCore is based on the micro-service cloud native architecture which utilizes micro-service components, DevOps tool and

containerized deployment to meet requirements of network functions, such as on-demand orchestration, rapid deployment,

elasticity and high reliability. In 2018, ZTE will focus on core technologies such as 5G wireless, core network and chipsets. ZTE

successfully launched its first self-innovated Narrow Band Internet of Things (NB-IOT) chipset for the internet of things usage. We

expect that the Company can benefit from the huge demand for chipsets for IOT usage. ZTE announced that its standard director

Mr. Jingyi Zhou was selected as one of the members of IEEE-SA Standards Association Standards Board (SASB) for 2018.

Having a member join the global telecom standard organization, we think ZTE can better position itself and improve its influence

within the telecom sector.

Table-1: ZTE’s Major Events and Accomplishments

Date Events

Jan. 2018 Unveiling of 5G core products based on SBA

Jan. 2018 Received innovation award for its smartphone AXON M in CES 2018

Dec. 2017 Staff joined the IEEE SA standard board

Dec. 2017 Passed China Mobile’s acceptance test of SDN project

Dec. 2017 Co-operated with Velcom, a branch of A1 telekom Austria Group, to launch first scaled commercial Narrowband

IoT network

Dec. 2017 Selected by China Telecom as China’s first SDN based cloud pool project

Dec. 2017

Signed a strategic cooperation agreement with China Mobile in the fields of smart city, smart home, secure

terminal service platform, smart next-generation network operation and maintenance, and next-generation

network technologies

Nov. 2017 Completed phase-1 5G transport test in cooperation with Telefonica in Spain

Nov. 2017 Won 47% of the total share of the bid for China Unicom’s IMS project

Nov. 2017 Completed 5G test for Sri Lanka Telecom

Nov. 2017 Provided 4.5GHz band experimental system for SoftBank

Oct. 2017 ZTE has also acquired 48.0% equity interest in a Turkish telecom equipment company NETAS

Source: the Company.

Co

mp

an

y R

ep

ort


[Table_RightMar1]

29

Ja

nu

ary

20

18

[Table_RightMar2]

ZT

E 中

兴通

讯 (0

07

63

HK

)


Figure-1: ZTE’s Carrier Network Revenue and YoY Growth Figure-2: ZTE’s Consumer Business Revenue and YoY Growth

Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.

Figure-3: ZTE’s Government & Corporate Business

Revenue and YoY Growth

Figure-4: ZTE’s Gross Margin

Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.

Profit Revisions

We revise up FY18-FY19 EPS by 4.3%/ 5.5%, respectively. Thanks to partnerships with many overseas telecom operators and

benefits from the launch of the 5G network, we revise up FY18-FY19 revenue by 3.4%/ 5.1%, respectively. Telecom operators’

CAPEX investment cycle is estimated to begin in 2018, which would help ZTE to gain market share and improve margin. Gross

margin is estimated to lift up by 0.8 ppt/ 0.3 ppt in FY18-FY19, respectively, contributed by high-end 5G telecom network products.

Table-2: Financial Estimations Revisions

RMB (Million) 2017F

OLD

2018F 2019F 2017F

NEW

2018F 2019F

2017F

CHANGE

2018F

2019F

Total revenue 114,237 122,001 126,482 114,237 126,149 132,933 0.0% 3.4% 5.1%

Carriers’ networks 64,769 70,802 74,622 64,769 74,484 80,443 0.0% 5.2% 7.8%

Government & corporate 7,657 6,509 5,077 7,657 6,509 5,077 0.0% 0.0% 0.0%

Consumer 41,811 45,156 47,414 41,811 45,156 47,414 0.0% 0.0% 0.0%

Net profit 4,620 5,317 5,792 4,620 5,546 6,111 0.0% 4.3% 5.5%

EPS (RMB) 1.111 1.278 1.392 1.111 1.333 1.469 0.0% 4.3% 5.5%

Source: Guotai Junan International.

Valuation

Upgrade the Company’s investment rating to “Buy” and revise up TP from HK$23.00 to HK$33.00. ZTE is a leading telecom

equipment provider and will benefit from the global 5G network rollout in 2018. The Chinese government has planned to build the

world's largest commercial 5G network according to 13th Five-Year Plan and provide solid demand for network equipment. ZTE

offers a full range of 5G telecom products ranging from systems, base stations, cloud platform, terminals and chipsets. A strong

global network, competitive pricing and partnerships should help ZTE to win bids for 5G telecom projects in 2018. The large scale

57.2 58.9

64.8

74.5

80.4 30.2%

2.9%

10.0%

15.0% 8.0%

0%

5%

10%

15%

20%

25%

30%

35%

40

50

60

70

80

90

2015A 2016A 2017F 2018F 2019F

Carriers' networks revenue (LHS)

YoY growth (RHS)

RMB (Billion)

32.5 33.4

41.8 45.2

47.4

13.3%

3.0%

25.0%

8.0%

5.0%0%

10%

20%

30%

0

5

10

15

20

25

30

35

40

45

50

2015A 2016A 2017F 2018F 2019F

Consumer business revenue (LHS)

YoY growth (RHS)

RMB (Billion)

10.5

8.9 7.7

6.5 5.1

-59.1%

18.2%

-15.2%

-14.0% -15.0%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

0

2

4

6

8

10

12

2015A 2016A 2017F 2018F 2019F

Governemt & corporate business (LHS)

YoY growth (RHS)

RMB (Billion)

29.0%

29.3%

29.6%

30.4%

30.7%

28%

29%

29%

30%

30%

31%

31%

2015A 2016A 2017F 2018F 2019F

Co

mp

an

y R

ep

ort


[Table_RightMar1]

29

Ja

nu

ary

20

18

[Table_RightMar2]

ZT

E 中

兴通

讯 (0

07

63

HK

)


of demand and market should help ZTE to differentiate itself with economies of scale effect. We revise up the Company’s TP from

HK$23.00 HK$33.00. The new TP represents 21.0x FY18 PER and 19.1x FY19 PER.

Table-3: Peers Comparison

PER PB ROE(%) EV/EBITDA ROA (%)

Company Ticker Currency Price 17F 18F 19F 17F 18F 19F 18F 18F 18F

HK Listed

Companies

Lenovo Group

Ltd

992 HK HKD 4.620 12.3 14.2 9.8 2.1 1.7 1.6 8.7 7.3 1.3

ZTE Corp-H 763 HK HKD 28.000 21.8 19.4 16.5 2.8 2.6 2.3 14.2 15.1 3.6

Simple

Average

17.1 16.8 13.2 2.4 2.1 1.9 11.5 11.2 2.5

Weighted

Average

19.5 18.1 14.8 2.6 2.4 2.1 12.8 13.1 3.1

Japan Listed

Companies

Toshiba 6502 JP YEN 317.000 n.a. 2.4 3.4 (2.5) 3.0 1.8 n.a. 3.5 13.9

NEC 6701 JP YEN 3190.000 30.3 16.0 18.9 1.0 0.9 0.9 6.0 6.7 2.2

Fujitsu 6702 JP YEN 816.000 18.9 10.8 11.0 1.9 1.7 1.5 16.1 5.1 4.6

Simple

Average

24.6 9.7 11.1 0.1 1.9 1.4 11.0 5.1 6.9

Weighted

Average

22.7 7.9 9.0 (0.3) 2.1 1.5 12.8 4.7 8.4

Taiwan

Listed

Companies

HTC Corp 2498 TT TWD 70.200 n.a. 4.2 n.a. 1.3 1.0 1.1 23.0 n.a. 22.5

Acer Inc 2353 TT TWD 27.950 34.2 26.4 27.1 1.5 1.4 1.4 5.7 8.7 2.5

Asusteck

Computer Inc.

2357 TT TWD 282.000 14.1 12.7 12.0 1.1 1.1 1.1 8.8 7.6 4.5

Simple

Average

24.2 14.5 19.6 1.3 1.2 1.2 12.5 8.1 9.8

Weighted

Average

20.0 14.7 16.4 1.3 1.2 1.2 10.4 7.9 7.0

US Listed

Companies

Motorola

Solutions Inc

MSI US USD 99.000 18.3 16.9 16.0 n.a. n.a. n.a. n.a. 10.2 9.2

Cisco

Systems Inc

CSCO US USD 42.560 22.2 17.3 16.4 3.2 3.2 2.9 18.3 10.1 9.3

Juniper

Networks Inc

JNPR US USD 28.190 13.4 13.3 12.7 2.4 2.2 2.0 15.3 6.0 8.0

Simple

Average

18.0 15.8 15.0 2.8 2.7 2.5 16.8 8.8 8.8

Weighted

Average

21.5 17.1 16.2 3.2 3.1 2.9 18.1 9.9 9.2

Overall

Simple

Average

21.9 13.7 14.6 1.3 1.7 1.5 11.7 8.1 6.4

Overall

Weighted

Average

20.7 13.6 13.4 1.2 1.9 1.6 12.0 8.6 6.1

Source: Bloomberg.

Co

mp

an

y R

ep

ort


[Table_RightMar1]

29

Ja

nu

ary

20

18

[Table_RightMar2]

ZT

E 中

兴通

讯 (0

07

63

HK

)


Financial Statements and Ratios

[Table_IncomeStatement] Income Statement

Year end 31 Dec (RMB m) 2015A 2016A 2017F 2018F 2019F

Carriers' networks 57,223 58,881 64,769 74,484 80,443

Government & Corporate business 10,497 8,904 7,657 6,509 5,077

Consumer business 32,467 33,449 41,811 45,156 47,414

Total Revenue 100,186 101,233 114,237 126,149 132,933

Cost of sales (71,093) (71,609) (80,431) (87,776) (92,143)

Gross profit 29,093 29,624 33,806 38,373 40,790

Other income 5,420 7,486 6,283 7,064 7,577

R&D costs (12,201) (12,762) (14,965) (17,030) (18,611)

Selling & distribution costs (11,941) (12,622) (13,937) (15,516) (15,819)

Admin costs (2,514) (2,731) (3,313) (3,911) (4,254)

Other expenses (2,348) (8,651) (2,171) (2,397) (2,526)

Operating Profit 5,509 343 5,703 6,583 7,158

Finance costs (1,269) (1,156) (1,178) (1,206) (1,239)

Profit from associates 63 45 (7) (7) (8)

Profit Before Tax 4,304 (768) 4,518 5,370 5,911

Income Tax (563) (640) (592) (703) (774)

profit After Tax 3,740 (1,408) 3,926 4,667 5,137

Non-controlling Interest (532) (950) 694 879 974

Shareholders' Profit / Loss 3,208 (2,357) 4,620 5,546 6,111

Basic EPS (RMB) 0.777 (0.567) 1.111 1.333 1.469

[Table_CashFlowStatement] Cash Flow Statement


Profit before tax 4,304 (768) 4,518 5,370 5,911

D&A 2,087 2,434 1,839 1,882 1,927

Other non-cash items (7,093) (2,868) (6,357) (8,638) (9,502)

Working capital change 7,967 5,363 7,244 2,751 2,711

Interest paid, net (800) (355) (403) (400) (400)

Tax paid (824) (714) (767) (872) (943)

Dividend paid (688) (1,039) 0 (1,386) (1,664)

Cash from Operating Activities 5,640 3,093 6,074 93 (297)

CAPEX (1,604) (2,075) (2,345) (2,556) (2,786)

Others (265) (1,579) (1,652) (1,044) (1,086)

Cash from Investing Activities (1,869) (3,654) (3,997) (3,599) (3,871)

Bank loan change (4,089) 709 923 987 1,055

Others 9,728 3,321 (388) (377) (366)

Cash from Financing Activities 5,640 4,029 536 610 689

Net Changes in Cash 9,411 3,468 2,612 (2,896) (3,479)

Cash at Beg of Year 17,230 26,617 30,050 32,634 29,716

FX change (24) (35) (28) (22) (18)

Cash at End of Year 26,617 30,050 32,634 29,716 26,218

Source: the Company, Guotai Junan International.

[Table_BalanceSheet] Balance Sheet


Fixed assets 8,369 9,281 9,248 14,360 19,759

Intangible assets 3,772 4,454 7,686 6,620 4,570

Factored long-term trade receivables 1,594 1,392 1,239 1,102 981

Investment properties 2,010 2,016 2,077 2,139 2,203

Available for sales assets 2,381 2,660 2,766 2,326 2,326

Other non-current assets 7,447 8,958 9,404 9,555 9,729

Total Non-current Assets 25,574 28,760 32,420 36,103 39,568

Bills & trade receivables 28,715 27,983 29,662 31,441 33,328

Inventories 19,732 26,811 28,151 29,559 31,037

Cash & Cash Equivalents 26,617 30,050 32,634 29,716 26,218

Other current assets 23,951 27,805 28,978 30,290 31,740

Total Current Assets 99,014 112,648 119,425 121,006 122,323

Total Assets 124,588 141,408 151,845 157,109 161,890

Short term loans 12,525 17,064 18,088 19,173 20,324

Bills and trade payables 32,818 36,934 38,781 35,720 32,506

Other payables 4,492 575 528 488 449

Other current liabilities 21,497 36,941 38,561 35,266 31,805

Total Current Liabilities 71,332 91,514 95,958 90,647 85,083

Long term loans 6,016 5,018 4,918 4,820 4,723

Other non-current liabilities 3,891 3,990 3,805 3,727 3,701

Total Non-current Liabilities 9,907 9,009 8,722 8,546 8,424

Total Liabilities 81,239 100,523 104,680 99,193 93,507

Share capital 4,151 4,185 4,185 4,185 4,185

Reserves 25,509 22,217 26,837 32,382 38,493

Total Shareholders' Equity 29,660 26,401 31,021 36,567 42,678

Minority Interest 13,689 14,484 16,144 21,349 25,706

Total Equity 43,349 40,885 47,165 57,916 68,384

[Table_FinancialRatio] Financial Ratios

2015A 2016A 2017F 2018F 2019F

Gross margin 29.0 29.3 29.6 30.4 30.7

Operating margin 5.5 0.3 5.0 5.2 5.4

Net margin 3.2 -2.3 4.0 4.4 4.6

ROA 2.7 -1.8 3.2 3.6 3.8

ROE 11.8 -8.4 16.1 16.4 15.4

Current ratio (x) 1.4 1.2 1.2 1.3 1.4

Quick ratio (x) 1.0 0.9 0.9 1.0 1.0

Net gearing Net cash Net cash Net cash Net cash 2.0

Co

mp

an

y R

ep

ort


[Table_RightMar1]

29

Ja

nu

ary

20

18

[Table_RightMar2]

ZT

E 中

兴通

讯 (0

07

63

HK

)


[Table_CompanyRatingDefinition] Company Rating Definition

The Benchmark: Hong Kong Hang Seng Index

Time Horizon: 6 to 18 months

Rating Definition

Buy 买入 Relative Performance>15%; or the fundamental outlook of the company or sector is favorable.

Accumulate 收集 Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable.

Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the company or sector is neutral.

Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable.

Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable.

[Table_IndustryRatingDefinition] Sector Rating Definition

The Benchmark: Hong Kong Hang Seng Index

Time Horizon: 6 to 18 months

Rating Definition

Outperform 跑赢大市 Relative Performance>5%; or the fundamental outlook of the sector is favorable.

Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral.

Underperform 跑输大市 Relative Performance<-5%; Or the fundamental outlook of the sector is unfavorable.

[Table_DISCLOSUREOFINTERESTS] DISCLOSURE OF INTERESTS

(1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for GREENLAND BROAD (01253 HK),GUOTAI JUNAN I (01788 HK),BINHAI INVESTMENT (02886 HK),GFI MSCI A I (03156

HK),CAM SCSMALLCAP (03157 HK),ZHENRO PPT (06158 HK),LINK HOLDINGS (08237 HK),GFI MSCI A I-R (CNY) (83156 HK),Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research Report.

(4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months.

(5) Guotai Junan and its group companies are not making a market in the securities in respect of the issuer mentioned in this Research Report.

(6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies.

DISCLAIMER This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily). Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan. Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision. This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction. © 2018 Guotai Junan Securities (Hong Kong) Limited. All Rights Reserved. 27/F., Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong. Tel.: (852) 2509-9118 Fax: (852) 2509-7793 Website: www.gtja.com.hk

massive 5g development in [table s 2018, upgrade …...capex investment cycle is estimated to begin...

Documents