Daiwa Capital Markets: Lowers ZTE's target price to HKD 35.8, product structure deteriorating sharply

Daihua Jixian released a research report stating that ZTE's performance in the third quarter of 2025 is significantly below market consensus expectations in terms of revenue, profit margin, and profitability. This is mainly attributed to changes in product structure, as the high-margin carrier network business performed far below expectations due to weak telecom capital expenditures, and issues with revenue recognition further exacerbated this situation. As ZTE begins to recognize related revenue in the fourth quarter, the carrier network business is expected to see a significant recovery. Maintaining a "Hold" rating, the target price has been lowered from HKD 40 to HKD 35.8