Great Wall Securities: ZTE Corporation (00763) target price lowered to 24.3 Hong Kong dollars, expected short-term gross profit margin under pressure.

Dahua Jixian released a research report stating that ZTE Corporation (00763) exceeded market expectations in the first quarter with a 7.8% year-on-year revenue growth. However, due to the revenue growth driven by low-profit artificial intelligence server business, the product mix and profit have significantly deteriorated, and the net profit is roughly in line with expectations. The bank expects that ZTE's contribution from artificial intelligence server business will continue to rise in the coming quarters, which may put pressure on gross profit margin in the short term. The rating of "hold" is maintained; the target price is lowered from HK$26.5 to HK$24.3.