Bank of America Securities: Expects continued strong growth in ZTE's server business, maintains "buy" rating.

Bank of America Securities released a research report stating that ZTE Communications' profit in the fourth quarter of last year fell by 43% year-on-year to 2.96 billion RMB, which was 53% lower than the bank's expectations, mainly due to the shrinking scale of operator business and increased year-end expenses. Quarterly sales were 8% lower than the bank's and market expectations, and only increased by 7% year-on-year to 33.4 billion RMB. Gross profit margin and operating profit margin were 0.8 and 1.5 percentage points lower than the bank's forecast respectively. The bank lowered its profit forecast for ZTE for the next two years by about 6%, reflecting pressure in the telecommunications operator business. Considering the appreciation of the RMB, the bank maintained its target price for ZTE H shares at 28 HKD, with a "buy" rating.