Business Summary

ZTE Corporation is a China-based company principally engaged in the design, development, production, distribution and installation of a range of Information and Communication Technology (ICT) related systems, equipment and terminals.

The Company mainly operates its business through three segments:

1.Carriers Network segment

Provides wireless network, wired network, core network and telecommunication software systems and services, as well as other technologies and product solutions.

2.Government and Corporate segment

provides the government and corporate information projects with top-level design, consulting services and integrated information solutions.

3.Consumer segment.

mainly involved in the development, production and sale of smart phones, mobile data terminals, family terminals and wearable devices, as well as the provision of related software applications and value-added services.

2016 Financial Summary

For the fiscal year ended 31 December 2016, ZTE Corporation (H Shares) revenues increased 1% to RMB101.23B. Net loss applicable to common stockholders totaled RMB2.36B vs. income of RMB3.21B.

Revenues reflect Carriers' Networks segment increase of 3% to RMB58.88B, Consumer Business segment increase of 3% to RMB33.45B,

The PRC segment increase of 10% to RMB58.55B. Net loss reflects Consumer Business segment income decrease of 71% to RMB394.4M.

Our View on 763.HK

1. 2017 first quarter net profit increase 27.8% to 1.214 billion yuan.

2. Reached settlement with the US Department of Justice, favorable to continue its business

3. ZTE A shares (000063.SZ) has just been included in the MSCI emerging market index

4. 5G is the future of the mainland communications industry, an important investment increment, the overall amount of investment will reach 830 billion yuan.

5. Buy rating with near-term price target = HK$27.50, share price retreat provides buying opportunity.

6. Cut-loss price @ Weekly chart MA(20) = HK$23.9

I, Anthony chan, am a licensed person under the Securities and Futures Commission. Until the date this commentary was published, neither I and/or my affiliates are the beneficiary of the securities mentioned herein or are entitled to any financial interests in relation thereto.