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The Hong Kong-listed ZTE Corp, the country's second largest telecommunications equipment provider, posted a net profit of 1.27 billion yuan (US$153 million) yesterday for the 2004 fiscal year, registering a growth of 23.7 per cent from the previous year.
According to the company's statement, its revenue rose 24.5 per cent to 21.2 billion yuan (US$2.5 billion). Earnings per share stood at 1.57 yuan (18.9 US cents).
The company's capital expenditure this year is set to be 900 million yuan (US$108 million).
Listed in Hong Kong last December, Shenzhen-based ZTE is the first mainland-listed company to make a subsequent float there.
ZTE shares dropped by 5.82 per cent to end at HK$24.30 (US$3.10) yesterday.
"The result is quite in line with our expectations," said Dai Chunrong, an analyst at China Securities.
The company's statement also showed that it sold 10 million handsets last year, up 120 per cent from the previous year.
Meanwhile, international sales reached 4.58 billion yuan (US$552 million), accounting for 21.5 per cent of total sales.
"I believe overseas business will continue to be a major revenue generator this year," Dai said yesterday.
Uncertainties in the domestic market and fierce competition are leading ZTE to focus on the international market, she added.
It was reported last week that China Unicom is to be split and merged with China Telecom and China Netcom.
Also, telecoms operators are likely to lower their investment in "Xiaolingtong"-related services, a former ZTE revenue earner, as the government is to introduce third generation (3G) wireless communications in the second half of the year.
To ensure sustained growth, ZTE has embarked on an aggressive campaign to boost its exports and aims to increase its overseas sales to 40 per cent of total sales by 2006.
ZTE said in January its unaudited contract sales surged 35 per cent in 2004 to 34 billion yuan (US$4.1 billion). Of the total, the company said 13.6 billion yuan was from international sales.
"The comparatively low prices as a result of low costs as well as top quality services make domestic telecommunications providers like ZTE and Huawei very competitive in the international market," Dai said.
ZTE and its domestic rival Huawei are competing with better-established rivals such as Ericsson, Nortel Networks and Motorola.
To fuel its international expansion, ZTE announced last week that it would invest about US$350 million to set up a research and development centre in Pakistan.
(China Daily April 12, 2005)
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