中兴通讯到财务报表分析英文版.docx

中兴通讯到财务报表分析英文版.docx

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中兴通讯到财务报表分析英文版

Content

PART1BACKGROUNDANALYSIS

1.Corporateprofile

ZTECorporationisaglobally-leadingprovideroftelecommunicationsequipmentandnetworksolutions.Withoperationsin160countries,thecompanyisaleaderintechnologyinnovation,deliveringsuperiorproductsandbusinesssolutionstoclientsallovertheworld.Foundedin1985,ZTEislistedonboththeHongKongandShenzhenStockExchangesandisChina’slargestlistedtelecomsequipmentcompany.

Offeringtheindustry’smostcomprehensiveproductrangeandend-to-endsolutions,ZTEdeliverscutting-edgetechnologytotelecommunicationsclientsinwireless,access&bearer,value-addedservices,terminals,managednetworkservices,andICTsolutionsforenterprisesandgovernmentagencies.Thecompany’sexpertiseandflexibilityintheseareasenablestelecommunicationsoperatorsandenterprisesgloballytoachievebusinessobjectivesandattainincreasedcompetitiveness.ZTE’stechnologyisdeployedbyleadinginternationaloperatorsandFortune-500enterprisesglobally.Thecompanyistheworld’sfourth-largesthandsetmaker,offeringstylishandintelligentdevicesforconsumersaroundtheworld.

ZTEbelievesintechnologyinnovationasacorevalueofthecompany,investingmorethan10%ofannualrevenueinR&D.Thecompanyhasestablished18state-of-the-artR&DcentersintheChina,France,Indiaandemploysover30,000researchprofessionals.With107subsidiariesdevotedtoinnovationglobally,ZTEwastheworld’sbiggestoriginatoroftechnologypatentsineachofthepasttwoyears,accordingtodatafromtheWorldIntellectualPropertyOrganization.

AsamemberoftheUNGlobalCompact,ZTEiscommittedtoavisionofbalanced,sustainabledevelopmentinthesocial,environmentalandeconomicarenas.Promotingfreedomofcommunicationsaroundtheworld,thecompanyhasincorporatedinnovation,technologicalconvergenceandtheconceptof"goinggreen"intotheproductlifecycle.ThisincludesR&D,production,logisticsandcustomerservice.ThecompanyalsoiscommittedtomaximizingenergyefficiencyandminimizingtheCO2emissions.

Activeincommunityprograms,ZTEparticipatedinreliefeffortsrelatedtothe2004tsunamiinIndonesia,the2008earthquakeinSichuan,China,andthe2010earthquakeinHaiti.ZTEalsoestablishedtheZTESpecialChildrenCareFund,thelargestcharityfundinChina.

Lookingforward,ZTEwillcontinuetoshapetheglobaltelecommunicationsindustry,workingwithourcustomersandpartnerstostayontopofshiftsintechnology,businessmodelsandmarketneeds.

2.Overviewoftheindustry

2.1Overviewofthedomestictelecommunicationsindustryforthefirsthalfof2014

Duringthefirstsixmonthsof2014,theBigThreedomesticcarrierssteppedupwiththeirinvestmentsinequipmentmainlyinconnectionwiththelarge-scaledeploymentof4Gnetworksandtheconstructionofrelatedancillaryfacilities.TherapiddevelopmentoftheMobileInternetandthelaunchof4Gsmartphoneshasacceleratedthecommercializationof4Gnetworks.Whilethewirelesssectorremainedaheavilyfavoredspotinthetelecommunicationsindustry,emergingnewsectorssuchastheMobileInternet,CloudComputing,BigDataandSmartCitywerebecomingnewgrowthnichesintheindustry.AccordingtostatisticspublishedbytheMinistryofIndustryandInformationTechnology,revenuefromthetelecommunicationservicesamountedtoRMB595.73billionforthesixmonthsended30June2014,representingayear-on-yeargrowthof5.6%.

2.2Overviewoftheglobaltelecommunicationsindustryforthefirsthalfof2014

Therewasstablegrowthinequipmentinvestmentbytheglobaltelecommunicationsindustryinthefirsthalfof2014.Thetraditionaltelecommunicationsindustrywasfacingopportunitiesaswellaschallengesinitsdevelopmentundertheimpactofcomprehensive4Gapplications,theintegrationofICTindustriesandthetrendofinformationalization.Whilecontinuingtoenhancenetworkperformance,globalcarrierswereactivelyinvestigatingnewprofitmodels,suchasserviceinnovations,flowbusinessandapplicationsforthegovernmentandcorporatesectors,inabidtorealizeeffectivetransformationbyexploringnewopportunitiesfordevelopment.

PART2FINANCIALSTATEMENTANALYSIS

1.IncomeStatementAnalysis

1.1HorizontalAnalysis

Fromthehorizontalanalysistablewecanfindthatthecompany'sannualnetprofitin2013is1,433,636,000yuan,whichhasincreased4,038,257,000yuan.Thegrowthrateis155.04%,whichisadramaticallyrise.

Theincreaseoftotalprofitis3,811,043,000yuan,andthegrowthrateis192.17%,whichmainlyduetotheincreaseofoperatingprofit,whosegrowthrateis70.15%.

Theincreaseofoperatingprofitis3,509,068,000yuan,andthegrowthrateis70.15%,whichmainlyduetotheincreaseofoperatingrevenue.Besides,thesellinganddistributioncostsandR&Dcostsdecreasesharply,andthefinancialexpensesincreasedslightly.

1.2VerticalAnalysis

Fromtheverticalanalysistable,wecanseethefinancialresultsofZTE.Theproportionoperatingprofitinoperatingrevenuewas-1.98%in2013anditroseby3.96%comparedwiththeratioin2012.Thenetprofitratiowas2.43%in2013anditroseby4.79%comparedwiththeratioin2012.Sointheviewofprofit,theprofitabilityofZTEpromoted.ThereasonwhytheZTE’sfinancialresultschangeresultsfromthedescendingofthesellinganddistributioncostsandadministrativeexpenses.However,theriseofoperatingcostsalsohasanegativeinfluenceonprofit.

2.BalanceSheetAnalysis

2.1HorizontalAnalysis

Oneofthegoalsofthehorizontalanalysisofbalancesheetistogenerallysummarizethechangesofassetsandequityandtorevealthedifferencebetweenchangesinassets,liabilitiesandstockholder'sequity,andanalyzesthereasonofthechanges.Inrecentyearsthedomesticcommunicationindustrycontinuestomaintainarapidgrowthrate.ZTECorpgraspsthepulseofthemarketandtakestheadvantagesofthediversificationofproductsandstrengthensdomesticmarketdependingonthedifferentmarketstrategies.Atthesametime,ZTEvigorouslyexploretheinternationalmarketandtotalassetsareimprovedsteadily.AccordingtotheannualreportofZTEin2013,wepreparethehorizontalbalancesheetasbelow:

Fromtheperspectiveofassets:

Thetotalassetsofthecompanyinthecurrentperiodarereducedby7,366,809,000yuan,havingsubsequentlydeclinedby6.86percent.Itsuggeststhattheassetsizeofthecompanydecreased.

Accordingtothefurtheranalysis:

（1）Thecurrentassetsdecreased6,213,729,000yuan,whichmadethetotalassetbereducedby5.78%.Non-currentassetsreduced1,153,080,000yuan,leadingtothetotalassetbereducedby1.07%.

（2）Themainreasonofthedecreaseofthetotalassetsisthedecreaseofthecurrentassets.Therelevantchangesmainlyreflectedinthefollowingtwoaspects:

Tosomedegree,thedropofthecurrentassetsreflectsthattheliquidityofassetshavedeclined.Thechangeismainlyreflectedinthefollowingterms:

A.Cashreduced3,223,388,000yuan,withadropoftotalassetsin3%.It’snotdesirabletoimprovetheliquidityofthecompany.Atthesametime,weshoulddoanin-depthanalysisoftheeffectivenessoftheuseoffunds.

B.Decreaseoftheaccountsreceivablesandthenotesreceivables.Theaccountsreceivablesdecreasedby3.06%,whichresultsinthedropoftotalassets.Theprojectwillhaveacertainimpactoncurrentcapital.Sothecompanyneedtodoanin-depthanalysisinthecompany'sannualsalesandcreditpolicy,tocontrolthecollectionoftheaccountsreceivables.

Fromtheaspectofliabilitiesandstockholder’sequity:

（1）Theliabilitiesdecreasedby8,396,659,000yuanwithadegreeof9.90%,whichleadedtothe7.81%declineoftotalliabilitiesandstockholder’sequity.Thestockholder’sequityincreased1,032,850,000yuan,withadegreeof4.57%,leadingtothe0.96%growthoftotalliabilitiesandstockholder’sequity.Thesetwofactorsmadethetotalliabilitiesandstockholder’sequitydecreasedby7,363,809,000yuanwithadegreeof6.85%.

（2）Themainreasonresultedinthedecreaseoftotalliabilitiesandstockholder’sequityisthedeclineofcurrentliabilities.Thecurrentliabilitiesdecreasedby11,985,122,000yuanwithadegreeof16.43%,whichleadedtothe11.15%declineoftotalliabilitiesandstockholder’sequity.Thedeclineofshort-termloanleadstothedecreaseofcurrentliabilities.Thischangemayreducethereimbursementofliabilitiespressureandthefinancialrisk.

（3）Theincreaseofundistributedprofitisthemainfactorleadingtotheincreaseofstockholder’sequity.Thisindicatesthegoodsalesconditionofthecompanyinthisterm.Otherchangesmaybecausedbythechangesofaccountingpolicies.

1.2VerticalAnalysis

Fromtheperspectiveofassetstructure

（1）Fromthestaticanglethecurrentassetsofthisperiodaccountedfor76.34%andtheproportionofnon-currentassetsisashighas23.66%,suggestingthatZTEhasanelasticassetstructurewhichisconducivetoquicklymobilizefundstolowertherisk.

（2）Fromthedynamicangle,theproportionofcurrent-assetsfellby0.55%andtheproportionofnon-currentassetsincreasedby0.55%.ThenarrowrangeoftheseassetsaddsuptoexplainthatthestableassetstructureofZTE.

Fromtheaspectofcapitalstructure

（1）Fromthestaticpointofview,theproportionofstockholder’sequityis23.61%,buttheproportionofliabilitiesis76.39%.Thehighdebtratioimpliesthehighfinancialrisk.However,itrequirestotaketheprofitabilityintoconsiderationwhendeterminewhethertooptimizethecapitalstructure.

（2）Fromthedynamicangle,