News alert: Telecom Equipment Sector – Growth moderated; ZTE continued to gain market
- Global telecom equipment market revenue increased by 3% y-o-y during the 1H22, according to Dell’Oro
- Market is still positive as 5G and fibre have more to expand
- Huawei maintained its leadership position, while ZTE is seeing a gradual up-trend in share gain
- We continue to like ZTE (763 HK) and YOFC (6869 HK) with BUY ratings
What’s New
– Dell’Oro Group, a third party researcher, published a report on 1H22 total telecom equipment market last week.
– Global telecom equipment market revenue increased 3% y-o-y during 1H22 against 7% y-o-y increase in 1H21.
– Challenging 5G markets, strengthening USD, suppliers exits in Russia, and slower wireless activity in Japan and India are the key factors for the slower growth in 1H22.
– Market is still positive as 5G and fibre have more to expand; the researcher is forecasting the overall telecom equipment market to advance for a fifth consecutive year in FY22 with 4% full year growth.
– Huawei accounted for 29% of the 1H22 global market, largely unchanged in past 3 years. Its leadership position in China outweighed its revenue share decline outside of China.
– ZTE is seeing a gradual up-trend in its market share gain over the years, reaching 11% of share in the globe and 32% of share in China in 1H22.
Our View:
– The research findings are largely in-line with our earlier view of stable capex outlook, and that ZTE will grow on market share gain.
– 5G and fibre will continue to be the key spending area in the medium term.
– We continue to like ZTE (763 HK) and YOFC (6869 HK) with BUY ratings unchanged.