ZTE Surges After Jump in First-Half Earnings: Hong Kong Mover

ZTE Surges After Jump in First-Half Earnings
An employee holds a ZTE Corp. Grand Memo smartphone for a photograph at the Mobile World Congress in Barcelona. Photographer: Simon Dawson/Bloomberg

ZTE Corp., China’s second-largest maker of equipment for phone networks, rose the most in almost five years in Hong Kong trading after posting a surge in first-half earnings.

The shares jumped 20 percent, the biggest gain since October 2008, to close at HK$13.84. Net income rose 23 percent to 302.3 million yuan ($49 million) in the six months ended June, the Shenzhen-based company said in a filing yesterday.

Cutting expenses for selling as well as research and development helped boost margins at ZTE and limit the impact of sliding sales. The result, which follows a loss in the second half of 2012, was also boosted by one-time items including the sale of its stake in Shenzhen ZNV Technology Co.

“ZTE’s fundamentals have been improving and will push its results back on track” in the second half of this year, Tony Yang, an analyst at BOCI Research Ltd. in Hong Kong, wrote in a note to clients today.

Revenue fell 12 percent to 37.7 billion yuan in the first half amid lower demand for handsets and data cards, the company said in yesterday’s statement.

ZTE yesterday also announced an incentive plan for employees under which options may be granted for as many as 103.2 million A shares, or about 3 percent of total share capital. The stock had been suspended since July 15 as the company adopted the plan.

Closely held Huawei Technologies Co. is China’s biggest maker of phone network equipment.

— With assistance by Edmond Lococo

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