ZTE Corp shares surge 14 percent, forecasts first-quarter rebound

FILE PHOTO: People walk next to ZTE booth at the Mobile World Congress in Barcelona, Spain February 25, 2019. REUTERS/Rafael Marchante/File Photo

HONG KONG (Reuters) – Shares of ZTE Corp rose as much as 14 percent on Thursday after the company forecast a first quarter profit of up to 1.2 billion yuan ($178.18 million) as it recovers from U.S. sanctions.

The Chinese telecommunications equipment maker said in filings late on Wednesday it expected to make a net profit of 800 million to 1.2 billion yuan in the first quarter of 2019, up from a net profit of 276 million yuan in the December quarter.

ZTE, the world’s fourth-largest telecommunications equipment maker by market share, was forced to stop most business between April and July last year due to U.S. sanctions.

The sanctions were lifted after ZTE paid $1.4 billion in penalties. The company reported its worst half-year loss of 7.8 billion yuan in August..

That resulted in a 2018 full year loss of 7 billion yuan, just within its guidance range of 6.2 billion yuan to 7.2 billion yuan, but deeper than the average 6.2 billion yuan loss estimated by 10 analysts, according to Refinitiv Eikon data.

Hong Kong-listed shares of ZTE jumped as much as 14 percent to HK$25, while Shenzhen-listed shares rose by the daily maximum limit of 10 percent.

ZTE said its revenue for the quarter ending in December was 26.7 billion yuan, while its full-year revenue dropped 21.4 percent to 85.5 billion yuan, against an average estimate of 87 billion yuan by 12 analysts.

($1 = 6.7233 Chinese yuan renminbi)

Reporting by Sijia Jiang and Hong Kong newsroom; Editing by Stephen Coates and Darren Schuettler

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