ZTE – industry leader seeks to reverse profit margin decline

ZTE (000063:SZ, 0763:HKG) looks set to continue to benefit from 3G infrastructure roll-out in China while also cashing in on demand from telecom carriers for low-priced handsets. Growing scale, however, comes at the expense of dwindling margins. While euro weakness and a delay in tax refunds have dragged on earnings for two straight quarters, ZTE should reverse slips in profit through assets disposal and a renewal of the government incentive policy of tax rebates to tech firms.

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