Chinese equipment maker says shar drop reflects sale of Nationz Technologies stake.
Chinese telecommunications equipment maker ZTE Corp. said Friday it expects to report first-half net profit of 154 million-308 million yuan, down 60%-80% from the same period last year.
It said in a statement to the Hong Kong stock exchange that the sharp drop reflected the disposal of shares in Nationz Technologies and the resulting absence of investment income as well as foreign exchange translation losses due to a weak euro and some Asian currencies. It did not quantify the effects.
ZTE said that its net profit would be equal to CNY0.04 to CNY0.09 per share for the first half. Basic earnings per share for the first half a year earlier was CNY0.23.
It also said that its remaining holdings in Nationz Technologies were reclassified from long-term equity investment to trading financial assets for accounting purposes. This resulted in the recognition of investment income and gains arising from the change in fair value amounting to CNY900 million.
It said investment income for the reporting period was significantly less than that for the same period last year.
ZTE also said that certain domestic carrier network contracts were not recognized in the results due to delays in tenders. It added there was a decline in overall gross profit margin compared with a year ago.
