ZTE's third-quarter results staged a sharp rebound, yet cumulative profit for the first nine months still declined significantly, reflecting the profitability-quality challenges facing this telecom equipment giant amid rapid revenue expansion.
The company's third-quarter report disclosed on October 27 showed that from July to September 2026, net profit attributable to shareholders of the listed company reached 1.307 billion yuan, up 394.46% year on year and a substantial improvement from the prior quarter; revenue over the same period was 38.813 billion yuan, up 33.99% year on year, marking a strong single-quarter revenue performance.
Over a longer horizon, cumulative net profit for the first three quarters was 4.060 billion yuan, down 23.71% year on year, while cumulative revenue was 116.838 billion yuan, up 16.23% year on year.
It is worth noting that the strong third-quarter rebound was partly aided by non-recurring factors. Single-quarter non-recurring gains and losses totaled 715 million yuan, mainly from fair value changes and disposal-related gains on financial assets, which together contributed 691 million yuan. Excluding non-recurring items, adjusted net profit for the first three quarters was 2.814 billion yuan, down 27.46% year on year, a steeper decline than that of net profit.
Strong single-quarter revenue, profit elasticity driven by non-recurring items
ZTE's third-quarter revenue of 38.813 billion yuan rose by more than 30% year on year, providing important support for full-year revenue growth. However, the high profit growth rate was largely driven by non-recurring factors.
Single-quarter non-recurring gains and losses reached 715 million yuan, of which fair value changes and disposal gains on financial assets contributed 691 million yuan, the largest share. By comparison, the company's adjusted net profit attributable to shareholders was only 593 million yuan, up 363.65% year on year—although the growth rate was equally eye-catching, it also confirms that the recovery in the profitability of the main business was relatively limited.
For the first three quarters, gains from fair value changes reached 342 million yuan, up 67.95% year on year, mainly due to increased revaluation gains on trading financial assets at period-end; investment income was 493 million yuan, up 123.46% year on year, mainly due to higher profits from associates and joint ventures. These items together supported profit performance, but also left some uncertainty over the sustainability of the results.
Inventories and accounts payable surge, stockpiling moves draw attention
The balance sheet shows that as of September 30, 2026, ZTE's inventory scale reached 73.635 billion yuan, up 56.61% from 47.017 billion yuan at the end of 2025, an increase of more than 26.6 billion yuan. The company explained that this was mainly due to increased material purchases during the period.
At the same time, accounts payable rose to 29.032 billion yuan, up 54.70% year on year; notes payable rose to 25.247 billion yuan, up 65.33% year on year. The sharp rise in these items mirrors the inventory growth, showing that the company made full use of supplier credit periods while accelerating stockpiling.
Total assets rose 13.30% from the beginning of the year to 246.699 billion yuan, while total liabilities increased from 142.098 billion yuan to 168.535 billion yuan. On the debt structure side, the company newly issued 2.001 billion yuan of short-term bonds during the period and added medium-term notes, pushing the balance of bonds payable to 10.244 billion yuan, up 31.17% year on year; non-current liabilities due within one year rose to 12.382 billion yuan, up 56.72% year on year, indicating somewhat increased short-term repayment pressure.
Cash flow under pressure, large certificate-of-deposit swaps lift investment spending
Net cash flow from operating activities for the first three quarters was 715 million yuan, down 59.78% year on year. The company explained that this was mainly due to a sharp increase in cash paid for goods and services, consistent with the logic of inventory expansion.
Net cash outflow from investing activities reached 13.699 billion yuan, expanding significantly year on year, mainly due to an increase in net investment in yield-bearing products. The balance sheet also confirms this change: monetary funds decreased 49.94% from the beginning of the year to 16.895 billion yuan, while trading financial assets rose 70.66% to 29.689 billion yuan; at the same time, large certificates of deposit with terms of more than one year were reclassified as due within one year, causing "non-current assets due within one year" to surge from 511 million yuan at the beginning of the year to 20.160 billion yuan, while debt investments correspondingly fell 58.45%. This series of changes represents a maturity reclassification of funds between different accounting items and does not represent a substantive outflow of funds, but it still raises outside attention to changes in the company's liquidity structure.
As for credit impairment losses, they deteriorated significantly year on year in the first three quarters, mainly due to increased provisions for accounts receivable impairment. Against the backdrop of pressure on the macroeconomy and the industry cycle, this trend deserves continued tracking.
Shareholder structure and capital operations
As of September 30, 2026, ZTE had a total of 643,175 shareholders. The largest shareholder, Zhongxing New Communications Co., Ltd., held a 20.09% stake, or 959 million A-shares; H shares held through Hong Kong Securities Clearing Company Nominees Limited accounted for 15.73%, making it the second-largest shareholder.
On capital operations, the company repurchased A-shares during the period, with its dedicated repurchase securities account holding 28.6594 million shares, or a 0.60% stake, and a treasury stock balance of 1.000 billion yuan; it also issued perpetual bonds, with the balance of other equity instruments rising from 127 million yuan at the beginning of the year to 1.634 billion yuan, an increase of more than tenfold year on year, showing that the company is supplementing capital through diversified channels.
Basic earnings per share for the first three quarters were 0.85 yuan, down 23.42% year on year; the weighted average return on equity was 5.34%, down 1.86 percentage points year on year, indicating some decline in profitability efficiency.
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