ZTE (Hong Kong stock code 0763) plunges 6% to HK$21.20 in the afternoon session vs the HSI’s 1.5% rise. Unproved market news says ZTE has settled the lawsuit with Ericsson. The company agrees to pay a patent license fee but the company denies about paying 500 million euros compensation.  

Credit Suisse keeps ZTE Outperform with a target price of HK$32.50; it says economic pressures will likely force telcos to seek alternatives in better managing capex and opex and “as a cost leader with a track record undercutting competition with price-sensitive, yet reliable, products and services, ZTE should gain share under tough environment.” It says that as the fifth-largest telco equipment vendor, ZTE continues to expand its market share from a low base; having successfully penetrated all Tier 1 telcos, it now embarks on a new phase with potential margin expansion as upfront entry cost diminishes, and with significant R&D cost advantages, ZTE is closing the technological gap with its competitors. The house adds that low-priced smartphones are key growth drivers and it expects ZTE to gain share in 4G LTE over the next five years.

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ZTE Plunges 8.6% In Afternoon Session; Triggered By Tat Fook Warning And Rumors On Compensation