As stated in the report of Goldman Sachs, ZTE (00763.HK)  +0.600 (+3.464%)    Short selling $9.85M; Ratio 6.799%  's operating revenue in the third quarter amounted to RMB 21.1 billion with a profit margin of 30% which was in concordance with GS's forecast.The company recorded a net profit of RMB 1.8 billion in the first three quarters which was in line with the guidance of ZTE (RMB 1.7 billion to RMB 1.9 billion). ZTE guided for annual net profit of RMB 2.5 billion to RMB 2.8 billion, lower than the estimation of GS but was within market estimates. The network business recorded a year-on-year increase of 10% in the third quarter with stable profit margin of nearly 40%. ZTE will reduce the 2014 target for smartphone shipments from 60 million to 50 million-55 million, lower than GS's expectation of 58 million.

GS stated that ZTE should continue benefit from the launch of 4G network in the Mainland. However, following the acquisition of Motorola by LENOVO GROUP (00992.HK)  0.000 (0.000%)    Short selling $37.40M; Ratio 23.876%   , ZTE is likely to face with keen competition in the American market.

GS lowered the shipments forecast on ZTE in 2014 and 2015, which was reduced from 58 million and 72 million to 53 million and 65 million respectively. The projected EPS was also cut to 13% but the projected EPS in 2015-2016 was uplifted to 10%-12%. GS maintained the Neutral rating of ZTE and the target price was raised from $14.9 to $15.9.