HONG KONG (Reuters) - Investors on Monday cheered the lifting of a U.S. supplier ban on China’s ZTE Corp (0763.HK), pushing its shares up 17 percent, though analysts cautioned the telecommunications equipment maker still faced many challenges as it works to revive its business.
The U.S. Commerce Department on Friday lifted a crippling ban on American firms selling parts to ZTE - imposed in relation to a U.S. sanctions case - after the Chinese company deposited $400 million in escrow as part of a settlement reached last month. The settlement also included a $1 billion penalty paid to the U.S. Treasury in June.
“It’s a long way back for ZTE. Not just to win back customer confidence and assure them, but also work hard to find substitutes to U.S. suppliers such as Avnet, Qualcomm, Broadcom etc (to reduce reliance),” said Nikhil Batra, senior research manager at consultancy IDC.
“Essentially, this would mean going back to the drawing board and rethinking its overall design strategy.”
ZTE’s Hong Kong-listed stock opened up 5.5 percent on Monday, rising over 17 percent to HK$16.12 by noon. That was still 37 percent lower than its last price in April when trading of the stock was suspended for two months following the ban.
ZTE’s Shenzhen shares jumped by their 10 percent daily limit early on Monday, as investors brushed off ZTE’s forecast on Friday a net loss of up to 9 billion yuan ($1.35 billion) for the first half of 2018 due to the fine.
Jefferies analyst Edison Lee estimated ZTE had an operating loss of up to 4 billion yuan for April-June due to suspending business when the ban
