CCB International published a research report stating that ZTE Corporation (ZTE) delivered strong interim results, with revenue increasing by 15%, primarily driven by positive demand in its government business and boosted by its consumer business. Segment revenue increased by 110% and 8%, respectively, during the period. Gross profit margin narrowed by 8.1 percentage points year-on-year to 30.9%. The bank attributed this to the increased share of server sales, which contribute less profit to the government business, and the increased proportion of AI server shipments. The bank believes that computing demand from domestic internet service providers will remain strong for the remainder of the year and believes that ZTE's component inventory can support continued strong growth. It currently forecasts a 104% year-on-year increase in ZTE's government business revenue for the full year, with a 14% increase next year. While gross profit margin may remain under pressure this year, it is not expected to deteriorate further. The bank maintained its "Outperform" rating on ZTE and raised its target price from HK$33 to HK$40.