Investment Rating - The report maintains a "Buy" rating with a target price of HKD 6.58, corresponding to a PE ratio of 23.52 for 2024 [4][12]. Core Insights - The company's performance is stabilizing, with a focus on cost control and multiple emerging business lines showing growth potential. The anticipated recovery in the market and the release of self-controlled demand are expected to drive business growth beyond expectations [3][4]. Summary by Sections Earnings Forecast - The company is projected to achieve revenues of HKD 179.45 billion, HKD 195.54 billion, and HKD 212.60 billion for the years 2024, 2025, and 2026 respectively. The net profit attributable to shareholders is expected to be HKD 7.74 billion, HKD 9.71 billion, and HKD 12.40 billion for the same years [11][12]. Valuation Analysis - The report employs a PE valuation method, comparing the company to peers such as Saiyi Information and Zhongke Chuangda. The average PE for comparable companies in 2024 is 23.52, leading to a reasonable valuation of HKD 6.58 per share [12][13].

Financial Performance - Revenue for the first half of 2024 was RMB 7.926 billion, a decrease of 6.2% compared to the same period in 2023[4] - Service revenue for the first half of 2024 was RMB 7.648 billion, a decrease of 7.8% compared to the same period in 2023[4] - Net profit for the first half of 2024 was RMB 285.353 million, a decrease of 18.6% compared to the same period in 2023[4] - Basic earnings per share for the first half of 2024 were RMB 10.93 cents, a decrease of 12.1% compared to the same period in 2023[4] - Revenue for the first half of 2024 decreased by 6.2% year-on-year to RMB 7,926.183 million[49] - Service income for the first half of 2024 decreased by 7.8% year-on-year to RMB 7,647.920 million[49] - Net profit for the first half of 2024 decreased by 18.6% year-on-year to RMB 285.353 million[49] - The company achieved revenue of RMB 7.926 billion and net profit of RMB 285 million in the first half of 2024[52] - Revenue for the first half of 2024 was RMB 7,926,183 thousand, a 6.2% decrease compared to the same period in 2023[61] - Service revenue for the first half of 2024 was RMB 7,647,920 thousand, a 7.8% decrease year-over-year[61] - Gross profit for the first half of 2024 was RMB 1,831,400 thousand, a 8.5% decrease compared to the same period in 2023[64] - Gross margin for the first half of 2024 was 23.1%, a 0.6% decrease year-over-year[64] - Sales and distribution costs for the first half of 2024 were RMB 425,950 thousand, a 1.2% increase compared to the same period in 2023[67] - Administrative expenses for the first half of 2024 were RMB 1,113,278 thousand, a 8.0% decrease year-over-year[67] - Financial expenses for the first half of 2024 were RMB 99,837 thousand, a 20.2% increase compared to the same period in 2023[68] - Other income for the first half of 2024 was RMB 94,577 thousand, a 34.2% decrease year-over-year[65] - Other gains for the first half of 2024 were RMB 104,890 thousand, compared to a loss of RMB 5,663 thousand in the same period in 2023[66] - Income tax expense for the first half of 2024 was RMB 10,481 thousand, compared to an income of RMB 8,314 thousand in the same period in 2023[68] - The company's available cash balance decreased to RMB 3,937,782 thousand in the first half of 2024, compared to RMB 5,088,641 thousand at the end of 2023[70] - Net current assets decreased to RMB 8,095,537 thousand in the first half of 2024, down from RMB 9,983,119 thousand at the end of 2023[70] - The company's profit for the period decreased by 18.6% to RMB 285,353 thousand in the first half of 2024, compared to RMB 350,687 thousand in the same period last year[71] - Basic earnings per share decreased by 12.1% to RMB 10.93 cents in the first half of 2024, compared to RMB 12.44 cents in the same period last year[71] - Revenue from the Technology Professional Services Group (TPG) decreased by 7.3% to RMB 7,076,954 thousand in the first half of 2024[72] - Revenue from the Internet Information Technology Services Group (IIG) increased by 3.7% to RMB 849,229 thousand in the first half of 2024[72] - Revenue for the six months ended June 30, 2024, was RMB 7,926,183 thousand, a decrease of 6.2% compared to RMB 8,450,060 thousand in the same period of 2023[79] - Gross profit for the six months ended June 30, 2024, was RMB 1,831,400 thousand, down 8.5% from RMB 2,001,135 thousand in the same period of 2023[79] - Net profit attributable to the company's owners for the six months ended June 30, 2024, was RMB 285,720 thousand, a decrease of 18.6% from RMB 351,028 thousand in the same period of 2023[79] - Total assets as of June 30, 2024, were RMB 13,107,051 thousand, a decrease of 7.1% from RMB 14,105,460 thousand as of December 31, 2023[81] - Current assets as of June 30, 2024, were RMB 12,195,876 thousand, down 5.8% from RMB 12,945,329 thousand as of December 31, 2023[81] - Total equity attributable to the company's owners as of June 30, 2024, was RMB 11,379,724 thousand, a decrease of 3.1% from RMB 11,742,461 thousand as of December 31, 2023[83] - Basic earnings per share for the six months ended June 30, 2024, were RMB 10.93 cents, down 12.1% from RMB 12.44 cents in the same period of 2023[79] - Diluted earnings per share for the six months ended June 30, 2024, were RMB 10.56 cents, a decrease of 12.6% from RMB 12.08 cents in the same period of 2023[79] - Non-current assets as of June 30, 2024, were RMB 5,011,514 thousand, an increase of 21.6% from RMB 4,122,341 thousand as of December 31, 2023[81] - Current liabilities as of June 30, 2024, were RMB 4,100,339 thousand, up 38.4% from RMB 2,962,210 thousand as of December 31, 2023[81] - Operating cash flow decreased to RMB -686,433 thousand in 2024 from RMB -731,184 thousand in 2023[87] - Investment cash flow increased to RMB -910,800 thousand in 2024 from RMB -721,980 thousand in 2023[87] - Financing cash flow turned negative to RMB -332,717 thousand in 2024 from RMB 812,612 thousand in 2023[87] - Total revenue decreased to RMB 7,926,183 thousand in 2024 from RMB 8,450,060 thousand in 2023[93] - Revenue from software and hardware sales decreased to RMB 278,263 thousand in 2024 from RMB 154,309 thousand in 2023[94] - Revenue from the Technology Professional Services Group (TPG) decreased to RMB 7,076,954 thousand in 2024 from RMB 7,631,522 thousand in 2023[96] - Revenue from the Internet IT Services Group (IIG) increased to RMB 849,229 thousand in 2024 from RMB 818,538 thousand in 2023[96] - Pre-tax profit decreased to RMB 295,834 thousand in 2024 from RMB 342,373 thousand in 2023[97] - Interest on borrowings increased to RMB 96,377 thousand in 2024 from RMB 77,399 thousand in 2023[98] - Earnings per share decreased to RMB 285,720 thousand in 2024 from RMB 351,028 thousand in 2023[99] - The weighted average number of ordinary shares for calculating basic earnings per share in 2024 was 2,614,104,739, a decrease from 2,821,509,612 in 2023[101] - The weighted average number of ordinary shares for calculating diluted earnings per share in 2024 was 2,706,115,049, down from 2,905,709,398 in 2023[101] - Trade and other receivables (net of provisions) increased to RMB 6,282,802 thousand in 2024 from RMB 5,304,724 thousand in 2023[103] - Receivables within 90 days accounted for RMB 4,162,887 thousand in 2024, up from RMB 4,019,768 thousand in 2023[105] - Trade and other payables decreased to RMB 1,555,845 thousand in 2024 from RMB 1,662,625 thousand in 2023[106] - Total borrowings increased to RMB 3,605,110 thousand in 2024 from RMB 3,016,817 thousand in 2023[108] - The company prepaid HKD 1.65 billion of loans in February 2024, with the remaining HKD 1.35 billion due in December 2025[109] - The average annual interest rate for borrowings in the first half of 2024 was 2.12%, down from 2.19% in 2023[109] - The company's issued and fully paid shares decreased from 3,027,011,358 to 2,809,753,358 between January 1, 2023, and June 30, 2024, with a corresponding reduction in share value from HKD 151,350,569 to HKD 140,487,669[110] - Capital commitments for property, plant, and equipment amounted to RMB 492,657,000 as of June 30, 2024, compared to RMB 542,091,000 at the end of 2023[110] - The company has committed to additional funding of RMB 246,708,000 for equity method investments as of June 30, 2024, down from RMB 276,408,000 in 2023[110] - Revenue from IT outsourcing services to related parties increased to RMB 4,604,000 in the first half of 2024, up from RMB 1,273,000 in the same period of 2023[112] - Employee compensation for the first half of 2024 totaled RMB 6,526,599,000, including director remuneration of RMB 22,389,000, compared to RMB 7,199,889,000 and RMB 11,995,000 respectively in 2023[113] - Amortization of intangible assets and depreciation expenses for the first half of 2024 were RMB 44,638,000 and RMB 130,436,000 respectively, compared to RMB 38,083,000 and RMB 198,267,000 in 2023[113] AI and Technology Transformation - The company focused on AI-driven transformation, establishing AI consulting, industry model training fields, and model factories[5] - The company developed a multi-heterogeneous large model operation management system to optimize computing resource allocation and scheduling[6] - The company launched HR.ai and Fin.ai models to enhance productivity through AI digital employees[11] - The company has achieved deep cooperation with top clients in industries such as finance, energy, and steel for AI pilot projects[12] - The company has successfully implemented NLP and CV training and inference projects, collaborating with leading clients in finance, energy, steel, and pharmaceutical industries[16] - The company has established partnerships with over 100 enterprises and institutions in fields such as scientific research, smart manufacturing, and healthcare, completing more than 100 projects[17] - The company's AI Agent product solutions, including "Ask Data," "Ask Strategy," "Ask Service," and "Ask Vision," have been upgraded and implemented in industries like finance, transportation, and manufacturing[18] - The company has developed the LMBSS system for managing diverse large models, successfully deploying it in projects such as Gui'an Development Group and Nanjing Big Data Bureau[17] - The company has integrated deep learning and data mining technologies to enhance AI support for the oil and gas pipeline industry[16] - The company launched the "Model Factory" service, offering end-to-end large model application R&D services, including model migration, training, and deployment[15] - The company has achieved compatibility certification for its "Ask" series integrated products with Huawei's training servers and AI framework[18] - The company has been selected for the "2023 Computing Power Network Industry Map" at the 2024 Computing Network Integration Development Conference[17] - The company established the Zhongsoft International AIGC Research Institute, focusing on AI model empowerment and data innovation[52] - The company became a partner in the Ascend AI ecosystem, providing AI computing power services across multiple industries[52] - The company is focusing on AI-related solutions and services, promoting local intelligent upgrades, and building cloud intelligence business capabilities in key regions such as Asia-Pacific[54] - The company is strengthening its organizational structure with a "Spearhead-Army-Base Camp" model, focusing on technology IP incubation and AI team formation[54] HarmonyOS Ecosystem - The company collaborated with over 300 application vendors in various fields for HarmonyOS native applications and services[7] - The company served over 500 categories and 400 brand customers in HarmonyOS chip southbound adaptation, with device access reaching tens of millions[7] - KaihongOS achieved full ecosystem connectivity with HarmonyOS Next, solidifying its leading position in the OpenHarmony ecosystem[23] - Upgraded OpenHarmony edge intelligent products, with 17 models and 13 self-developed products currently available[24] - Collaborated with 300+ application manufacturers in the HarmonyOS ecosystem, covering smart travel, life services, finance, government, healthcare, and cultural tourism[25] - Awarded "HarmonyOS Ecosystem Excellent Development Service Provider" and "HarmonyOS Ecosystem Pioneer Partner Award" at Huawei HDC 2024[25] - Cumulative service of 500+ categories and 400+ brand clients in the HarmonyOS chip adaptation business, with device access reaching tens of millions[25] - Approximately HKD 244 million of the net proceeds were used for the development of HarmonyOS and OpenHarmony products and solutions[76] - Secured multiple large-scale Hongmeng application development projects for state-owned banks, joint-stock banks, and leading insurance institutions[33] - Assisted in the release of HarmonyOS 4.2 and the beta launch of HarmonyOS NEXT, enhancing Huawei's smart ecosystem[42] - Collaborated with Huawei to develop the HiCar integrated solution, supporting the release of ADS 3.0 and the launch of AITO M9 and M7 series[42] ERP and Digital Transformation - The company accelerated the layout of the state-owned enterprise ERP application service market, aiming to become a leading provider of digital transformation solutions[8] - The company partnered with SAP to provide customized consulting solutions based on commercial AI technology[8] - The company has aggregated over 6,000 ecosystem partners and provided digital solutions and services to more than 20,000 customers[9] - The company expanded its ERP consulting and implementation services, securing projects with major clients like CNPC, Sinochem Group, and Southern Power Grid[20] - The company has provided data asset services to key clients in the manufacturing sector, including Changan Automobile and Chutian Technology, promoting data assetization and businessization[21] - The company is accelerating its layout in the ERP application service market for central state-owned enterprises, focusing on high-quality solutions and market expansion[54] - The company has established partnerships with over 100 local enterprises for digital transformation services through the Tangshan RPA demonstration center, replicating the model in Xiangyang[29] - The company has successfully implemented smart audit projects for CNOOC and Shandong Energy, and secured the China Postal Savings Bank's new audit project[40] Cloud and Ecosystem Partnerships - The company has established R&D and delivery centers in multiple countries including Thailand, Japan, Singapore, Saudi Arabia, and the UAE[10] - The company has been awarded the "Huawei Cloud Ecosystem Rock Award" twice, ranking first in Huawei Cloud ecosystem partner capability certifications[13] - The company focuses on industries like energy, finance, and government, serving major clients such as Huawei, HSBC, and China Mobile[14] - Business scale with Huawei Cloud grew over 30 times in seven years, winning the "Huawei Cloud Ecosystem Rock Award" in 2022 and 2023[26] - Certified with 8 primary and 10 secondary labels in CTSP cloud services, maintaining the top position among partners[27] - Successfully implemented 40+ CTSP projects in industries such as energy, steel, and pharmaceuticals, collaborating with leading customers on scenario-based applications of large models[27] - Successfully implemented over 20 advanced cloud integration projects in areas such as RPA, big data, and cloud services, including a data base project for a data group company and a cloud RDS project for an energy technology company[28] - Awarded "Annual Service Partner" by Huawei Cloud in the Asia-Pacific region, supporting smart city projects in Malaysia and Saudi Arabia's NEOM digital infrastructure[30] - The company has been the top partner of Huawei Cloud for seven consecutive years and has won the "Huawei Cloud Ecosystem Rock Award" twice[54] - The company is actively participating in open-source database communities and collaborating with ecosystem partners to achieve independent control of key basic software[54] Industry-Specific Solutions - The company launched the first "Fire Hong" solution in collaboration with Huawei, integrating big data, AI, and IoT technologies for smart fire prevention and control[36] - Developed the first water conservancy solution based on KaihongOS, achieving efficient data collection and remote control, winning the "2024 China Enterprise Digital Innovation Solution" award[36] - Released the first gas industry open-source Hongmeng solution "Ran Hong," enabling unified device communication and reducing manual intervention[37] - Introduced the Hongmeng-based smart station solution for urban rail transit, enhancing operational efficiency and passenger experience[38] - Launched four refined product solutions for aluminum industry clients, covering energy management and MES systems, serving over 10 major aluminum enterprises[39] - Promoted AI golden scenarios such as government hotline 12345, grassroots burden reduction, and industrial investment, completing POC verification and case studies in multiple cities[35] - Invested in the "One Field, Three Centers" project in Changping Energy Valley, providing infrastructure and development platform support for AI models and scenario applications in the power industry[34] Shareholder and Corporate Governance - Chairman and CEO Chen Yuhong holds 340,138,144 shares, representing approximately 12.11% of the company's issued share capital as of June

Investment Rating - The report assigns a "Buy" rating to China Software International (00354 HK) with a target price of HKD 5 31 [1] Core Views - The company reported H1 2024 revenue of RMB 7 926 billion (YoY -6 2%) and net profit attributable to shareholders of RMB 286 million (YoY -18 6%) due to reduced demand from core clients [1][2] - Gross margin decreased by 0 6 percentage points YoY to 23 1% while sales expenses increased by 1 2% to RMB 426 million [1][2] - Cloud and intelligent business revenue grew by 2 0% YoY to RMB 3 368 billion accounting for 42 5% of total revenue [1][2] - The company is advancing its "1+3" strategic layout focusing on cloud intelligence AIGC HarmonyOS and AIoT applications and enterprise digital transformation services [1][3] - In AIGC the company is developing model factory services and collaborating with leading clients in finance energy and healthcare sectors [3] - In the HarmonyOS ecosystem the company is building an independent IoT platform and expanding into industries like military energy and transportation [3] - The company is strengthening its position in the ERP market targeting state-owned enterprises and leveraging Huawei Cloud partnerships [4][5] Financial Performance and Forecast - Revenue is expected to decline slightly in 2024 but recover with steady growth in 2025-2026 [1][5] - Net profit attributable to shareholders is forecasted to be RMB 676 million in 2024 and RMB 759 million in 2025 [1][5] - The company's PE ratio for 2024-2025 is estimated at 13 5x and 12 0x respectively [5] Business Segments - Core business revenue in H1 2024 was RMB 4 558 billion (YoY -11 5%) while cloud and intelligent business revenue reached RMB 3 368 billion (YoY +2 0%) [2][5] - The top five clients contributed 60 0% of total service revenue and the top ten clients contributed 68 8% [2] Strategic Initiatives - The company is deepening its collaboration with Huawei becoming a comprehensive partner in Huawei Cloud and leading in capability certifications [5] - It is expanding internationally with R&D and delivery centers in Thailand Japan Singapore Saudi Arabia and the UAE [5]

Incentives and Performance Targets - The company granted incentives to certain directors and employees to subscribe for 145,460,000 shares at a price of HKD 5.08 per share[1] - The performance targets for the share incentives are related to the company's financial parameters, including revenue and profit[1] - Non-financial parameters such as strategic goals and operational objectives are also part of the performance criteria for the incentives[1] Supplementary Information - The company maintains that the supplementary information does not affect other data in the 2023 annual report[2]

Investment Rating - The report maintains a "Buy" rating for China Software International (0354.HK) [2] Core Insights - The company reported a revenue of 7.926 billion RMB for the first half of 2024, a year-on-year decline of 6.2%, primarily due to reduced demand from core clients in 2023 [1] - Gross profit for 1H24 was 1.831 billion RMB, with a gross margin of 23.1%, down 0.6 percentage points year-on-year [1] - Net profit for 1H24 was 285 million RMB, reflecting an 18.6% year-on-year decline, with a net margin of 3.6% [1] - The company is focusing on AI-driven innovations and aims to become a comprehensive AI software and service provider, enhancing collaboration with leading clients across various industries [1] - Cloud intelligence revenue increased to 42.5% of total revenue, with a 2% year-on-year growth in cloud intelligence business revenue [1] Summary by Sections Financial Performance - Revenue for 1H24 was 7.926 billion RMB, down 6.2% year-on-year [1] - Gross profit was 1.831 billion RMB, with a gross margin of 23.1% [1] - Net profit was 285 million RMB, down 18.6% year-on-year [1] Business Development - The company is enhancing its AI capabilities, focusing on natural language processing, computer vision, and predictive applications [1] - It has expanded its international business, particularly in the Middle East and Southeast Asia, collaborating with global partners like Huawei [1] Emerging Business Segments - Cloud intelligence revenue reached 33.68 billion RMB, accounting for 42.5% of total revenue [1] - The company is actively developing its ERP services and has launched several projects in key industries [1] Profit Forecast and Valuation - The net profit forecast for 2024 and 2025 has been adjusted to 720 million RMB and 870 million RMB, respectively, reflecting a decrease of 36% and 37% [1] - The company has conducted share buybacks totaling nearly 260 million shares over two years, indicating confidence in long-term growth [1]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公佈之內容概不負責， 對其準確性或完整性亦不發表任何聲明，並明確表示，概不就因本公佈全部或任 何部份內容而產生或因倚賴該等內容而引致之任何損失承擔任何責任。 概要 截至二零二四年上半年業績 截至六月三十日止六個月 二零二四年 二零二三年 損益表概要 （未經審核） （未經審核） 變化 人民幣千元 人民幣千元 % 收入 7,926,183 8,450,060 (6.2%) 服務性收入 7,647,920 8,295,751 (7.8%) 本期溢利 285,353 350,687 (18.6%) 本公司擁有人應佔溢利 285,720 351,028 (18.6%) 每股基本盈利（人民幣分） 10.93 12.44 (12.1%) • 董事不建議就截至二零二四年六月三十日止六個月派發中期股息。 CHINASOFT INTERNATIONAL LIMITED 中軟國際有限公司 * （於開曼群島註冊成立之有限公司） （股份代號：354） 截至二零二四年六月三十日止六個月 中期業績公告 • 本公司不會暫停辦理過戶登記手續。 1 管理層討論與分析 主要運營資料 於二零二四年 ...

Financial Performance - In 2023, the company achieved revenue of RMB 17.12 billion, marking a significant growth of 400 times since its inception[5]. - The net profit margin improved by 0.4% to reach 4.2%, despite a decrease in business scale[5]. - The company reported a gross profit of RMB 4,003,076 thousand, a decrease of 13.0% year-on-year[59]. - The company's revenue for 2023 was RMB 17,116,894 thousand, a decrease of 14.4% compared to RMB 20,005,171 thousand in 2022[72]. - Service revenue for 2023 was RMB 16,631,560 thousand, down 14.7% from RMB 19,489,625 thousand in 2022[72]. - The group reported a net profit of RMB 712,667 thousand in 2023, down 6.1% from RMB 758,829 thousand in 2022, with the profit margin increasing to 4.2% from 3.8%[82]. - The total revenue for the group in 2023 was RMB 17,116,894 thousand, a decrease of 14.4% from RMB 20,005,171 thousand in 2022[83]. - The group maintained a cash balance of RMB 5,088,641 thousand in 2023, slightly down from RMB 5,112,410 thousand in 2022, with a current ratio of 4.4 compared to 3.8 in 2022[81]. - The company achieved a compound annual growth rate (CAGR) of 26.1% in revenue and 32.7% in service revenue since its listing in 2003[62]. Strategic Initiatives - The company launched the SP304 strategic plan, focusing on "embracing the AIGC industrial revolution" and enhancing productivity through AI applications[5]. - The company established the JointPilot platform and the AIGC Research Institute to develop AI-native application capabilities and reduce development barriers[6]. - A strategic cooperation agreement was signed with Huawei to create joint solutions for government and enterprise clients, focusing on AI applications[7]. - The company aims to enhance its capabilities in various sectors, including finance, government, and manufacturing, through integrated AI solutions[7]. - The establishment of the AIGC Research Institute focuses on building a large model application ecosystem, enhancing collaboration with clients, universities, and research institutions to drive innovation in the AIGC field[15]. - The company aims to enhance its overseas service system and compliance construction to provide superior products and services globally[11]. - The company is actively involved in setting industry standards for large model applications in collaboration with various institutions, contributing to the establishment of several industry standards[22]. Market Expansion - The company is expanding its market presence in key regions such as Beijing, Guangdong, Jiangsu, and Sichuan[5]. - The company has expanded its overseas business in Southeast Asia and the Middle East, establishing local project delivery capabilities in the UAE and Saudi Arabia[11]. - The company is expanding its market presence in overseas regions such as Singapore, Malaysia, Thailand, UAE, Saudi Arabia, and Chile, aiming to establish a global IT influence[14]. - The company has achieved nearly 100% renewal rate with existing clients while expanding its market presence to cover over 50 big data bureaus across 25 cities[21]. - The company has successfully completed 7 first-level labels and 12 second-level labels certifications in CTSP professional services, ranking first among partners[39]. Research and Development - The company has over 35,000 certified HarmonyOS developers, ranking first in the ecosystem[8]. - The company launched a financial HarmonyOS native technology development platform, winning multiple significant development projects in the financial sector[26]. - The company has developed a comprehensive domestic self-research IoT product matrix in the water conservancy industry and implemented the first domestic "Harmony Tunnel" solution in the transportation sector[8]. - The company has developed a distributed microservice architecture platform, TOPLINK 5.0, supporting various domestic software systems[41]. - Research and development costs decreased by 12.9% year-on-year, reflecting ongoing investment in innovation[59]. Corporate Governance - The company emphasizes the importance of corporate governance for its success and has implemented various measures to maintain high standards[88]. - The board consists of a mix of executive, non-executive, and independent directors, ensuring diverse expertise and experience[89]. - The company has adhered to the corporate governance code, with the board confirming compliance for the year ending December 31, 2023, except for certain attendance issues at the annual general meeting[88]. - The company has established a risk management and compliance system overseen by the board of directors[185]. - The company has a zero-tolerance policy towards violations of business ethics and has implemented strict internal policies to regulate employee conduct[185]. Environmental, Social, and Governance (ESG) - The company is committed to corporate social responsibility (CSR) by aligning with SA8000 standards and actively engaging in green innovation practices[110]. - The company is focused on digital empowerment for low-carbon development and green transformation in industries[163]. - The ESG governance structure includes a three-tier system with the board of directors, an ESG working committee, and various operational groups to ensure effective implementation of ESG strategies[178]. - The company has established an ESG working committee to oversee key ESG issues and ensure alignment with corporate strategy[162]. - The company promotes integrity in procurement processes and collaborates with suppliers to establish integrity clauses in contracts[185]. Client Engagement and Service Quality - The company provided services for 3,723 projects to over 1,500 government and enterprise clients, generating a Gross Transaction Value (GTV) of 14.4 billion RMB during the reporting period[21]. - The group achieved a customer suggestion handling rate of 91.60% in 2023, with a Net Promoter Score (NPS) of 71%, reflecting a year-on-year increase of 5.4%[198]. - The group has established a customer complaint handling mechanism to improve service quality based on feedback[125]. - The company has optimized customer service through an official consultation platform and regular communication with clients, ensuring timely resolution of issues[197]. Awards and Recognition - The company has been recognized as the largest software enterprise in China and ranked 73rd among global IT service providers by Gartner[5]. - The company received multiple awards from Huawei, including the Gold Supplier Award for 2023 in China[56]. - The company was recognized as an excellent contributor at the openGauss Summit 2023 and launched several new tools, including SQL audit tools and database performance monitoring tools[52]. - The company received multiple awards, including "Best IR Team" and "Best Hong Kong Stock Connect Company" at the 8th Zhitong Finance Listed Company Awards[189].

Investment Rating - The report assigns an "Outperform" rating to the company [1]. Core Insights - The company's computing power scheduling platform is positioned as a crucial driver for digital economic transformation, with significant growth potential and returns [4][7]. - The collaboration with Huawei has led to the launch of various AI products, enhancing the company's competitive edge in the AI sector [13][20]. - The company is expected to experience substantial revenue growth, with projected revenues of 213.37 billion, 257.90 billion, and 297.54 billion yuan for 2024, 2025, and 2026 respectively [21][23]. Summary by Sections Investment Rating - The company is rated as "Outperform" with a target price range of 6.83 to 8.54 HKD based on a dynamic PE of 20-25 times for 2024 [4][21]. Financial Performance - The company’s projected net profits for 2024, 2025, and 2026 are 918 million, 1.154 billion, and 1.389 billion yuan respectively, with corresponding EPS of 0.32, 0.40, and 0.48 yuan [5][21]. - The revenue for 2023 is expected to be 171.17 billion yuan, reflecting a year-on-year decrease of 14% [5][23]. Computing Power Scheduling Platform - The computing power scheduling platform is essential for managing diverse computing resources and optimizing their utilization across various business scenarios [4][8]. - The platform includes three core components: the computing power access management center, the computing power orchestration scheduling center, and the computing power operation center [9][11]. Collaboration with Huawei - The company has deepened its partnership with Huawei, resulting in the introduction of numerous AI products, including the AIGC model factory and various large model services [13][20]. - The collaboration aims to enhance the efficiency of model training and application development, addressing the challenges faced by enterprises in deploying large models [14][19]. Future Outlook - The company is well-positioned to benefit from the growing demand for AI and computing power solutions, with expectations of significant growth in the digital economy [12][21]. - The report emphasizes the importance of the company's innovative solutions in driving digital transformation across various industries [12][20].

Financial Performance - Total revenue for the year ended December 31, 2023, was RMB 17,116,894 thousand, a decrease of 14.4% compared to RMB 20,005,171 thousand in 2022[2]. - Service revenue for the same period was RMB 16,631,560 thousand, down 14.7% from RMB 19,489,625 thousand in the previous year[2]. - Annual profit attributable to shareholders was RMB 713,394 thousand, reflecting a decline of 6.1% from RMB 759,441 thousand in 2022[2]. - Basic earnings per share decreased by 0.9% to RMB 25.88 from RMB 26.11 in the prior year[2]. - Gross profit for the year was RMB 4,003,076 thousand, down from RMB 4,600,170 thousand in 2022[4]. - Total comprehensive income for the year was RMB 706,486 thousand, compared to RMB 756,900 thousand in the previous year[5]. - Revenue from the Technology Professional Services segment was RMB 15,020,564 thousand in 2023, down from RMB 17,930,401 thousand in 2022, representing a decline of 16.4%[13]. - Revenue from the Internet Information Technology Services segment increased slightly to RMB 2,096,330 thousand in 2023 from RMB 2,074,770 thousand in 2022, a growth of 1.0%[13]. - The gross profit for 2023 was RMB 4,003,076 thousand, a decline of 13.0% from RMB 4,600,170 thousand in 2022, with a gross margin of 23.4%[41]. - The group achieved a net profit of RMB 712,667 thousand in 2023, a 6.1% decrease from RMB 758,829 thousand in 2022, with a profit margin of 4.2%[50]. Dividends and Shareholder Returns - The board proposed a final dividend of HKD 0.0811 per share for the year ended December 31, 2023[2]. - The company declared a final dividend of HKD 0.0811 per share for the year ending December 31, 2023, an increase from HKD 0.0567 in 2022[17]. - The board proposed a final dividend of HKD 0.0811 per ordinary share for the fiscal year ending December 31, 2023, subject to shareholder approval[62]. Assets and Liabilities - Non-current assets increased to RMB 4,122,341 thousand from RMB 3,364,263 thousand in 2022[6]. - Total liabilities increased to RMB 2,338,700 thousand from RMB 1,276,708 thousand in the previous year[7]. - Total equity attributable to shareholders decreased to RMB 11,742,461 thousand from RMB 12,109,765 thousand in 2022[7]. - Trade receivables (net of provisions) were RMB 5,304,724 thousand in 2023, a decrease from RMB 5,469,959 thousand in 2022, representing a decline of 3.0%[19]. - The aging analysis of trade receivables showed that RMB 4,019,768 thousand was within 90 days, down from RMB 4,384,078 thousand in 2022, a decrease of 8.3%[21]. - Total liabilities decreased to RMB 1,662,625 thousand in 2023 from RMB 2,043,359 thousand in 2022, a reduction of 18.6%[21]. - The group reported a current ratio of 4.4 in 2023, an increase from 3.8 in 2022, indicating improved liquidity[49]. Operational Highlights - The number of active customers in 2023 was 2,191, with 182 large customers contributing service revenue greater than RMB 6 million[31]. - The company’s top five customers accounted for 61.7% of total service revenue, while the top ten customers contributed 70.4%[31]. - The total number of employees at the end of 2023 was 69,976, a decrease of 14.8% from 82,140 at the end of 2022[33]. - The company is actively expanding its overseas business, achieving rapid growth in Hong Kong and establishing project delivery capabilities in the Middle East[26]. - The company has strengthened its partnerships with major banks and financial institutions, expanding cooperation in various financial sectors[27]. - The company has made breakthroughs in smart water and smart transportation solutions based on open-source Hongmeng technology[25]. - The company is focusing on a "platform + service" model in the ERP sector, enhancing its consulting services in key industries[25]. - The company has successfully maintained its leading position in cloud migration and development services, ranking first in these segments[26]. Strategic Initiatives - The company aims to become a global leader in technology-based IT services, leveraging core technologies and enhancing service capabilities[28]. - The group aims to enhance profit margins through a "1+3" strategic layout, focusing on high-margin service business and software-hardware product transformation[42]. - The establishment of the AIGC Research Institute aims to enhance joint innovation in the AIGC field, focusing on large model applications and solutions[24]. - The company has launched the JointPilot AI application platform to provide integrated AI application solutions for clients and ISVs[24]. - The company plans to expand into new markets including Singapore, Malaysia, Thailand, UAE, Saudi Arabia, and Chile[32]. - The company plans to allocate approximately HKD 7.88 billion for the development of full-stack cloud intelligent products and solutions, with about HKD 6.57 billion specifically for R&D and related investments[55]. - The company intends to invest in the development of the HarmonyOS and OpenHarmony hardware and software products, with a significant portion of the funds allocated for this purpose[55]. Corporate Governance - The audit committee reviewed and approved the financial statements for the fiscal year, ensuring compliance with accounting standards[61]. - The company has adopted various measures to ensure high standards of corporate governance, complying with the corporate governance code[56]. - The company will suspend share transfer registration from May 14 to May 20, 2024, to determine eligibility for voting at the annual general meeting[63]. - The annual general meeting is scheduled for May 20, 2024, at 2 PM[65]. - The annual report will be published in both Chinese and English, with the Chinese version prevailing in case of discrepancies[65]. - Financial reports prepared in accordance with international financial reporting standards will be available in English[65]. - The annual report will include all information required by the listing rules appendix 16 and will be sent to shareholders in due course[65]. Research and Development - R&D expenditure for 2023 was RMB 1,078,296 thousand, a decrease of 12.9% from RMB 1,238,035 thousand in 2022, with an R&D cost ratio of 6.3%[46].

Share Incentive Plan - The share incentive plan granted a total of 130,349,000 shares during the year, with 101,123,000 shares remaining unexercised as of December 31, 2022[2] - The company reported a total of 87,629,000 shares granted to other employees during the year, with 74,703,000 shares remaining unexercised[2] - The share incentive plan does not have any applicable plan authorization or service provider sub-limits[4] Compensation - The five highest-paid individuals in the company received a total of 36,960,000 shares, with 11,000,000 shares granted to the executive director Chen Yuhong[2][3] Governance Structure - The board of directors includes three executive directors and three independent non-executive directors, ensuring a diverse governance structure[5]