而在垂直行业方面呢我们过去这些高速增长24年呢我们看到了比较多的风险所以我们主动的踩了一下刹车降低了垂直行业的一些发展的速度有意的啊降低了一些速度主要是怕有些回款的风险有些坏账的风险所以在垂直行业我们放弃了一些市场导致我们在垂直行业的增长呢也不如过去了 那我们看到我们收入下滑主要的原因是我们传统业务的下滑传统业务就BSS业务下滑比较厉害18.9%的下滑那OSS业务基本保持了一个平稳就1.8%的下滑我们数字运营业务呢在这么艰难的情况下还有0.4%的一个增幅绝对值达到11.06 呃各位媒体的朋友各位投资者早上大家早上好呃非常感谢大家参加今天的亚先科技2024年度的业绩发布会今天除了现场的会议呢我们还通过电话会议和现场直播的平台同步举行相关的投资者呢可以到公司的网站或者做网上直播同步收看本次发布会的现场直播呃除了我本人的主持和最管理层的这个 副总裁兼二锐数字首席执行官李云川先生今天的业绩发布会首先由我们的高总给大家介绍整体的业绩情况黄总会接着介绍财务的表现在问答的环节大家可以把问题提给高总和黄总同时我们也欢迎大家把问题提给刚才介绍的三位主管的副总裁好现在首先请高总对业绩进行一个简单的介绍 好各位朋友大家上午好我把2 ...

Financial Performance - The company reported a revenue increase of 15% year-over-year, reaching RMB 1.2 billion for the fiscal year 2024[14]. - The company's total revenue for 2024 was approximately RMB 66.46 billion, representing a year-on-year decline of 15.8%[36]. - Traditional BSS business revenue was about RMB 40.46 billion, down 18.9% year-on-year, while the new business revenue reached RMB 25.99 billion, down 10.3%[36]. - Gross profit was RMB 24.84 billion, with a stable gross margin of 37.4%[34][36]. - Net profit increased slightly to RMB 5.16 billion, with a net profit margin of 7.8%, up 1.3 percentage points from the previous year[32][36]. - The company plans to distribute a final dividend of HKD 0.252 per share and a special dividend of HKD 0.160 per share, totaling HKD 0.412 per share[36]. - The proportion of new business revenue in total revenue increased to 39.1%[36]. - The company's operating revenue for 2024 was approximately RMB 6.646 billion, a decrease of 15.8% from RMB 7.891 billion in 2023[81]. - The revenue from new businesses reached approximately RMB 2.599 billion, down 10.3% from RMB 2.899 billion in 2023, accounting for 39.1% of total revenue, an increase of 2.4 percentage points year-on-year[81]. - The gross profit for 2024 was approximately RMB 2.484 billion, a decline of 16.5% from RMB 2.975 billion in 2023, with a gross margin of 37.4%, down 0.3 percentage points year-on-year[81]. - The net profit for 2024 was approximately RMB 516 million, a slight increase of 0.7% from RMB 512 million in 2023, with a net profit margin of 7.8%, up 1.3 percentage points year-on-year[57]. Business Strategy and Growth - The company provided a forward guidance of 10-12% revenue growth for the next fiscal year[14]. - New product launches are expected to contribute an additional RMB 300 million in revenue in 2025[14]. - Market expansion plans include entering two new provinces in China, targeting a 5% market share by 2025[14]. - The company is exploring potential acquisitions to enhance its service offerings, with a budget of RMB 500 million allocated for this purpose[14]. - A strategic partnership with a leading telecom provider is expected to enhance service delivery and customer reach[14]. - The company aims to consolidate its leadership in the BSS market while rapidly developing OSS, digital operations, and vertical industry digitalization, referred to as the "three new businesses"[24]. - The company has established a strategy of "one consolidation, three developments" to ensure high-quality growth and market leadership[24]. - The company is committed to driving business model innovation in line with the trends of industrial digitalization and digital industrialization[24]. - The company aims to deepen strategic cooperation with leading large model vendors like Alibaba Cloud and Baidu to enhance its competitive edge in large model delivery[55]. - The company plans to focus on three growth points: AI large model delivery, 5G private networks and applications, and intelligent operations to drive higher quality development[54]. Research and Development - The company is investing RMB 200 million in R&D for new technologies in the upcoming year[14]. - The company reported a commitment to embrace advanced technologies such as 5G, cloud computing, big data, AI, and IoT, forming a comprehensive product system of cloud network, digital intelligence, and IT[24]. - In 2024, the company achieved significant breakthroughs in AI, with over 100 AI large model projects covering various business areas[39]. - The company launched over 100 AI-related projects in 2024, including collaborations with China Mobile and China Telecom, enhancing its AI capabilities[73]. - The company has participated in the formulation of 60 new standards and 202 patents, strengthening its research in key technologies for 5G-A/6G[51]. Operational Efficiency - The company aims to improve operational efficiency by 8% through digital transformation initiatives[14]. - The company has implemented cost control measures, including personnel scale management and the use of AI tools to enhance delivery efficiency[36][38]. - The company is actively transforming its traditional business model to adapt to market changes and enhance operational efficiency[38]. - The company continues to focus on core capabilities in data platforms, AI models, and business scenarios in the digital operation business, targeting industries such as telecommunications and finance[80]. Market and Customer Insights - User data showed a growth of 20% in active users, totaling 5 million by the end of 2024[14]. - The company achieved a 35% year-on-year growth in order scale within the automotive sector, winning multiple projects including intelligent customer service and data platforms[42]. - In the financial sector, the company reported a 300% year-on-year increase in order scale, providing data platforms and operational services to various financial institutions[43]. - The vertical industry digitalization business saw a revenue decline from RMB 965 million to RMB 676 million, accounting for 10.2% of total revenue due to adjustments in the nuclear power 5G network construction cycle[46]. - The company has signed contracts for high-value scenario-based large models with major clients such as State Grid and PetroChina, focusing on intelligent diagnostics and financial analysis[49]. Sustainability and ESG Initiatives - The board has approved a new ESG strategy to align with global sustainability standards, focusing on reducing carbon emissions by 25% by 2026[14]. - The company is committed to achieving comprehensive carbon neutrality by 2028 and is actively exploring green operations and office models[52]. - The group has been actively reviewing its environmental practices to enhance sustainability in its operations[160]. Leadership and Governance - The company’s board of directors includes newly appointed members as of November 8, 2024, including Mr. Guo Zunhua and Mr. He Zheng[166]. - The board is composed of experienced professionals with diverse backgrounds in technology, finance, and management, enhancing strategic decision-making capabilities[121]. - The management team emphasizes the importance of innovation in technology development to maintain competitive advantage[126]. - The company has confirmed that no directors have interests in businesses that compete directly or indirectly with its operations, except as disclosed[173]. Employee and Compensation - The company had a total of 12,868 employees as of the reporting period, down from 13,577 employees on December 31, 2023, indicating a reduction of approximately 5.2%[170]. - The company maintains competitive employee compensation levels in line with market trends, with remuneration based on performance and includes comprehensive benefits plans[170]. - The company has a defined contribution retirement benefit plan for employees, with contributions confirmed as expenses when incurred[171].

Core Viewpoint - The summit held by AsiaInfo Technology and TM Forum focused on the role of AI in driving digital transformation across industries, emphasizing the integration of AI, P5G, and intelligent networks for high-quality development [1][3][13]. Group 1: Summit Overview - The summit gathered hundreds of industry leaders, experts, and executives to discuss the impact of AI and P5G on digital transformation [1][2]. - Keynote speeches highlighted the importance of collaboration in advancing AI technologies and the need for a unified standard in the telecommunications sector [3][4][5]. Group 2: Key Insights from Leaders - Nik Willetts emphasized the rapid development of AI in China and its transformative impact on the economy and society, advocating for a collaborative approach to AI development [3]. - Wen Ku pointed out that AI is crucial for enhancing the efficiency of 5G networks and called for increased cooperation among government, enterprises, and research institutions [4]. - Li Huidi discussed the emergence of new technologies driven by AI, such as smart connected vehicles and AI-powered devices, and highlighted the need for ethical governance in AI [5]. - Huang Zhiyong mentioned China Telecom's focus on cloud-network integration and the development of AI infrastructure to enhance network capabilities [6]. - Gao Nianshu from AsiaInfo Technology stressed the importance of AI in traditional industry transformation and the company's commitment to providing AI and data services across various sectors [7]. Group 3: Future Directions - The summit concluded with a call for building an open and collaborative "digital intelligence community" to leverage AI and next-generation networks for industry transformation [13]. - AsiaInfo Technology aims to enhance its capabilities in 5G, cloud computing, AI, and big data to create value across multiple industries [14].

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected investment return exceeding 15% over the next 6-12 months [3][14]. Core Insights - The company's revenue for 2024 is projected at 6.646 billion RMB, a decline of 15.8% year-on-year, primarily due to the slowdown in the telecommunications industry and cost-cutting measures by operator clients [1]. - Traditional business revenue, particularly from BSS, is under pressure, with a forecasted revenue of 4.046 billion RMB for 2024, down 18.9% year-on-year [1]. - New business segments (OSS, vertical industries, and smart operations) generated 2.599 billion RMB in revenue, a decrease of 10.3%, but their contribution to total revenue increased by 2.4 percentage points to 39.1% [1]. - The company is focusing on expanding its AI model delivery business, which is expected to grow significantly, with projected revenues of 200-300 million RMB in 2025 [2]. - The company plans to replicate its domestic BSS and OSS experiences in overseas markets, engaging with operators in Hong Kong and the Philippines [1]. Summary by Sections Financial Performance - In 2024, the company reported a gross profit of 2.484 billion RMB, a decrease of 16.5%, resulting in a gross margin of 37.4% [1]. - Net profit for 2024 is expected to be 545 million RMB, with a net profit margin of 7.8% [1]. - The company anticipates a recovery in net profit to 636 million RMB in 2025, reflecting a growth rate of 16.8% [3]. Revenue Projections - Revenue for 2025 is estimated to reach 7.191 billion RMB, representing an 8.2% increase from 2024 [4]. - The company expects a double-digit growth in OSS business revenue in 2025, driven by trends in operator consolidation and resource integration [1][2]. Dividend Policy - The company has announced a total dividend of 0.412 HKD per share for 2024, reflecting its commitment to shareholder returns [2].

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected investment return exceeding 15% over the next 6-12 months [3][14]. Core Insights - The company's revenue for 2024 is projected at 6.646 billion RMB, a decline of 15.8% year-on-year, primarily due to the slowdown in the telecommunications industry and cost-cutting measures by operator clients [1]. - Traditional business revenue, particularly from BSS, is under pressure, with a forecasted revenue of 4.046 billion RMB for 2024, down 18.9% year-on-year [1]. - New business segments (OSS, vertical industries, and smart operations) generated 2.599 billion RMB in revenue, a decrease of 10.3%, but their contribution to total revenue increased by 2.4 percentage points to 39.1% [1]. - The company is focusing on expanding its AI model delivery business, which is expected to grow significantly, with projected revenues of 200-300 million RMB in 2025 [2]. - The company plans to replicate its domestic BSS and OSS experiences in overseas markets, engaging with operators in Hong Kong and the Philippines [1]. Summary by Sections Financial Performance - In 2024, the company reported a gross profit of 2.484 billion RMB, a decrease of 16.5%, resulting in a gross margin of 37.4% [1]. - Net profit for 2024 is expected to be 516 million RMB, corresponding to a net profit margin of 7.8% [1]. - The company anticipates a recovery in net profit to 636 million RMB in 2025, reflecting a growth rate of 16.8% [3]. Revenue Forecast - Revenue is projected to increase to 7.191 billion RMB in 2025, representing an 8.2% growth from 2024 [4]. - The company expects a gradual recovery in traditional business segments, with BSS revenue potentially stabilizing in 2025 [1][3]. Dividend Policy - The company has announced a total dividend of 0.412 HKD per share for 2024, reflecting its commitment to shareholder returns [2].

Revenue Performance - Total revenue for the year was approximately RMB 6.646 billion, a year-on-year decrease of 15.8%[4] - Revenue from the three new businesses was approximately RMB 2.599 billion, a year-on-year decrease of 10.3%, accounting for about 39.1% of total revenue, an increase of 2.4 percentage points from the previous year[4] - Revenue from traditional BSS business was approximately RMB 4.046 billion, a year-on-year decrease of 18.9%[6] - OSS business revenue was approximately RMB 818 million, a slight year-on-year decrease of 1.8%[11] - The company's total revenue for 2024 was approximately RMB 6.65 billion, a decrease of 15.8% compared to RMB 7.89 billion in 2023[35] - Revenue from traditional business was RMB 4.05 billion, down from RMB 4.99 billion, while revenue from new businesses was RMB 2.60 billion, a decline of 10.3% from RMB 2.90 billion[35] - The company's revenue primarily comes from project-based software development contracts, with performance obligations typically fulfilled over six to eighteen months[56] Profitability - Net profit was approximately RMB 516 million, an increase of 0.7% year-on-year, with a net profit margin of 7.8%, up 1.3 percentage points from the previous year[4] - Net profit for 2024 was approximately RMB 515.69 million, an increase of 0.7% from RMB 512.31 million in 2023, resulting in a net profit margin of 7.8%, up by 1.3 percentage points[35] - The net profit for the year was approximately RMB 516 million, an increase of 0.7% year-on-year, with a net profit margin of 7.8%, up 1.3 percentage points year-on-year[93] - Net profit for the year ended December 31, 2024, was RMB 585,771,000, down from RMB 638,763,000 in 2023, a decrease of 8.3%[69] Dividends - The board proposed a final dividend of HKD 0.252 per share and a special dividend of HKD 0.160 per share, totaling HKD 0.412 per share[4] - The proposed final dividend for the year 2024 is HKD 0.252 per share, equivalent to RMB 0.233, a decrease from the 2023 final dividend of HKD 0.412 (RMB 0.373) per share[8] - A special dividend of HKD 0.160 per share (RMB 0.148) is proposed for 2024, while no special dividend was declared in 2023[8] Business Growth Areas - The company plans to focus on three growth areas: AI large model delivery, 5G private networks and applications, and digital intelligence operations for higher quality development[4] - The company aims to become a leading enterprise in large model delivery, leveraging its technological advantages and strategic partnerships with major foundational model vendors[22] - The company plans to deepen the integration of "5G + AI" technology to expand its market share in sectors such as nuclear power, new energy, and mining[32] - The company is focusing on optimizing its business layout and ensuring revenue quality by abandoning high-risk orders in response to market changes[98] Operational Efficiency - The company has implemented cost control measures, resulting in a strict management of expenses during the reporting period[93] - Operating costs decreased by 15.3% to approximately RMB 4.16 billion, reflecting a reduction in labor and non-labor costs[122] - Employee costs totaled RMB 3,514,006,000 in 2024, a decrease of 18.2% from RMB 4,295,810,000 in 2023[69] Cash Flow and Assets - The net cash used in operating activities for 2024 was RMB 103,545,000, a significant decline from the net cash generated of RMB 581,502,000 in 2023[48] - The total cash and cash equivalents decreased by RMB 995,460,000 in 2024, compared to an increase of RMB 678,806,000 in 2023[49] - Trade receivables increased significantly from RMB 1,513,032 thousand in 2023 to RMB 2,065,075 thousand in 2024, representing a growth of about 36.4%[41] - Total assets decreased from RMB 8,398,630 thousand in 2023 to RMB 7,638,575 thousand in 2024, a decline of approximately 9.1%[41] Market Expansion - The company has made significant breakthroughs in customer expansion, securing important projects with HKT and a Southeast Asian operator[11] - In the automotive sector, the company achieved a 35% year-on-year increase in order scale through various projects[12] - The order scale in the financial sector increased by 300% year-on-year, with significant contributions from marketing lead rating and private domain operation projects for various financial clients[14] - The company signed contracts with major clients in the energy sector, including China National Nuclear Corporation and State Power Investment Corporation, expanding its market share in new energy and nuclear power[17] Research and Development - The company has established a comprehensive delivery system for large model applications, collaborating with leading cloud and large model vendors on over 200 projects[21] - The company is committed to continuous research and development to drive technological advancements and market competitiveness[166] - The company is involved in the development of AI and AIOps technologies to enhance IT operations[166] Sustainability and Governance - The company is committed to achieving comprehensive carbon neutrality by 2028 and is actively exploring green operations and office models[28] - The company has received multiple awards for its sustainable development practices, including recognition in the "KPMG ESG Top 50" and other prestigious awards[28] - The company emphasizes its commitment to ESG (Environmental, Social, and Governance) standards in its operations[164] Strategic Partnerships - The company will enhance its strategic partnerships with leading large model vendors like Alibaba Cloud and Baidu to strengthen its position in the AI large model delivery market[31] - The company is leveraging partnerships with organizations like ETSI and ITU to align with global telecommunications standards[164] Corporate Governance - The company has adopted a corporate governance code to ensure high standards of corporate governance and protect shareholder interests[154] - The board of directors includes a diverse group of executives and independent directors, ensuring a range of perspectives in decision-making[169]

Summary of Conference Call Notes Company and Industry Overview - The conference call focused on the AI business of Yaxin Technology, a leading telecommunications IT service provider in China, highlighting its rapid progress in AI services and partnerships with major cloud providers such as Volcano Engine, Alibaba, and Baidu Cloud [1][2][3]. Key Points and Arguments 1. **AI Business Development**: Yaxin Technology has made significant advancements in its AI business, becoming an official HiAgent partner of Volcano Engine and a key player in Alibaba's public cloud hybrid cloud services [1][2]. 2. **Market Position**: The company is currently experiencing a historical low valuation, making it an attractive investment opportunity. The guidance for 2024 indicates profits will exceed those of the previous year, with a stable year-end dividend per share corresponding to a dividend yield of approximately 6.9% [1][2]. 3. **5G and AI Growth**: Yaxin is actively exploring new business avenues, particularly in 5G private networks and AI, which have shown substantial growth [1][2]. 4. **Market Size and Trends**: The AI large model market is projected to reach a scale of hundreds of billions by 2028, with significant growth in project numbers and funding [6][7]. 5. **Client Engagement**: The company is focusing on providing large model services to over 3 million small and medium enterprises, emphasizing the importance of user experience and continuous operation post-deployment [5][6]. 6. **Collaboration with Cloud Providers**: Yaxin collaborates closely with major cloud providers to leverage their computational resources for training large models, which is essential for the development of AI applications [8][9]. 7. **Client Segmentation**: The strategy involves targeting head clients in various industries, including government, energy, transportation, and finance, to replicate successful applications and experiences across different sectors [18][19]. 8. **Product and Service Integration**: Yaxin's strategy includes integrating its products with those of cloud providers, ensuring compatibility and flexibility for clients, particularly in sectors with high customization needs [22][23]. Additional Important Insights - **Operational Challenges**: The transition from testing phases to full-scale implementation of AI models requires significant operational adjustments and continuous monitoring to ensure data security and model performance [5][6]. - **Market Dynamics**: The AI large model market is still evolving, with many clients unsure of how to implement these technologies effectively, highlighting the need for companies like Yaxin to provide guidance and support [13][14]. - **Investment in Infrastructure**: The development of AI applications is heavily reliant on robust infrastructure, including hardware and software integration, which Yaxin is well-positioned to provide [16][17]. - **Long-term Partnerships**: Yaxin aims to establish long-term partnerships with cloud providers and clients, focusing on mutual growth and the successful deployment of AI solutions [20][21]. This summary encapsulates the key discussions and insights from the conference call, providing a comprehensive overview of Yaxin Technology's current position and future strategies in the AI sector.

Investment Rating - The investment rating for the company is "Outperform the Market" [4] Core Views - The company is a leading provider of intelligent digital solutions with advanced technology capabilities in various fields including 5G, cloud computing, big data, artificial intelligence, and IoT [4][6] - The company has experienced a revenue of 7.891 billion RMB in 2023, a year-on-year increase of 2.0%, despite a decline in traditional BSS revenue [2][5] - The company aims to transition from a focus on communication services to a broader scope that includes both communication and non-communication businesses [4][6] Financial Performance - In 2023, the company reported a net profit of 512 million RMB, a decrease of 37.9% year-on-year, primarily due to non-operating items such as goodwill impairment [2][5] - The adjusted net profit for the year was 851 million RMB, with an adjusted net profit margin of 10.8% [2][5] - The comprehensive gross margin for 2023 was 37.7%, a slight decrease of 0.3 percentage points year-on-year [2][5] Revenue Breakdown - Traditional BSS revenue was 4.881 billion RMB in 2023, down 0.9% year-on-year [2][5] - The digital operation business generated 1.102 billion RMB, a decline of 4.2% year-on-year [2][5] - The vertical industry digitalization business saw a significant increase of 27.5%, reaching 965 million RMB [2][5] - OSS business revenue grew by 24.9%, amounting to 832 million RMB [2][5] Future Outlook - For the first half of 2024, the company expects revenue to decline by 8.8% to approximately 2.994 billion RMB, with traditional BSS facing significant pressure [4][8] - The company anticipates a narrowing decline in BSS revenue for the full year of 2024, while new business segments are expected to maintain good growth [4][8] - The company has set a dividend guidance for 2024 at 40% of the annual net profit, maintaining stability compared to the previous year [4][8] Market Position - The company has established a strong presence in various sectors including telecommunications, broadcasting, energy, government, transportation, finance, and postal services [4][6] - The company is actively expanding its international business, focusing on markets in the Middle East and Southeast Asia [7][8] Valuation - The company is projected to achieve revenues of 7.931 billion RMB in 2024, with a slight growth of 0.51% year-on-year [5][8] - The expected net profit for 2024 is 598 million RMB, reflecting a year-on-year growth of 12% [5][8] - The company is assigned a dynamic PE ratio of 10-12 times for 2024, with a reasonable value range of 6.99-8.39 HKD [8]

Revenue Performance - Revenue for the six months ended June 30, 2024, was RMB 29.94 billion, a decrease of 8.8% compared to RMB 32.82 billion for the same period in 2023[9]. - In the first half of 2024, the company's operating revenue was RMB 2.994 billion, a year-on-year decrease of 8.8%[11]. - Revenue from traditional BSS business was RMB 1.794 billion, down 18.1% year-on-year, while new business revenue reached RMB 1.200 billion, an increase of 10.0% year-on-year[11]. - Revenue from new business segments reached RMB 12.00 billion, an increase of 10.0% from RMB 10.91 billion year-over-year[9]. - Revenue from software development and related services was RMB 2,648,172 thousand, down from RMB 3,049,292 thousand, reflecting a decline of approximately 13% year-over-year[87]. - Revenue from software services provided to a major shareholder was RMB 1,706,772,000 for the six months ended June 30, 2024, down from RMB 2,080,097,000 for the same period in 2023[131]. Profitability and Loss - Gross profit decreased to RMB 7.38 billion, down 35.5% from RMB 11.44 billion in the previous year[9]. - Gross margin fell to 24.7%, a decline of 10.2 percentage points from 34.9%[9]. - The company reported a net loss of RMB 0.70 billion, a significant decrease from a profit of RMB 2.12 billion in the prior year, representing a 133.0% change[9]. - Net profit margin was -2.3%, down 8.8 percentage points from 6.5%[9]. - The company reported a net loss of RMB 70 million in the first half of 2024 due to significant revenue decline[11]. - The company reported a loss before tax of RMB 91,392 thousand for the six months ended June 30, 2024, compared to a profit of RMB 220,716 thousand in the prior year[77]. - The net loss for the period was RMB 70,131 thousand, contrasting with a profit of RMB 212,296 thousand for the same period in 2023[77]. - The company reported a loss of RMB 21,261 thousand for the six months ended June 30, 2024, compared to a profit of RMB 8,420 thousand for the same period in 2023[93]. Cash Flow and Operating Activities - Cash used in operating activities increased to RMB 9.19 billion, a 95.3% increase compared to RMB 4.71 billion in the previous period[9]. - Operating cash outflow increased by 95.3% year-on-year to approximately RMB 919 million, compared to RMB 471 million in the same period of 2023[20]. - Net cash used in operating activities for the first half of 2024 was approximately RMB 919 million, a significant increase of 95.3% compared to RMB 471 million in the same period of 2023[36]. - Net cash generated from investing activities was approximately RMB 328 million, reflecting a year-on-year growth of 27.1% from RMB 258 million in the first half of 2023[36]. - Net cash used in financing activities increased by 98.0% year-on-year to approximately RMB 696 million from RMB 352 million in the same period of 2023, mainly for the payment of special dividends[37]. Business Strategy and Future Outlook - The company is focusing on expanding its new business segments, which include digital operations and vertical industry digitization[9]. - Future outlook indicates a commitment to enhancing research and development in AI and telecommunications technologies[9]. - The company plans to explore strategic partnerships and potential acquisitions to bolster market presence and technological capabilities[9]. - The company aims to maintain a dividend payout ratio of 40% of the annual net profit for the year 2024, with a dividend yield of 9.0%[11]. - The company aims to achieve a rebound in performance in the second half of 2024, with expectations for BSS business revenue decline to significantly narrow[18]. - The company plans to expand its revenue scale through result-based and profit-sharing payment models in its digital operation business[18]. Research and Development - Research and development investment amounted to RMB 436 million, accounting for 14.6% of total revenue[14]. - The company is focusing on enhancing its core R&D capabilities in three product systems: Cloud Network, Digital Intelligence, and IT[14]. - The company has participated in the formulation of 30 international and domestic standards in the first half of the year, with 44 international/domestic patents granted[16]. - Research and development expenses decreased by 13.6% to approximately RMB 436 million, representing 14.6% of total revenue[28]. Shareholder and Equity Information - As of June 30, 2024, the total number of issued shares is 935,304,312[51]. - Skipper Investment Limited holds 213,924,952 shares, representing approximately 22.87% of the total issued shares[50]. - AsiaInfo Security holds 190,016,976 shares, accounting for 20.31% of the total issued shares[52]. - China Mobile International Holdings Limited owns 182,259,893 shares, which is about 19.48% of the total issued shares[52]. - The company is in the process of acquiring up to 190,016,976 shares from Skipper Investment Limited, which will increase its ownership to approximately 51.35%[47]. - The company has granted stock options to independent non-executive directors, totaling 112,000 options[48]. - The report indicates no significant changes in the ownership structure of the company's major shareholders[49]. Employee and Compensation Information - As of June 30, 2024, the total number of full-time employees was 12,929, a decrease from 13,577 as of December 31, 2023[68]. - Total employee costs decreased to RMB 1,820,803 thousand for the six months ended June 30, 2024, down 9.25% from RMB 2,006,986 thousand in the same period of 2023[96]. - Total compensation for the company amounted to RMB 25,511,000 for the six months ended June 30, 2024, down from RMB 29,082,000 in the same period of 2023, representing a decrease of approximately 8.6%[134]. - Salary, allowances, and benefits decreased to RMB 7,142,000 in 2024 from RMB 7,353,000 in 2023, a decline of about 2.9%[134]. - Share-based payment expenses were RMB 13,422,000 for the first half of 2024, down from RMB 16,809,000 in 2023, indicating a reduction of approximately 20.5%[134]. Asset and Liability Overview - Total assets as of June 30, 2024, were approximately RMB 10.004 billion, a decrease of 11.4% from RMB 11.285 billion at the end of 2023[30]. - The company's total equity attributable to equity holders decreased to RMB 6,170,889 thousand, down from RMB 6,615,739 thousand, a decline of 6.7%[79]. - Total liabilities decreased to RMB 3,463,936 thousand, down 19.2% from RMB 4,289,824 thousand[79]. - The company's net asset value decreased to RMB 6,147,590 thousand, a decline of 6.8% from RMB 6,600,399 thousand[79]. - The company's goodwill remained stable at RMB 1,932,246 thousand, unchanged from the previous period[78]. Market and Operational Developments - The company successfully scaled its operations in 16 provinces, enhancing its market coverage and customer response capabilities[13]. - Orders for "AI+" projects increased by over 55% in the first half of 2024, with 56 innovative applications combining "AI large models" and BSS[12]. - The company's smart operation business revenue was RMB 447 million, a slight decline of 1.9% year-on-year, but showed signs of improvement[13]. - In the transportation sector, revenue increased by 2.9 times year-on-year, driven by successful integration of large model technology into toll collection systems[14]. - The company signed over 30 new projects in the energy sector, with 5G private network coverage reaching nearly 30% across 23 units in five major nuclear power bases[14].

Investment Rating - Buy (Maintained) [2] Core Views - Traditional operator business is under pressure, but vertical industry digitalization in the "Three New Businesses" is driving growth [2] - BSS revenue declined by 18.1% YoY in 1H24 due to cost reductions by operator clients, while "Three New Businesses" revenue grew by 6.8% YoY to 40.1% of total revenue [2] - The company's strong cash flow supports its dividend policy, with a 40% payout ratio of net profit for 2024 [2] Business Performance BSS Business - BSS revenue in 1H24 was RMB 17.94 billion, down 18.1% YoY, primarily due to operator cost reductions and delayed order progress [2] - The company is accelerating AI-driven BSS innovation, with 56 "AI + BSS" projects signed in 1H24, representing a 55% increase in order value [2] Three New Businesses - OSS revenue in 1H24 was RMB 2.80 billion, down 1.6% YoY, but the company has successfully implemented over 10 "AI + OSS" commercial cases [2] - Vertical industry digitalization revenue grew 34.6% YoY to RMB 4.73 billion in 1H24, driven by energy, transportation, and government sectors [2] - Digital operations revenue was RMB 4.47 billion in 1H24, down 1.9% YoY, but the decline has narrowed compared to 2023 [2] Financial Performance - 1H24 revenue was RMB 29.94 billion, down 8.8% YoY, with a net loss of RMB 0.7 billion and a net loss margin of 2.3% [2] - Gross profit margin was 24.7%, down 10.2 pct YoY, due to revenue decline and rigid cost structure [2] - The company expects BSS revenue decline to narrow significantly in 2H24 and digital operations revenue to recover [2] Valuation and Forecast - 2024-2026 net profit forecasts are adjusted to RMB 584 million, RMB 698 million, and RMB 789 million, respectively, with YoY growth rates of 9.6%, 19.8%, and 12.9% [2] - The current stock price of HKD 5.2 implies an 8x PE for 2024, offering valuation safety and high dividend appeal [2] Financial Statements Income Statement - 2024E revenue is forecasted at RMB 7.726 billion, with net profit of RMB 584 million [3] - EPS for 2024E is projected at RMB 0.62 [3] Balance Sheet - Total assets are expected to grow from RMB 11.285 billion in 2023 to RMB 14.989 billion in 2026 [4] - Net cash position is forecasted to decline from RMB 2.638 billion in 2023 to a net debt of RMB 771 million in 2026 [4] Cash Flow Statement - Operating cash flow is expected to increase from RMB 582 million in 2023 to RMB 1.708 billion in 2026 [5] - Free cash flow is projected to improve from a negative RMB 1.296 billion in 2023 to a negative RMB 430 million in 2026 [5]