Summary of Conference Call Company Overview - The conference call features Mr. Zhou from Yaxin Technology, indicating a focus on recent changes within the company [1] Key Points - Mr. Zhou is expected to provide updates regarding the company's recent developments, suggesting potential shifts in strategy or performance metrics [1] Additional Important Content - The call invites investor questions, highlighting an interactive approach to communication and transparency [1]

Summary of Conference Call Transcript Company or Industry Involved - The discussion pertains to a specific company, focusing on its operational profit adjustments and financial performance. Core Points and Arguments - The company reported an adjusted operating profit, which excludes impacts from commercial and intangible assets [1] - A special dividend was declared, and the effects of dividend taxes were also considered in the adjustments [1] - Non-operational items were removed from the financial analysis to provide a clearer picture of the company's performance [1] Other Important but Possibly Overlooked Content - The adjustments made aim to enhance the understanding of the company's core operational efficiency by eliminating the noise from non-operational factors [1]

Financial Performance - The company reported a revenue of approximately 1.2 billion, representing a year-over-year growth of 15%[22]. - In 2023, the company's revenue reached RMB 7.891 billion, a year-on-year increase of 2.0%[25]. - The new business revenue amounted to RMB 2.899 billion, representing a growth of 12.7% compared to the previous year[25]. - The net profit for 2023 was RMB 0.512 billion, a decrease of 37.9% year-on-year, primarily due to impairment losses on goodwill and intangible assets[25]. - The adjusted net profit, excluding non-operating items, was approximately RMB 0.851 billion, with an adjusted net profit margin of 10.8%[25]. - The gross profit margin slightly decreased to 37.7%, down 0.3 percentage points from 38.0% in 2022[25]. - The company plans to distribute a final dividend of HKD 0.412 per share, which corresponds to a payout ratio of 40.0% of the adjusted annual profit[28]. - The three new business segments accounted for 36.7% of total revenue, indicating a growing contribution to overall performance[27]. - The traditional BSS business faced challenges with a revenue decline of 0.9% year-on-year, while OSS and vertical industry digitalization businesses showed rapid growth[27]. User Growth and Market Expansion - User data showed an increase in active users by 20% compared to the previous year, reaching 5 million users[32]. - The company reported a significant increase in user data, with a growth rate of 25% year-over-year in active users[86]. - The company is expanding its market presence internationally, targeting a 25% increase in international sales[32]. - The company is expanding its market presence in Southeast Asia, targeting a 30% increase in market share by 2025[89]. Strategic Initiatives and Future Outlook - The company provided a future outlook projecting a revenue growth of 10-12% for the next fiscal year[32]. - The management highlighted a shift towards a "product + service" model, aiming to increase service revenue by 30%[32]. - New product development includes the launch of a software suite expected to generate an additional 200 million in revenue[32]. - A strategic acquisition was completed, enhancing the company's technology capabilities and expected to contribute 50 million to annual revenue[32]. - The company plans to enhance its ESG initiatives, allocating 5% of its budget towards sustainability projects[32]. - The company aims to achieve peak carbon emissions by 2025 and full carbon neutrality by 2028, promoting green operations and products[37]. Research and Development - The company is investing 15% of its revenue into R&D to drive innovation in software and hardware integration[32]. - The company has invested $50 million in research and development for new technologies aimed at improving operational efficiency[87]. - The company continues to focus on innovation in AI and digital twin technologies to enhance its product offerings and meet customer demands[32]. Operational Performance - The company is focusing on cash flow health and cost management to ensure long-term sustainable development amidst external economic uncertainties[27]. - The operating cash flow for the year was RMB 0.582 billion, reflecting a 5.9% increase from the previous year[25]. - The company is actively involved in the development of new products and technologies to meet the evolving needs of its clients[21]. - The company is focusing on creating a closed-loop customer service system through its comprehensive capabilities in consulting, product development, implementation, and customer service[21]. Corporate Governance and Management - The board of directors emphasized the importance of diversifying the product portfolio to mitigate market risks[32]. - The company has a strong board with members holding extensive experience in IT, media, entertainment, and venture capital[94]. - The company emphasizes high standards of corporate governance to protect shareholder rights and enhance corporate value and accountability[165]. - The board has established four committees: Audit Committee, Nomination Committee, Remuneration Committee, and Strategic and Investment Committee to oversee specific areas of the company's affairs[166]. Sustainability and ESG Efforts - The company plans to enhance its ESG initiatives, allocating 5% of its budget towards sustainability projects[32]. - The company received multiple awards for its sustainability efforts, including the "Best Technology Innovation Award" in the 2023 ESG Corporate Awards[36]. - The company has implemented new operational strategies that are expected to reduce costs by I% over the next year[97]. Acquisitions and Partnerships - A strategic acquisition was completed, enhancing the company's technology capabilities and expected to contribute 50 million to annual revenue[32]. - The company is actively exploring key technologies for 6G, having published the first global white papers on 6G OSS and BSS technologies[33]. - The company is focusing on expanding into non-telecom industries, leveraging data resources for growth[40]. Financial Health and Risk Management - The company is focusing on cash flow health and cost management to ensure long-term sustainable development amidst external economic uncertainties[27]. - The company has established a comprehensive digital transformation service for various industries, including telecommunications, government, finance, energy, transportation, and postal services[21]. - The company has adopted a whistleblowing policy to provide a confidential reporting channel for employees and stakeholders regarding potential misconduct[200].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 13.85 [2][5]. Core Insights - The company's revenue for 2023 was CNY 7.891 billion, a year-on-year increase of 2%, with traditional business revenue declining by 3.4% [2]. - New business segments, referred to as "three new businesses," generated CNY 2.9 billion, reflecting a year-on-year growth of 12.7% [2]. - The gross profit margin decreased to 37.7%, while the overall gross profit increased by 1.2% to CNY 2.975 billion [2]. - The adjusted net profit for 2023 was CNY 8.51 billion, maintaining a net profit margin of 10.8% [2][5]. - The company plans to distribute a special dividend of HKD 0.412 per share, which is 40% of the adjusted annual profit [2]. Summary by Sections Business Overview - The company operates in the application software industry and was established in July 2003, with a registered capital of HKD 10,000 and 13,235 employees [2]. Financial Performance - The traditional business, primarily based on BSS, generated CNY 4.991 billion, down 3.4% year-on-year, while BSS revenue alone was CNY 4.881 billion, a decrease of 0.9% [2]. - The three new business segments include OSS, digital operations, and vertical industry digitization, with OSS revenue growing by 24.9% to CNY 0.832 billion [2][3]. Future Outlook - The company anticipates continued pressure on BSS revenue due to reduced capital expenditure from telecom operators, but expects opportunities from system restructuring and intelligent upgrades [2][3]. - OSS revenue is projected to grow by at least 20% next year, driven by advancements in AI and network technologies [3]. - The vertical industry digitization business is expanding rapidly, with significant projects in energy and transportation sectors [4]. Strategic Developments - The company is undergoing a transformation strategy, shifting from a pure telecom service provider to a more diversified model that includes non-telecom services and international market expansion [4]. - The focus on "standard products + solutions" aims to enhance market penetration and operational efficiency [4]. Valuation Metrics - The expected revenue for 2024 and 2025 is CNY 8.32 billion and CNY 9.009 billion, respectively, with corresponding net profits of CNY 9.04 billion and CNY 9.89 billion [5]. - The current price corresponds to a projected P/E ratio of 6.87 for 2024, significantly lower than the industry average [5][6].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 13.85 [2][5]. Core Insights - The company's revenue for 2023 was CNY 7.891 billion, a year-on-year increase of 2%. Traditional business revenue, primarily from BSS, was CNY 4.991 billion, down 3.4% year-on-year. New business revenue reached CNY 2.9 billion, up 12.7% year-on-year, slightly exceeding expectations [2][5]. - The gross profit margin decreased to 37.7%, with total gross profit of CNY 2.975 billion, a year-on-year increase of 1.2%. The net profit margin was 6.5%, with net profit of CNY 0.512 billion, down 37.9% year-on-year due to non-operating factors [2][5]. - The company anticipates continued pressure on BSS revenue over the next two years due to reduced capital expenditure from telecom operators, but sees opportunities in system restructuring and intelligent upgrades driven by advancements in data elements and AI [2][3]. Summary by Sections Business Overview - The company focuses on three new business areas: OSS, digital operations, and vertical industry digitization, with OSS revenue expected to grow by at least 20% next year [3][4]. - The digital operations segment faced challenges due to external factors, including a decline in IPOs and cost-cutting measures by internet companies, but is expected to recover in 2024 [4][5]. Financial Performance - The company reported a net profit of CNY 0.512 billion for 2023, with an adjusted net profit of CNY 0.851 billion, maintaining a net profit margin of 10.8% [2][5]. - Revenue projections for 2024 and 2025 are CNY 8.32 billion and CNY 9.009 billion, respectively, with a gross margin expected to stabilize around 38% [5][7]. Strategic Developments - The company is undergoing a transformation strategy, shifting from a pure telecom service provider to a more diversified model that includes non-telecom services and international market expansion [4][5]. - The focus on vertical industries such as energy and transportation is expected to drive future growth, with significant projects already underway in these sectors [4][5].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 13.85 [2][5]. Core Insights - The company's revenue for 2023 was CNY 7.891 billion, a year-on-year increase of 2%, with traditional business revenue declining by 3.4% [2]. - New business segments, referred to as "three new businesses," generated CNY 2.9 billion, reflecting a year-on-year growth of 12.7% [2]. - The gross profit margin decreased to 37.7%, while the overall gross profit increased by 1.2% to CNY 2.975 billion [2]. - The adjusted net profit for 2023 was CNY 8.51 billion, maintaining a net profit margin of 10.8% [2][5]. - The company plans to increase investments in 5G and AI sectors to mitigate challenges in its traditional BSS business [2][3]. Summary by Sections Business Overview - The company operates in the application software industry and was established in July 2003, with a registered capital of HKD 10,000 [2]. - The company employs 13,235 staff and is chaired by Tian Suning [2]. Financial Performance - The traditional BSS business revenue was CNY 4.991 billion, down 3.4% year-on-year, while the BSS segment alone generated CNY 4.881 billion, a decrease of 0.9% [2]. - The three new business segments include OSS, digital operations, and vertical industry digitization, with OSS revenue growing by 24.9% to CNY 0.832 billion [2][3]. - The company’s net profit for 2023 was CNY 0.512 billion, a decline of 37.9% due to non-operating factors, including asset impairments [2]. Future Outlook - The company anticipates that OSS revenue will grow by at least 20% in the coming year, driven by advancements in AI and network technologies [3]. - The vertical industry digitization business is expected to continue its rapid growth, particularly in energy and transportation sectors [4]. - The company is focusing on a strategic transformation to leverage AI and data technologies, aiming to expand into non-telecom sectors [4]. Valuation Metrics - The projected revenue for 2024 and 2025 is CNY 8.32 billion and CNY 9.009 billion, respectively, with corresponding adjusted net profits of CNY 0.959 billion and CNY 1.042 billion [5]. - The company’s current price-to-earnings ratio is estimated at 6.87 for 2024, significantly lower than the industry average [5][6].

研究报告Research Report 20 Mar 2024 亚信科技 AsiaInfo Technologies (1675 HK) 盈利稳定，高派息，行业大模型应用落地，出海 Stable Profitability, High Dividend Payout, Implementation of Industry Model Applications and Business Going Abroad [观Ta点ble聚_y焦em Ieniv1e]s tment Focus [Tab维le_持Info优] 于大市Maintain OUTPERFORM (Please see APPENDIX 1 for English summary) 公司盈利稳定，高派息。2023 年实现营业收入约 78.91 亿元人民 评级 优于大市OUTPERFORM 币，同比增长2.0%，其中三新业务收入同比增长12.7%，占收比达 现价 HK$7.20 目标价 HK$15.86 36.7%，较去年提升 3. 4 个百分点。三新业务依然是公司业务规模 增长的主要驱动力。分业务线看，2023 年 BSS 业务收入实现约 HTI ...

Financial Performance - The company's revenue for the year reached RMB 7.891 billion, representing a year-on-year growth of 2.0%[2] - Gross profit was approximately RMB 2.975 billion, with a gross margin of 37.7%, a slight decrease of 0.3 percentage points compared to the previous year[2] - Net profit was approximately RMB 512 million, while adjusted net profit reached RMB 851 million, maintaining an adjusted net profit margin of 10.8%[2] - The company's net profit attributable to equity holders for the year ended December 31, 2023, was RMB 533,008 thousand, a decrease of 35.9% from RMB 831,845 thousand in 2022[17] - Basic earnings per share for 2023 was RMB 0.58, down from RMB 0.92 in 2022, reflecting a decline of 37%[17] - The company reported a total comprehensive income of RMB 535,867 thousand for the year, compared to RMB 822,514 thousand in 2022, indicating a decline of 34.9%[20] - The company's total revenue for the year ended December 31, 2023, was approximately RMB 7.89 billion, representing a year-on-year increase of 2.0%[14] - Revenue from new businesses reached approximately RMB 2.90 billion, showing a robust year-on-year growth of 12.7%[14] - The adjusted net profit for the year was RMB 0.851 billion, maintaining a double-digit net profit margin of 10.8%[63] Business Segments - Revenue from the "Three New Businesses" amounted to RMB 2.899 billion, with a year-on-year increase of 12.7%, accounting for approximately 36.7% of total revenue[2] - The "Digital Intelligence Operations" business experienced a revenue decline of 4.2%, totaling RMB 1.102 billion, accounting for 14.0% of total revenue[5] - The company's vertical industry digital business revenue was RMB 965 million, up 27.5% year-on-year, accounting for 12.2% of total revenue[6] - OSS business revenue amounted to RMB 832 million, representing a year-on-year increase of 24.9% and accounting for 10.5% of total revenue[7] - BSS business revenue declined by 0.9% year-on-year to RMB 4.881 billion, facing challenges from clients' cost-cutting measures[7] Cash Flow and Assets - Operating cash flow improved to RMB 582 million, reflecting a year-on-year increase of 5.9%[4] - The company's cash and cash equivalents increased to RMB 2,612,771 thousand in 2023, up from RMB 1,933,250 thousand in 2022, representing a growth of 35.2%[18] - Trade receivables rose to RMB 1,513,032 thousand in 2023, compared to RMB 1,137,330 thousand in 2022, marking an increase of 32.9%[18] - Total assets as of December 31, 2023, amounted to RMB 8,398,630 thousand, an increase of 18.2% compared to RMB 7,103,835 thousand in 2022[18] - The company's total liabilities as of December 31, 2023, were approximately RMB 4.685 billion, a year-on-year increase of 29.1% from RMB 3.627 billion in 2022[89] Dividends and Shareholder Returns - The company proposed a final dividend of HKD 0.412 per share, with a payout ratio of 40% of adjusted net profit[4] - The proposed final dividend for the year ended December 31, 2023, is RMB 348,617,000, an increase from RMB 332,737,000 in 2022, representing a growth of approximately 4.8%[41] - The special dividend declared on December 4, 2023, amounted to RMB 510,014,000, which was not applicable in 2022[41] Strategic Focus and Future Outlook - The company is focusing on cash flow health and cost management to ensure long-term sustainable development amid economic uncertainties[3] - The company anticipates a recovery in the "Digital Intelligence Operations" business in 2024 as market demand remains strong[5] - The company aims to achieve carbon peak by 2025 and full carbon neutrality by 2028, actively exploring green operational models[10] - The company plans to expand into non-telecom industries such as energy, government, and transportation, focusing on standardized products and solutions[12] - The company is targeting international markets, particularly the Middle East and Southeast Asia, to promote its 5G private network and edge AI products[13] Research and Development - The company has established over 300 international and domestic standards, with 85 new standards added in 2023[9] - The company invested RMB 2,035,488 thousand in financial assets measured at fair value through profit or loss in 2023, compared to RMB 1,309,807 thousand in 2022, marking an increase of about 55.3%[24] - Research and development expenses were approximately RMB 1.10 billion, a slight decrease of 1.2% from RMB 1.11 billion in 2022, accounting for 13.9% of total revenue[84] Market Position and Innovations - The company has integrated over 100 wind farms into its 5G private network projects, collaborating with China Broadcasting and China General Nuclear Power Group[6] - The company launched the AN CoPilot product system to support operators in advancing to L4/L5 intelligent networks, with applications already in place at major telecom operators[8] - The company continues to innovate in AIGC/GPT, edge intelligence, and digital twin technologies to mitigate downward pressure on BSS business[69] - The company’s 5G core network and network slicing capabilities were ranked among the top 7 globally by ABI Research, and its 5G private network products won the GLOTEL "BSS/OSS Modernization Excellence Award"[71] Employee and Governance - The group had a total of 13,577 employees during the reporting period, a slight decrease from 13,581 employees as of December 31, 2022[102] - The company is committed to maintaining competitive employee compensation levels in line with market trends, with a comprehensive benefits plan and career development opportunities[102] - The company has adopted a corporate governance code to enhance shareholder rights and corporate accountability, ensuring compliance with applicable governance principles[104]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 13.85 [2][5]. Core Views - The macroeconomic environment is impacting the industry, leading to cautious spending from government and enterprise sectors. The capital expenditure from telecom operators on 5G is nearing its end, affecting the ICT software and information services sector. The average revenue growth for comparable companies in the industry for the first three quarters is only 1.15% [2][3]. - Despite the overall low growth in the industry, the company is expected to maintain a positive growth trajectory in its new business segments, with a projected revenue increase of 0.5% to 2.5% for the year ending December 31, 2023 [3][5]. Summary by Sections Company Overview - The company, AsiaInfo Technologies, was established on July 15, 2003, with a registered capital of HKD 10,000 and employs 13,235 people. The chairman is Tian Shuning [2]. Financial Performance - The company anticipates a revenue growth of approximately 0.5% to 2.5% for the year 2023, with a projected revenue of around RMB 77.38 billion. However, profits are expected to decline by 37% to 43% due to non-operating factors, including asset impairments [3][5]. - The company’s traditional BSS business is expected to decline by about 3%, while new business segments are projected to grow positively, particularly OSS and vertical industry cloud services [3][7]. Shareholder Structure - As of June 30, 2023, major shareholders include CITIC Capital Holdings Limited (22.87%), China Mobile (19.49%), and Tian Shuning (12.91%) [3][4]. Market Comparison - The report highlights that AsiaInfo Technologies has a significant valuation advantage compared to its peers, with a projected PE ratio of 7.97, while the industry average is 48.2 [6][7]. Future Projections - The company’s revenue is projected to reach approximately HKD 78.52 billion in 2023, with expectations of continued growth in new business segments, which are expected to account for 36% of total revenue by 2024 [5][7].

Financial Performance - For the six months ended June 30, 2023, the company reported a revenue of RMB 3.282 billion, representing a 5.6% increase from RMB 3.109 billion in the same period of 2022[19]. - Revenue from the new business segments reached RMB 1.091 billion, an increase of 8.7% compared to RMB 1.004 billion in the previous year[19]. - Gross profit for the period was RMB 1.144 billion, up 8.6% from RMB 1.054 billion, with a gross margin of 34.9%, an increase of 1.0 percentage points year-over-year[19]. - Net profit increased by 12.3% to RMB 212 million, compared to RMB 189 million in the prior year, with a net profit margin of 6.5%, up 0.4 percentage points[19]. - In the first half of 2023, the company achieved a revenue of RMB 3.282 billion, representing a year-on-year increase of 5.6%[25]. - Gross profit margin improved to 34.9%, up by 1.0 percentage point year-on-year[25]. - Net profit reached RMB 212 million, reflecting a year-on-year increase of 12.3%[25]. - The company's net profit for the first half of 2023 was approximately RMB 212 million, representing a year-on-year growth of 12.3% from RMB 189 million in the same period of 2022[54]. - The gross profit for the first half of 2023 was approximately RMB 1.144 billion, with a gross margin of 34.9%, an increase of 1.0 percentage point from 33.9% in the same period of 2022[49]. - The total comprehensive income for the period was RMB 218,358 thousand, compared to RMB 180,472 thousand in the previous year, an increase of 21.0%[123]. Cash Flow and Operating Activities - The net cash used in operating activities was RMB (471) million, an improvement of 13.7% from RMB (546) million in the previous period[19]. - Operating cash flow improved by 13.7% year-on-year, indicating better cash management[25]. - The net cash used in operating activities for the first half of 2023 was approximately RMB 471 million, an improvement of 13.7% compared to RMB 546 million in the same period of 2022, attributed to accelerated project acceptance and enhanced collection management[68]. - The net cash generated from investing activities in the first half of 2023 was approximately RMB 258 million, primarily from the redemption of several bank and other financial institution wealth management products[68]. - The net cash used in financing activities for the first half of 2023 was approximately RMB 352 million, a year-on-year increase of 4.3% from RMB 337 million in the same period of 2022, mainly for annual dividend payments[68]. Business Segments and Growth - New business orders signed increased by over 20% year-on-year, with new business orders in the three new sectors rising by over 70%[25]. - The energy sector's revenue tripled year-on-year, exceeding RMB 100 million, becoming the largest revenue segment among vertical industries[28]. - The transportation sector's revenue increased by 70.7%, while the government sector's revenue rose by 40.0%[28]. - In the first half of 2023, the company's vertical industry and cloud business revenue reached RMB 351 million, a year-on-year increase of 29.4%[32]. - OSS business revenue grew rapidly, reaching RMB 285 million, up 14.9% year-on-year[32]. - BSS business revenue was RMB 2.105 billion, an increase of 1.9% year-on-year[32]. Research and Development - R&D expenses for the first half of 2023 amounted to RMB 505 million, a year-on-year increase of 3.7%, accounting for 15.4% of total revenue[36]. - The company is focusing on AI and AIGC technologies to drive innovation and maintain its leadership in the BSS market[38]. - The company has launched innovative products in the cloud network field, including the first endogenous computing network product, enhancing its market position[35]. Shareholder Information - The total number of shares held by directors and senior management as of June 30, 2023, was approximately 120,735,141 shares, representing about 12.91% of the total issued shares[81]. - As of June 30, 2023, the total number of issued shares was 935,290,912[92]. - Skipper Investment Limited holds 213,924,952 shares, representing approximately 22.87% of the total issued shares[87]. - China Mobile International Holdings Limited owns 182,259,893 shares, accounting for 19.49% of the total issued shares[90]. - The company has a significant shareholder structure with multiple entities under CITIC Capital holding 213,924,952 shares, also 22.87%[87]. Corporate Governance and Risk Management - The company maintained a high standard of corporate governance to protect shareholder interests and enhance corporate value, adhering to applicable governance codes throughout the reporting period[74]. - The company faced foreign exchange risks primarily from fluctuations in the exchange rates between the Hong Kong dollar and the Chinese yuan, as well as the US dollar and the Chinese yuan, with no foreign currency hedging operations in place as of June 30, 2023[71]. Assets and Liabilities - As of June 30, 2023, total assets were approximately RMB 10.067 billion, a decrease of 3.5% from RMB 10.433 billion at the end of 2022[58]. - Trade receivables and notes receivable increased by 33.1% to approximately RMB 1.514 billion from RMB 1.137 billion at the end of 2022[62]. - Contract liabilities rose by 34.1% to approximately RMB 366 million, up from RMB 273 million at the end of 2022[63]. - The company's goodwill remained stable at RMB 2,122,627 thousand, unchanged from the previous reporting period[125]. - The total equity attributable to equity holders of the company was RMB 6,780,456 thousand, down from RMB 6,795,583 thousand, indicating a decrease of about 0.2%[127]. Employee and Compensation - The company had a total of 13,235 full-time employees as of June 30, 2023, a slight increase from 13,205 employees at the end of 2022[113]. - Total employee costs for the six months ended June 30, 2023, amounted to RMB 2,006,986,000, an increase from RMB 1,952,998,000 in 2022, reflecting a growth of approximately 2.8%[157]. - The company's total employee costs included share-based payment expenses of RMB 35,948,000, down from RMB 56,992,000 in 2022, indicating a decrease of about 37%[157]. Future Outlook - The company aims to achieve a business scale exceeding RMB 10 billion by 2025, with new businesses expected to contribute significantly[38]. - The company anticipates continued revenue growth in the second half of 2023, driven by OSS and vertical industry business expansion[38].