Investment Rating - The report initiates a "Buy" rating for the company with a target price of HKD 5.0, reflecting a potential upside of 23% from the current price of HKD 4.07 [71][73]. Core Insights - The company is positioned as a leading provider in the IDC (Internet Data Center) sector, focusing on "edge computing + edge AI" to drive new growth engines. The stable relationships with upstream and downstream partners are expected to enhance market share [2][12]. - The IDC business is projected to benefit from the digital transformation of Chinese enterprises, with a compound annual growth rate (CAGR) of 13.6% expected from 2024 to 2028 in the IDC market [16][8]. - The edge computing market is anticipated to grow at a CAGR of 32.9% from 2024 to 2028, indicating significant potential for the company's edge computing services [36][8]. Financial Projections - Revenue is forecasted to grow from RMB 696 million in 2023 to RMB 1,189 million by 2027, with a CAGR of approximately 19% [3][53]. - The operating profit is expected to increase from RMB 23 million in 2023 to RMB 87 million in 2027, reflecting a growing profit margin [3][60]. - The net profit is projected to rise from RMB 14 million in 2023 to RMB 69 million in 2027, with an expected net profit margin improvement [3][60]. Market Dynamics - The report highlights the increasing demand for IDC services driven by the rise of cloud computing, blockchain, and IoT technologies, with the IDC market size in China expected to reach RMB 426.8 billion by 2028 [16][8]. - The edge computing services are positioned to capture a growing share of the market, with the company already establishing a cross-regional edge computing network across major cities in China [40][12]. Business Model and Strategy - The company operates a flexible and scalable business model that avoids direct competition with state-owned telecom operators, allowing for rapid business expansion [35][12]. - The focus on edge AI and edge computing services is expected to create a new growth curve, with the company leveraging its existing infrastructure to enhance service offerings [49][12]. Customer and Supplier Relationships - The company has established strong relationships with major clients across various sectors, including government, finance, and telecommunications, which contribute to a low customer churn rate [28][12]. - Long-term partnerships with key suppliers, including state-owned telecom operators, enhance the company's ability to meet diverse customer needs [32][12].

Core Viewpoint - The company, Yun Gong Chang (02512.HK), has announced a subscription agreement to issue shares at a price of HKD 4.98 per share, which is a discount of approximately 0.40% compared to the closing price of HKD 5.00 on July 18 [1] Group 1: Subscription Details - The company will issue a total of 26,277,000 shares to Subscriber A and 19,708,000 shares to Subscriber B [1] - The total proceeds from the share issuance are expected to be approximately HKD 229.0 million, with a net amount of HKD 228.0 million [1] - The ultimate beneficial owners of Subscriber A are the Wuxi Municipal Government State-owned Assets Supervision and Administration Commission and Ms. Zhu Lingling, holding 55.29% and 29.14% respectively [1] - The ultimate beneficial owner of Subscriber B is the Wuxi Xinwu District Government, holding 64.97% [1] Group 2: Use of Proceeds - The net proceeds will be allocated as follows: 50% for the development of the company's core business and accelerating business expansion, and 50% for strategic investments, talent retention, working capital, and general corporate purposes [1] - The board believes that the subscription will provide additional funding for business operations and enhance the company's capital base [2] - The board is confident that the subscription will contribute to the company's long-term stable development and increase overall competitiveness, thereby creating greater value for shareholders [2]

Financial Performance - For the fiscal year ending December 31, 2024, the company reported revenue of RMB 707,629,000, representing a 1.7% increase from RMB 695,949,000 in 2023[8] - Gross profit for the same period was RMB 89,622,000, up 2.3% from RMB 87,641,000 in 2023[8] - The company experienced a decline in profit before tax, which was RMB 13,831,000, down 5.7% from RMB 14,671,000 in 2023[8] - Net profit for the year was RMB 12,372,000, a decrease of 13.0% compared to RMB 14,224,000 in the previous year[8] - Revenue from IDC solutions decreased by 2.2% to RMB 658.7 million, compared to RMB 673.8 million in the previous year[26] - Revenue from edge computing services surged by 170.7% to RMB 49.0 million, up from RMB 18.1 million in the previous year, with the number of customers increasing from 16 to 25[28] - Overall gross profit increased by 2.3% to RMB 89.6 million, with a slight increase in gross margin from 12.6% to 12.7%[34] - Gross margin for edge computing services improved to 27.3%, up from 20.4% in the previous year, attributed to technological advancements and entry into emerging markets[36] - Other income and gains rose significantly to RMB 9.4 million, compared to RMB 1.3 million in the previous year, mainly due to increased government subsidies and interest income[37] - The total employee benefits expenses, including salaries for directors and senior management, amounted to RMB 33.7 million for the reporting period, compared to RMB 25.6 million as of December 31, 2023[58] - The group reported that transactions with its top five customers accounted for 71.2% of total revenue during the reporting period, up from 67.3% for the year ending December 31, 2023[101] - The single largest customer contributed 22.2% of total revenue, compared to 20.9% for the year ending December 31, 2023[101] Product Development and Services - The company launched a new product, EdgeGlobalCDN service, aimed at enhancing overseas edge network services[9] - The EdgeAIStation service was introduced to integrate distributed heterogeneous computing resources for AI training and scientific computing[9] - The company achieved a 4.8 times increase in the overall capacity of its EdgeCDN platform to meet growing business demands[11] - The EdgeCDN network's overall capacity increased by 4.8 times compared to 2023, successfully supporting significant business demands from leading platform customers[16] - The launch of EdgeGlobalCDN service marks a significant step in the company's internationalization strategy, enhancing global network acceleration capabilities[17] - The EdgeAIStation service was officially launched, providing diverse heterogeneous cloud computing services for machine learning and high-performance computing[20] - The company aims to integrate AI capabilities into edge computing applications, enhancing its business development across CDN, AIoT, and computing platforms[21] - The company has signed over 20 contracts for EdgeAIoT services in various sectors, including smart city management and intelligent transportation[19] Strategic Initiatives and Partnerships - The company signed a cooperation agreement to build a green computing zero-carbon industrial park with local government[13] - A strategic partnership with national ministries is being formed to create a national-level public service platform for large AI models, enhancing computational power offerings[22] - The company plans to cover over 1,000 cities nationwide by 2025 and expand into Southeast Asia, the Middle East, and Europe and the United States markets[23] Financial Position and Assets - The total assets increased to RMB 911,406,000 in 2024 from RMB 501,741,000 in 2023, reflecting significant growth[8] - Trade receivables increased by 18.9% to RMB 235.0 million, compared to RMB 197.6 million in the previous year, reflecting business growth[46] - Prepayments and other receivables surged by 468.4% to RMB 216.0 million, up from RMB 38.0 million in the previous year, primarily due to prepayments related to bandwidth and other resources[47] - As of December 31, 2024, the group's cash and cash equivalents increased by 128.6% to RMB 371.0 million from RMB 162.3 million as of December 31, 2023[52] - The group's debt-to-equity ratio as of December 31, 2024, was 0.6, a significant decrease from 3.1 as of December 31, 2023[56] Management and Governance - The company has a strong management team with diverse backgrounds in finance, law, and technology[78] - The company aims to enhance its financial management and compliance through the expertise of its newly appointed directors[79] - The management team is committed to expanding the company's market presence and exploring new strategies for growth[81] - The board of directors includes experienced professionals with a proven track record in their respective fields[78] - The company has adhered to the corporate governance code, with a commitment to maintaining high standards of corporate governance[179] - The audit committee consists of three independent non-executive directors, with one member possessing appropriate professional qualifications and financial management expertise[199] Risks and Compliance - The group faces several risks, including potential demand slowdown for IDC solutions and reliance on major telecom operators for network services[99] - The company has established strong long-term relationships with key customers, focusing on improving customer experience and reducing complaints[104] - The company faces potential risks from third-party data center agreements that may be terminated early, which could significantly impact operations[105] - The company has taken measures to monitor regulatory developments and reduce risks associated with contractual arrangements[153] - The company is subject to regulatory compliance regarding its contractual arrangements, ensuring fairness and alignment with shareholder interests[163] Shareholder and Investment Information - The group did not propose any final dividends for the reporting period, consistent with the previous year[63] - The company has retained zero profit as distributable reserves for shareholders during the reporting period[111] - The company will continue to explore investment opportunities that are beneficial to shareholders[62] - The company has not entered into any significant contracts with its controlling shareholders or their subsidiaries during the reporting period[167] Charitable Contributions and ESG - The total amount of charitable and other donations made by the group during the reporting period was RMB 87,500[168] - The group emphasized the importance of integrating ESG principles into daily operations for long-term development[96] - The company is committed to environmental protection and resource conservation, adhering to relevant environmental laws and regulations in China[95]

Financial Performance - The company's revenue for the year ended December 31, 2024, was RMB 707,629,000, representing a 1.7% increase from RMB 695,949,000 in 2023[4]. - Gross profit for the same period was RMB 89,622,000, up 2.3% from RMB 87,641,000 in the previous year[4]. - The company's net profit decreased by 13.0% to RMB 12,372,000 from RMB 14,224,000 in 2023[4]. - Basic and diluted earnings per share fell by 25.0% to RMB 0.03 compared to RMB 0.04 in the prior year[4]. - The total comprehensive income for the year was RMB 18,721,000, an increase from RMB 14,224,000 in 2023[6]. - The group's profit before tax for the year 2024 reached RMB 13,831,000, compared to RMB 14,671,000 in 2023, reflecting a decrease of approximately 5.7%[33]. - The total tax expense for the year 2024 was RMB 1,459,000, significantly higher than RMB 447,000 in 2023, reflecting an increase of approximately 226.4%[33]. - The company did not declare or pay any dividends for the year ending December 31, 2024[34]. - Net profit for the period was RMB 12.4 million, down from RMB 14.2 million in the previous year, attributed to increased financing costs and administrative expenses[77]. Revenue Breakdown - IDC solution services generated revenue of RMB 658,663,000 in 2024, down from RMB 673,752,000 in 2023, indicating a decline of about 2.2%[23]. - Edge computing services saw significant growth, with revenue increasing to RMB 48,966,000 in 2024 from RMB 18,064,000 in 2023, marking an increase of approximately 171.5%[23]. - The total revenue from major customers amounted to RMB 461,414,000 in 2024, compared to RMB 361,567,000 in 2023, reflecting an increase of about 27.6%[21]. - Revenue from IDC solutions decreased by 2.2% to RMB 658.7 million, while revenue from edge computing services surged by 170.7% to RMB 49.0 million[59][60]. - The number of edge computing service customers increased to 25 from 16 in the previous year, contributing an additional RMB 28.1 million in revenue from the top five customers[60]. Assets and Liabilities - The company's cash and cash equivalents rose significantly to RMB 371,016,000 from RMB 162,341,000 in the previous year[7]. - Trade receivables increased to RMB 235,042,000 from RMB 197,627,000, indicating a growth in customer credit[7]. - The company's total assets less current liabilities amounted to RMB 405,929,000, compared to RMB 55,565,000 in 2023[7]. - The company's long-term receivables at year-end 2024 were RMB 53,915,000, down from RMB 78,846,000 in 2023, indicating a decrease of about 31.7%[36]. - Trade payables decreased to RMB 199,598 thousand in 2024 from RMB 244,135 thousand in 2023, with a typical settlement period of 90 to 150 days[45]. - The debt-to-equity ratio improved to 0.6 from 3.1 in the previous year, indicating a stronger financial position[86]. Expenses - Research and development expenses rose to RMB 23,815,000 from RMB 22,231,000, reflecting ongoing investment in innovation[5]. - Administrative expenses increased by 23.5% to RMB 44.1 million, primarily due to the hiring of additional management and administrative staff[72]. - The total financing costs rose significantly to RMB 8,549,000 in 2024, up from RMB 3,987,000 in 2023, indicating an increase of approximately 114.1%[6]. - The sales cost for edge computing services increased by 147.2% to RMB 35.6 million, aligning with the revenue growth in that segment[65]. - The total employee benefits expense increased to RMB 33.7 million from RMB 25.6 million, reflecting higher compensation and training initiatives[88]. Other Income and Gains - The company reported other income and gains of RMB 9,388,000, a substantial increase from RMB 1,318,000 in the previous year[5]. - Other income totaled RMB 9,388,000 in 2024, significantly higher than RMB 1,318,000 in 2023, representing an increase of approximately 610.5%[27]. - Government grants received increased to RMB 3,727,000 in 2024 from RMB 1,060,000 in 2023, showing a growth of about 251.4%[27]. - Interest income from bank deposits rose to RMB 2,732,000 in 2024, up from RMB 214,000 in 2023, indicating an increase of approximately 1,177.6%[27]. Strategic Initiatives and Future Plans - The company plans to expand its product offerings and market presence in edge computing technology by 2025, focusing on AI-enabled applications and a multi-business system[53]. - Future plans include expanding the computing power pool through mergers and partnerships to better serve enterprises and developers[54]. - The company aims to achieve coverage in over 1,000 cities in China by 2025, enhancing its domestic market presence[55]. - The company plans to expand its international market presence, starting with Southeast Asia and gradually moving to the Middle East and Europe[55]. Compliance and Governance - The company’s financial statements were approved by the board on March 26, 2025, indicating timely compliance with regulatory requirements[47]. - The board of directors includes executive directors Sun Tao, Jiang Yanqiu, Ji Lijun, and Zhu Wentao, as well as independent non-executive directors Ye Manlin, Cui Qi, and Zhao Hong[106]. - The annual report for the year ending December 31, 2024, will be published on the company's and the stock exchange's websites[101].

[Company Information](index=3&type=section&id=Company%20Information) This section provides an overview of the company's corporate governance structure, including key personnel, committees, and professional advisors [Company Information Overview](index=3&type=section&id=Company%20Information) This section outlines the company's corporate governance structure and contact information, including board members, committees, and auditors - The Chairman and Chief Executive Officer of the company is Mr. Sun Tao[15](index=15&type=chunk) - The company's auditor is Ernst & Young[19](index=19&type=chunk) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) For the six months ended June 30, 2024, revenue increased by 22.5%, while gross profit and profit for the period slightly decreased, with total assets and equity significantly improving due to IPO financing [Financial Highlights](index=5&type=section&id=Financial%20Highlights) For the six months ended June 30, 2024, revenue increased by 22.5%, while gross profit and profit for the period slightly decreased, with total assets and equity significantly improving due to IPO financing Condensed Consolidated Statement of Comprehensive Income Highlights | Item | For the Six Months Ended June 30, 2024 (thousand RMB) | For the Six Months Ended June 30, 2023 (thousand RMB) | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 369,696 | 301,862 | +22.5% | | Gross Profit | 47,110 | 47,771 | -1.4% | | Profit Before Tax | 14,850 | 15,071 | -1.5% | | Profit for the Period | 12,543 | 13,186 | -4.9% | Condensed Consolidated Statement of Financial Position Highlights | Item | As of June 30, 2024 (thousand RMB) | As of December 31, 2023 (thousand RMB) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 878,297 | 501,741 | +75.0% | | Total Liabilities | 469,468 | 446,840 | +5.1% | | Total Equity | 408,829 | 54,901 | +644.7% | [Management Discussion and Analysis](index=6&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an in-depth analysis of the company's operational performance, financial position, and future outlook [Business Review](index=6&type=section&id=Business%20Review) In H1 2024, the company achieved 22.5% revenue growth, primarily driven by a nearly 300% increase in edge computing services, while expanding its 'Sinking Strategy' and enhancing R&D in AI algorithms and AIoT - Total revenue reached **RMB 370 million** in H1 2024, a **22.5% year-over-year increase**[25](index=25&type=chunk) - Edge computing services revenue significantly increased by nearly **300%**[26](index=26&type=chunk) - The company implemented a 'Sinking Strategy' to optimize cross-regional data center resource deployment and expand services to county-level areas[25](index=25&type=chunk) - R&D focused on AI algorithm model innovation, developing nearly **100 new AI algorithm models** and accumulating over **20 million data samples** in H1[26](index=26&type=chunk) [Research and Development](index=7&type=section&id=Research%20and%20Development) The company's R&D focuses on enhancing IDC solution security, improving EdgeCDN services through system upgrades, and optimizing EdgeAIoT services, particularly in algorithm model lightweighting and edge deployment - R&D directions include enhancing IDC solution services, strengthening edge computing services, and optimizing EdgeAIoT services[28](index=28&type=chunk) [Outlook](index=7&type=section&id=Outlook) The company anticipates growth in edge and intelligent computing driven by the low-altitude economy and digitalization, planning to advance its 'Sinking Strategy' and collaborate on new AI application scenarios - The company believes the implementation of the low-altitude economy will drive demand for edge computing and lower-tier networks[29](index=29&type=chunk) - In the second half, the company will continue to focus on the sinking market and improve infrastructure based on its 'Sinking Strategy'[29](index=29&type=chunk) [Financial Overview](index=8&type=section&id=Financial%20Overview) Total revenue grew 22.5% to **RMB 369.7 million**, driven by a nearly 300% surge in edge computing services, though overall gross profit and net profit slightly declined due to a decrease in IDC solution services' gross margin [Revenue Analysis](index=8&type=section&id=Revenue) Total revenue increased by 22.5% to **RMB 369.7 million**, with IDC solution services growing 18.2% to **RMB 348.7 million**, and edge computing services surging nearly 300% to **RMB 21 million**, while ICT and other services saw minimal revenue due to strategic adjustments Segment Revenue (thousand RMB) | Segment | H1 2024 | % of Total Revenue | H1 2023 | % of Total Revenue | Year-over-Year Growth | | :--- | :--- | :--- | :--- | :--- | :--- | | IDC Solution Services | 348,699 | 94.3% | 295,007 | 97.7% | +18.2% | | Edge Computing Services | 20,997 | 5.7% | 5,285 | 1.8% | +297.3% | | ICT Services and Other Services | — | 0.0% | 1,570 | 0.5% | -100.0% | | **Total** | **369,696** | **100.0%** | **301,862** | **100.0%** | **+22.5%** | [Gross Profit and Gross Margin Analysis](index=9&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Overall gross profit slightly decreased by 1.4% to **RMB 47.1 million**, with gross margin falling from 15.8% to 12.7%, primarily due to a one-time vendor rebate in the prior period affecting IDC solution services, while edge computing services' margin improved from 24.2% to 31.4% Segment Gross Margin | Segment | H1 2024 Gross Margin | H1 2023 Gross Margin | | :--- | :--- | :--- | | IDC Solution Services | 11.6% | 15.4% | | Edge Computing Services | 31.4% | 24.2% | | **Overall** | **12.7%** | **15.8%** | [Operating Expenses and Other Items Analysis](index=9&type=section&id=Operating%20Expenses%20and%20Other) Significant changes in expenses and income include a substantial increase in other income due to **RMB 3 million** in IPO-related government grants, higher administrative expenses from staff expansion and listing fees, a 23.9% decrease in R&D, and a 52.6% rise in finance costs due to increased borrowings - Other income and gains increased by over **500%**, primarily due to the recognition of **RMB 3 million** in government grants related to the listing[42](index=42&type=chunk) - Administrative expenses increased by **19.3%**, mainly due to an increase in administrative staff and listing expenses[44](index=44&type=chunk) - R&D expenses decreased by **23.9%** to **RMB 6.7 million**, as significant requirements for certain R&D projects were met prior to the reporting period[45](index=45&type=chunk) - Finance costs increased by **52.6%** to **RMB 2.9 million**, primarily due to higher interest expenses on loans and borrowings[48](index=48&type=chunk) [Profit for the Period](index=10&type=section&id=Profit%20for%20the%20Period) Profit for the period was **RMB 12.5 million**, a slight decrease from **RMB 13.2 million** in the prior period, impacted by lower gross margin and increased expenses - Profit for the six months ended June 30, 2024, was **RMB 12.5 million**, compared to **RMB 13.2 million** in the prior period[50](index=50&type=chunk) [Liquidity and Financial Resources](index=11&type=section&id=Liquidity%20and%20Financial%20Resources) The company's financial position is robust, with significant increases in trade and other receivables due to business expansion, a substantial improvement in the debt-to-equity ratio from 3.1 to 0.61 post-IPO, and stable cash and cash equivalents at **RMB 165 million** Key Balance Sheet Item Changes (million RMB) | Item | June 30, 2024 | December 31, 2023 | Reason for Change | | :--- | :--- | :--- | :--- | | Trade Receivables | 323.8 | 197.6 | Increase in revenue | | Prepayments, Other Receivables and Other Assets | 262.3 | 38.0 | Increase in prepayments for equipment and resources | | Trade Payables | 191.8 | 244.1 | Settlement of supplier payments | | Interest-bearing Bank Borrowings | 247.0 | 166.7 | New bank loans | | Cash and Cash Equivalents | 164.6 | 162.3 | Remained stable | - The debt-to-equity ratio (total debt/total equity) significantly improved from **3.1** at the end of 2023 to **0.61**[60](index=60&type=chunk) [Other Information](index=13&type=section&id=Other%20Information) This section provides additional disclosures on corporate governance, shareholding, IPO proceeds, and employee matters [Other Important Information](index=13&type=section&id=Other%20Information) This section covers director and shareholder interests, IPO proceeds utilization, employee information, and corporate governance, noting that Chairman Mr. Sun Tao holds **75%** of shares, **HKD 337 million** in IPO net proceeds remain unutilized, and the company deviates from the corporate governance code regarding the Chairman and CEO roles, with no interim dividend declared - Chairman Mr. Sun Tao holds **345,000,000 shares**, representing **75.0%** of the total issued shares, through his wholly-owned entity Ru Yi IT[66](index=66&type=chunk)[67](index=67&type=chunk) - Net proceeds from the global offering, approximately **HKD 336.8 million**, remained unutilized as of the reporting date[71](index=71&type=chunk) - The roles of Chairman and Chief Executive Officer are held by the same individual, Mr. Sun Tao, deviating from corporate governance code recommendations[75](index=75&type=chunk) - The Board has resolved not to declare any interim dividend for the six months ended June 30, 2024[77](index=77&type=chunk) [Interim Condensed Consolidated Financial Statements](index=17&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited interim condensed consolidated financial statements for the six months ended June 30, 2024, including the statement of profit or loss, comprehensive income, financial position, changes in equity, and cash flows [Interim Condensed Consolidated Statement of Profit or Loss](index=17&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the period, revenue reached **RMB 369.7 million**, up 22.5%, but gross profit slightly decreased to **RMB 47.11 million** due to sales cost growth exceeding revenue, resulting in a profit for the period of **RMB 12.54 million**, down from **RMB 13.19 million** in the prior year Key Profit or Loss Statement Data (thousand RMB) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Revenue | 369,696 | 301,862 | | Cost of Sales | (322,586) | (254,091) | | **Gross Profit** | **47,110** | **47,771** | | Administrative Expenses | (20,963) | (17,645) | | Research and Development Expenses | (6,683) | (8,805) | | **Profit Before Tax** | **14,850** | **15,071** | | **Profit for the Period** | **12,543** | **13,186** | [Interim Condensed Consolidated Statement of Comprehensive Income](index=18&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) Total comprehensive income for the period was **RMB 16.95 million**, comprising **RMB 12.54 million** in profit for the period and **RMB 4.41 million** in exchange differences on translating foreign operations (other comprehensive income) - Total comprehensive income for the period was **RMB 16.952 million**, including **RMB 12.543 million** in profit and **RMB 4.409 million** in exchange gains[84](index=84&type=chunk) [Interim Condensed Consolidated Statement of Financial Position](index=19&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, total assets increased to **RMB 878 million** and total equity to **RMB 409 million**, primarily due to IPO proceeds, with net current assets turning positive at **RMB 282 million**, indicating significantly improved liquidity Key Financial Position Statement Data (thousand RMB) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Non-current Assets | 127,596 | 103,811 | | Current Assets | 750,701 | 397,930 | | **Total Assets** | **878,297** | **501,741** | | Current Liabilities | 469,093 | 446,176 | | Non-current Liabilities | 375 | 664 | | **Total Liabilities** | **469,468** | **446,840** | | **Total Equity** | **408,829** | **54,901** | [Interim Condensed Consolidated Statement of Changes in Equity](index=20&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) Shareholders' equity significantly increased from **RMB 54.9 million** at year-end 2023 to **RMB 409 million**, primarily driven by approximately **RMB 337 million** in net IPO proceeds and **RMB 16.73 million** in comprehensive income for the period - Total equity increased from **RMB 54.901 million** to **RMB 408.829 million**, primarily driven by share issuance (net proceeds of approximately **RMB 337 million**) and comprehensive income for the period (**RMB 16.952 million**)[89](index=89&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=21&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Net cash outflow from operating activities was **RMB 398 million**, mainly due to significant increases in trade and other receivables, while investing activities saw a net outflow of **RMB 24.92 million**, and financing activities generated a net inflow of **RMB 421 million**, primarily from IPO proceeds, resulting in a net increase of **RMB 2.3 million** in cash and cash equivalents (including exchange rate effects) Cash Flow Statement Summary (thousand RMB) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net Cash Flows Used in Operating Activities | (397,793) | (94,115) | | Net Cash Flows Used in Investing Activities | (24,915) | (33,488) | | Net Cash Flows From Financing Activities | 420,597 | 110,868 | | **Net Increase in Cash and Cash Equivalents** | **(2,111)** | **(16,735)** | | Cash and Cash Equivalents at End of Period | 164,639 | 61,251 | [Notes to the Interim Condensed Consolidated Financial Information](index=23&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) This section provides detailed explanations and supplementary information for significant financial statement items, including accounting policies, segment information, revenue composition, various expenses, and balance sheet item breakdowns [Note 5: Revenue, Other Income and Gains](index=25&type=section&id=5.%20Revenue%2C%20Other%20Income%20and%20Gains) This note details revenue composition, with IDC services remaining the primary revenue driver at **RMB 349 million**, and other income significantly including **RMB 3.5 million** in government grants, of which **RMB 3 million** is IPO-related Revenue from Contracts with Customers (thousand RMB) | Type of Goods or Services | H1 2024 | H1 2023 | | :--- | :--- | :--- | | IDC Services | 348,699 | 295,007 | | Edge Computing Services | 20,997 | 5,285 | | ICT Services and Other Services | — | 1,570 | | **Total** | **369,696** | **301,862** | - Other income and gains include **RMB 3.502 million** in government grants[104](index=104&type=chunk) [Note 6: Profit Before Tax](index=26&type=section&id=6.%20Profit%20Before%20Tax) This note discloses key items affecting profit before tax, including **RMB 7.51 million** in listing expenses contributing to administrative cost increases, and total employee benefit expenses (including directors' emoluments) of **RMB 15 million** - Listing expenses recognized during the reporting period amounted to **RMB 7.507 million**[105](index=105&type=chunk) - Total employee benefit expenses were **RMB 14.967 million** (comprising **RMB 13.042 million** in wages and **RMB 1.925 million** in retirement benefit scheme contributions)[105](index=105&type=chunk) [Note 10: Earnings Per Share](index=27&type=section&id=10.%20Earnings%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Parent) Basic and diluted earnings per share remained stable at **RMB 0.03**, calculated based on **RMB 12.32 million** profit for the period and a weighted average of **382 million** ordinary shares outstanding, adjusted for reorganization and capitalization issue - Basic and diluted earnings per share were **RMB 0.03**, consistent with the prior period[111](index=111&type=chunk) [Note 13: Trade Receivables](index=28&type=section&id=13.%20Trade%20Receivables) Net trade receivables significantly increased by **63.8%** from **RMB 198 million** at year-end 2023 to **RMB 324 million**, reflecting business expansion, with most receivables due within one year Trade Receivables Movement (thousand RMB) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Trade Receivables | 329,010 | 200,991 | | Impairment | (5,235) | (3,364) | | **Net** | **323,775** | **197,627** | [Note 16: Interest-bearing Bank Borrowings](index=30&type=section&id=16.%20Interest-bearing%20Bank%20Borrowings) Total interest-bearing bank borrowings increased from **RMB 167 million** to **RMB 247 million**, all current liabilities due within one year, with **RMB 22.7 million** secured and the remainder unsecured, at effective interest rates ranging from **2.90% to 3.40%** Composition of Interest-bearing Bank Borrowings (thousand RMB) | Type | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Bank Borrowings — Secured | 20,017 | 28,026 | | Bank Borrowings — Unsecured | 227,008 | 138,708 | | **Total** | **247,025** | **166,734** | [Note 17: Share Capital](index=31&type=section&id=17.%20Share%20Capital) During the period, the company's share capital significantly changed, with total issued ordinary shares increasing from **1 million** to **460 million** through a capitalization issue of **374 million** shares and an initial public offering of **85 million** shares - Through capitalization issue and initial public offering, the company's total issued shares increased from **1,000,000** to **460,000,000** shares[122](index=122&type=chunk)[123](index=123&type=chunk) [Definitions](index=34&type=section&id=Definitions) This section provides a glossary of specific terms used throughout the report to ensure clarity and consistency [Glossary of Terms](index=34&type=section&id=Definitions) This section defines specific terms used in the report, such as 'the Company', 'the Group', 'Contractual Arrangements', and 'Controlling Shareholder', to ensure accurate information dissemination

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 369,696,000, representing a 22.5% increase from RMB 301,862,000 in the same period of 2023[2] - Gross profit for the same period was RMB 47,110,000, slightly down by 1.4% from RMB 47,771,000 in 2023[2] - Profit before tax decreased by 1.5% to RMB 14,850,000 compared to RMB 15,071,000 in the previous year[3] - Net profit for the period was RMB 12,543,000, down 4.9% from RMB 13,186,000 in 2023[3] - Basic earnings per share remained unchanged at RMB 0.03 for both periods[3] - Other income and gains increased significantly to RMB 4,321,000 from RMB 738,000 in the previous year[3] - Total revenue for the six months ended June 30, 2024, was approximately RMB 369.7 million, representing a 22.5% increase compared to RMB 301.9 million for the same period in 2023[46] - Revenue from IDC solution services increased by 18.2% to RMB 348.7 million, up from RMB 295.0 million in the previous fiscal year[47] - The company recorded a profit of RMB 12.5 million for the six months ended June 30, 2024, down from RMB 13.2 million for the same period in 2023[65] Assets and Liabilities - Trade receivables rose to RMB 323,775,000 from RMB 197,627,000, indicating improved collection efficiency[5] - Current assets increased to RMB 750,701,000 from RMB 397,930,000, reflecting a strong liquidity position[5] - Total equity increased to RMB 408,829,000 from RMB 54,901,000, showing substantial growth in shareholder value[6] - Trade receivables as of June 30, 2024, were RMB 329,010,000, with a provision for impairment of RMB 5,235,000[22] - Long-term receivables as of June 30, 2024, amounted to RMB 123,586,000, up from RMB 98,149,000 as of December 31, 2023, indicating a 25.9% increase[24] - Trade receivables due within one year reached RMB 323,728,000 as of June 30, 2024, compared to RMB 197,200,000 as of December 31, 2023, reflecting a 64.1% increase[25] - Total bank borrowings as of June 30, 2024, were RMB 247,025,000, with an effective interest rate ranging from 2.90% to 3.40%[29] - As of June 30, 2024, the company's interest-bearing bank loans amounted to RMB 247.025 million, an increase from RMB 166.734 million as of December 31, 2023, representing a growth of approximately 48%[70] Operational Highlights - The company continues to focus on providing Internet Data Center (IDC) solutions and expanding its market presence in China[7] - IDC services contributed RMB 348,699,000 to revenue in 2024, up from RMB 295,007,000 in 2023, reflecting a growth of 18.2%[14] - Edge computing services recorded a significant revenue increase of nearly 300% during the reporting period[41] - The company has upgraded its AI algorithm models over 50 times and developed nearly 100 new AI algorithms applicable to various industries and scenarios[42] - The company plans to enhance its EdgeCDN services by upgrading the deployment system of edge nodes and developing a decentralized storage system[43] - The implementation of low-altitude economy is driving demand for edge computing and low-level networks, indicating significant growth potential for the company[44] - The company aims to solidify its foundational cloud services and collaborate with telecom operators and leading universities to explore applications in AI and computing power[45] - The company is expanding its IDC solution services to more geographical locations, including Suqian and Taizhou in Jiangsu Province and Jiangxi Province[41] - The company is focusing on optimizing cross-regional data center resource deployment to enhance data efficiency through its "downward strategy"[40] Costs and Expenses - Sales cost increased by 27.0% to RMB 322.6 million for the six months ended June 30, 2024, compared to RMB 254.1 million for the same period in 2023[50] - Gross profit decreased by 1.4% to RMB 47.1 million for the six months ended June 30, 2024, with a gross margin decline from 15.8% to 12.7%[54] - Research and development expenses decreased by 23.9% to RMB 6.7 million for the six months ended June 30, 2024, compared to RMB 8.8 million for the same period in 2023[60] - Total employee expenses for the six months ended June 30, 2024, were RMB 15.0 million, up from RMB 11.1 million for the same period in 2023, indicating a year-over-year increase of about 35%[72] Corporate Governance and Compliance - The company has adopted the corporate governance code and confirmed compliance with all applicable provisions, with a noted deviation regarding the roles of the Chairman and CEO[74] - The audit committee reviewed the unaudited interim results and found them to be prepared in accordance with applicable accounting standards[77] - The company is committed to adhering to the listing rules and standard codes of conduct for securities trading[83] - The board of directors includes both executive and independent non-executive members, ensuring governance and oversight[84] Other Information - The company did not declare or propose any interim dividends for the six months ended June 30, 2024[19] - There were no significant commitments or contingent liabilities reported as of June 30, 2024[34] - No major events occurred after the reporting period that would impact the financial statements[38] - The company has a total of 92 employees as of June 30, 2024, reflecting its commitment to maintaining a skilled workforce[72] - The report period ends on June 30, 2024, covering six months of performance[83] - The company plans to list its shares on the Hong Kong Stock Exchange on June 14, 2024[82] - The company provides customized ICT services, including cloud computing hardware resources and network acceleration services[82] - The concept of the Internet of Things (IoT) involves tracking 50 to 100 trillion objects through wireless networks[82] - The company launched its edge computing cloud service, "Lingjing Cloud," in 2022[82] - Ru Yi Information Technology Co., LTD was established on November 5, 2021, and is wholly owned by the company's chairman[84]