Core Insights - China Communication Services (00552.HK) reported a mid-year revenue of RMB 76.939 billion for the first half of 2025, reflecting a year-on-year growth of 3.4% [1] - The net profit for the same period was RMB 2.129 billion, showing a slight increase of 0.2%, with a gross margin of 10.3% and a net profit margin of 2.8% [1] Business Segments Performance - The telecommunications infrastructure service revenue reached RMB 38.272 billion, up 1.6%, accounting for 49.7% of total revenue [1] - Business process outsourcing service revenue was RMB 22.383 billion, growing by 1.0%, representing 29.1% of total revenue [1] - Revenue from software development and digital services, including applications, content, and other services, amounted to RMB 16.284 billion, marking an 11.7% increase and contributing 21.2% to total revenue, continuing to be a core driver of revenue growth [1] Market Development - The company is capitalizing on the opportunities presented by the digital transformation across various industries and the deepening application of artificial intelligence [1] - The company has seen significant growth in revenue from the domestic non-telecom operator customer market, driven by the construction of multiple intelligent computing centers and data center renovation projects [1] - For the first time, the combined revenue from domestic non-telecom operator customers and overseas markets exceeded 50% of total revenue [1]

[Report Highlights](index=1&type=section&id=%E8%A6%81%E9%BB%9E) The group achieved stable growth in operating revenue and net profit in H1 2025, with an optimized market structure and strong growth in application, content, and other services Key Financial Metrics | Metric | H1 2025 (RMB millions) | YoY Growth | | :--- | :--- | :--- | | Operating Revenue | 76,939 | 3.4% | | Net Profit | 2,129 | 0.2% | | Gross Profit Margin | 10.3% | -0.6 percentage points | | Net Profit Margin | 2.8% | -0.1 percentage points | - Combined revenue from domestic non-telecom operator enterprise market and overseas market exceeded half for the first time, indicating **optimized market structure**[2](index=2&type=chunk) - Application, content, and other services have been the core drivers of revenue growth for consecutive years, benefiting from **deepening AI applications** and **accelerated digital transformation**[2](index=2&type=chunk) [Chairman's Statement](index=2&type=section&id=%E8%91%A3%E4%BA%8B%E9%95%B7%E5%A0%B1%E5%91%8A%E6%9B%B8) This statement provides an overview of the Group's H1 2025 performance, strategic initiatives, and future outlook, emphasizing growth, innovation, and sustainability [Business Performance Overview](index=2&type=section&id=%E4%B8%80%E3%80%81%20%E7%B6%93%E7%87%9F%E6%A5%AD%E7%B8%BE%E7%A9%A9%E4%B8%AD%E6%9C%89%E9%80%B2%EF%BC%8C%E6%94%B6%E5%85%A5%E5%88%A9%E6%BD%A4%E5%AF%A6%E7%8F%BE%E9%9B%99%E5%A2%9E%E9%95%B7) This chapter details the Group's overall operating performance in H1 2025, including double-digit growth in revenue and profit, and the steady development of its three business segments and three client markets. Despite facing pressure from declining capital expenditure from traditional clients, the Group achieved optimized revenue structure and rapid growth in emerging markets through diversified strategies and capability advantages [Financial Performance](index=2&type=section&id=%E8%B2%A1%E5%8B%99%E8%A1%A8%E7%8F%BE) This section details financial performance, including key metrics like operating revenue, net profit, and margins Financial Performance Metrics | Metric | H1 2025 (RMB millions) | H1 2024 (RMB millions) | YoY Growth/Decrease | | :--- | :--- | :--- | :--- | | Operating Revenue | 76,939 | 74,412 | +3.4% | | Service Revenue | 74,981 | N/A | +2.9% | | Operating Gross Profit | 7,888 | 8,116 | -2.8% | | Net Profit | 2,129 | 2,125 | +0.2% | | Gross Profit Margin | 10.3% | 10.9% | -0.6 percentage points | | Net Profit Margin | 2.8% | 2.9% | -0.1 percentage points | | Return on Equity (ROE) | 9.3% (annualized) | N/A | N/A | | Basic Earnings Per Share | 0.307 RMB | 0.307 RMB | 0% | [Business Segment Development](index=3&type=section&id=%EF%BC%88%E4%B8%80%EF%BC%89%E6%8A%8A%E6%8F%A1%E6%95%B8%E6%99%BA%E6%A9%9F%E9%81%87%EF%BC%8C%E4%B8%89%E5%A4%A7%E6%A5%AD%E5%8B%99%E6%9D%BF%E5%A1%8A%E5%85%A8%E9%9D%A2%E5%A2%9E%E9%95%B7) This section details business segment development, highlighting revenue contributions and growth drivers across different service areas Revenue by Business Segment | Business Segment | H1 2025 Revenue (RMB millions) | YoY Growth | Share of Operating Revenue | | :--- | :--- | :--- | :--- | | Telecom Infrastructure Services | 38,272 | 1.6% | 49.7% | | Business Process Outsourcing Services | 22,383 | 1.0% | 29.1% | | Application, Content and Other Services | 16,284 | 11.7% | 21.2% | - **Application, content, and other services** revenue maintained rapid growth, serving as the core driver for revenue growth for consecutive years, benefiting from **deepening AI application scenarios** and **accelerated digital transformation** across various industries[6](index=6&type=chunk) [Client Market Performance](index=3&type=section&id=%EF%BC%88%E4%BA%8C%EF%BC%89%E7%99%BC%E6%8F%AE%E8%83%BD%E5%8A%9B%E5%84%AA%E5%8B%A2%EF%BC%8C%E4%B8%89%E5%A4%A7%E5%AE%A2%E6%88%B6%E5%B8%82%E5%A0%B4%E7%A9%A9%E5%81%A5%E7%99%BC%E5%B1%95) This section details client market performance, analyzing revenue trends and strategic initiatives across domestic telecom, non-telecom, and overseas markets Revenue by Client Market | Client Market | H1 2025 Revenue (RMB millions) | YoY Growth/Decrease | | :--- | :--- | :--- | | Domestic Telecom Operator Market | 38,203 | -4.6% | | Domestic Non-Telecom Operator Enterprise Market | 36,585 | +12.9% | | Overseas Market | 2,151 | +8.7% | - Domestic telecom operator market stabilized traditional business and expanded strategic emerging businesses through a "CAPEX+OPEX+Smart Application" strategy to counter declining capital expenditure challenges[7](index=7&type=chunk) - Domestic non-telecom operator enterprise market achieved double-digit growth by seizing opportunities in computing power infrastructure construction, leveraging "Consultant+Employee+Housekeeper" service models and "Platform+Software+Service" capabilities[9](index=9&type=chunk) - Overseas market showed good development by integrating into the "Belt and Road" initiative, expanding into **high-value projects** and new sectors like industrial digitalization and new energy services[9](index=9&type=chunk) [Strategic Emerging Business Development](index=5&type=section&id=%E4%BA%8C%E3%80%81%20%E8%B7%9F%E7%84%A6%E9%87%8D%E9%BB%9E%E8%A1%8C%E6%A5%AD%EF%BC%8C%E6%88%B0%E7%95%A5%E6%96%B0%E8%88%88%E6%A5%AD%E5%8B%99%E5%8B%95%E8%83%BD%E5%BC%B7%E5%8B%81) In H1, the Group continued to deeply cultivate strategic emerging industries such as digital infrastructure, green and low-carbon, smart cities, and emergency security, focusing on key sectors. Strategic new businesses maintained rapid growth, with new contract value accounting for over **40%**, injecting new momentum into the enterprise's high-quality development [Digital Infrastructure Sector](index=5&type=section&id=%EF%BC%88%E4%B8%80%EF%BC%89%E6%95%B8%E5%AD%97%E5%9F%BA%E5%BB%BA%E9%A0%98%E5%9F%9F) This section details digital infrastructure sector initiatives, focusing on seizing AI-driven computing power opportunities and undertaking major construction projects - Seizing the computing power market opportunities driven by **AI technological transformation** and promoting the evolution and upgrade of new information infrastructure[12](index=12&type=chunk) - Undertaking the construction of intelligent computing centers, data center renovations, cloud platforms, and 5G+ projects in multiple locations domestically and internationally, deeply serving government, internet, finance, energy, and other industry clients[12](index=12&type=chunk) - In H1, new contract value in this sector maintained **rapid growth**[12](index=12&type=chunk) [Green and Low-Carbon Sector](index=5&type=section&id=%EF%BC%88%E4%BA%8C%EF%BC%89%E7%B6%A0%E8%89%B2%E4%BD%8E%E7%A2%B3%E9%A0%98%E5%9F%9F) This section details green and low-carbon sector efforts, adopting a dual-driven model of green energy and energy-saving technologies to create benchmark projects - Adopting a "green energy + energy-saving technology" dual-driven model to create benchmark projects such as low-carbon intelligent computing centers, 5G green base stations, green and low-carbon industrial parks, and virtual power plant platforms[13](index=13&type=chunk) - Participating in the compilation of the first national standard for green data center evaluation, 'Green Data Center Evaluation', enhancing industry influence[13](index=13&type=chunk) [Smart City Sector](index=6&type=section&id=%E6%99%BA%E6%85%A7%E5%9F%8E%E5%B8%82%E9%A0%98%E5%9F%9F) This section details smart city sector initiatives, leveraging full-chain service capabilities and integrating digital technologies to build new urban paradigms - Seizing opportunities in new urban infrastructure construction and leveraging full-chain service capabilities including "planning + design + implementation + delivery + operation"[14](index=14&type=chunk) - Deeply integrating digital technologies such as **AI**, **IoT**, and **big data** to create a new paradigm for livable, resilient, and smart cities[14](index=14&type=chunk) - In H1, new contract values in digital government, smart education, smart water conservancy, smart cultural tourism, smart healthcare, and enterprise digital transformation all achieved **rapid growth**[14](index=14&type=chunk) [Emergency and Security Sector](index=6&type=section&id=%EF%BC%88%E5%9B%9B%EF%BC%89%E6%87%89%E6%80%A5%E5%AE%89%E5%85%A8%E9%A0%98%E5%9F%9F) This section details emergency and security sector advancements, utilizing large AI models to empower intelligent emergency management and developing independently controllable cybersecurity products - Leveraging large **AI models** to empower clients in key sectors such as mining, chemical, water conservancy, and fire safety to achieve intelligent transformation of emergency management[15](index=15&type=chunk) - Developing multiple independently controllable cybersecurity products, undertaking major national cybersecurity projects, and providing **integrated security services**[15](index=15&type=chunk) [Technological Innovation and New Quality Productive Forces](index=7&type=section&id=%E4%B8%89%E3%80%81%20%E5%BC%B7%E5%8C%96%E7%A7%91%E6%8A%80%E5%89%B5%E6%96%B0%E9%A9%85%E5%8B%95%EF%BC%8C%E5%8A%A0%E5%BF%AB%E5%9F%B9%E8%82%B2%E6%96%B0%E8%B3%AA%E7%94%A2%E7%94%9F%E5%8A%9B) In H1, the Group strengthened its technology innovation drive, targeted cutting-edge fields, concentrated R&D efforts, built differentiated core competitiveness, deepened industrial cooperation, and accelerated the cultivation of new quality productive forces [Leading with Technological Innovation](index=7&type=section&id=%EF%BC%88%E4%B8%80%EF%BC%89%E5%A0%85%E6%8C%81%E7%A7%91%E6%8A%80%E5%89%B5%E6%96%B0%E5%BC%95%E9%A0%98%EF%BC%8C%E5%BB%BA%E8%A8%AD%E7%A7%91%E6%8A%80%E5%9E%8B%E4%BC%81%E6%A5%AD) This section details leading with technological innovation, forming a product innovation library for emerging technologies and accumulating significant intellectual property - Forming a product innovation library of nearly a hundred products for emerging technologies such as **AI**, **security**, and **low-carbon solutions**[17](index=17&type=chunk) - Accumulated over **4,100 authorized patents**, over **10,900 software copyrights**, and participated in **48 national standards**[17](index=17&type=chunk) [AI Business Layout](index=7&type=section&id=%EF%BC%88%E4%BA%8C%EF%BC%89%E4%BD%88%E5%B1%80%E4%BA%BA%E5%B7%A5%E6%99%BA%E8%83%BD%E6%A5%AD%E5%8B%99%EF%BC%8C%E5%A1%91%E9%80%A0%E6%A0%B8%E5%BF%83%E7%AB%B6%E7%88%AD%E5%8A%9B) This section details AI business layout, implementing the 'AI+' initiative across integrated innovation, scenario cultivation, and ecosystem collaboration - Fully implementing the "**AI+**" initiative, strategically deploying **AI business** from three aspects: integrated innovation, deep scenario cultivation, and ecosystem collaboration[18](index=18&type=chunk) - Possessing an **AI delivery team of over 1,400 people**, providing customized services such as intelligent computing infrastructure construction and operation, data governance, and scenario-based application R&D[18](index=18&type=chunk) - In H1, new contract value in the **AI sector** exceeded **RMB 1.3 billion**, covering over **200 clients**[18](index=18&type=chunk) [Scientific and Technological Innovation System Reform](index=8&type=section&id=%EF%BC%88%E4%B8%89%EF%BC%89%E6%8E%A8%E9%80%B2%E7%A7%91%E5%89%B5%E9%AB%94%E7%B3%BB%E6%94%B9%E9%9D%A9%EF%BC%8C%E6%BF%80%E6%B4%BB%E7%99%BC%E5%B1%95%E6%96%B0%E5%8B%95%E8%83%BD) This section details scientific and technological innovation system reform, optimizing R&D mechanisms, tackling cutting-edge technologies, and enhancing talent development - Optimizing R&D intensive operation and promotion mechanisms and achievement transformation mechanisms to improve the efficiency of R&D resource utilization[19](index=19&type=chunk) - Intensifying efforts to tackle cutting-edge technology areas with urgent customer needs and huge market potential, creating industry-leading flagship products[19](index=19&type=chunk) - Improving mechanisms for cultivating, introducing, and selecting scientific and technological innovation experts, and adopting multi-dimensional incentive methods to stimulate innovation and development vitality[19](index=19&type=chunk) [Corporate Social Responsibility and Governance](index=8&type=section&id=%E5%9B%9B%E3%80%81%20%E8%B9%9B%E8%A1%8C%E7%92%B0%E5%A2%83%E8%88%87%E7%A4%BE%E6%9C%83%E8%B2%AC%E4%BB%BB%EF%BC%8C%E4%BF%9D%E6%8C%81%E8%89%AF%E5%A5%BD%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB) The Group actively fulfills its corporate mission, implements green development concepts, steadily advances the 'Dual Carbon' strategy, and promotes social green transformation through energy conservation, emission reduction, and green services. Concurrently, the Group adheres to a people-centric approach, actively participates in disaster relief, major event support, and rural revitalization, while continuously enhancing corporate governance capabilities, improving risk and internal control management systems, and receiving multiple corporate governance awards from the capital market [Environmental and Social Responsibility](index=8&type=section&id=%E7%92%B0%E5%A2%83%E8%88%87%E7%A4%BE%E6%9C%83%E8%B2%AC%E4%BB%BB) This section details environmental and social responsibility, implementing the 'Dual Carbon' strategy and actively participating in disaster relief and community support - Implementing the national "**Dual Carbon**" strategy, steadily advancing green and low-carbon development plans, and building a green ecosystem through energy conservation, emission reduction, and green services[20](index=20&type=chunk) - Completed construction and communication support tasks related to disaster relief, major events, and rural revitalization, becoming a solid support for **emergency rescue** and **livelihood security**[21](index=21&type=chunk) [Corporate Governance](index=9&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB) This section details corporate governance, continuously enhancing governance capabilities, improving risk management, and receiving multiple capital market awards - Continuously enhancing corporate governance capabilities, improving risk and internal control management systems, and strengthening corporate development momentum and security guarantees[22](index=22&type=chunk) - Awarded 'Most Respected Company', 'Best CFO', 'Best Investor Relations Company', 'Best ESG', and 'Best Company Board' in the Extel "**2025 Asia's Best Management Team**" rankings[22](index=22&type=chunk) - Awarded 'Asia Sustainable Development Award', 'Asia's Best CFO', and 'Best Investor Relations Company' in the "**15th Asian Excellence Award**" by Corporate Governance Asia[22](index=22&type=chunk) [Future Outlook and Strategy](index=10&type=section&id=%E6%9C%AA%E4%BE%86%E5%B1%95%E6%9C%9B%E8%88%87%E6%88%B0%E7%95%A5) The Group will firmly position itself as a "new-generation integrated smart service provider", fully embrace AI, deepen reforms, and develop new quality productive forces. By advancing the "AI+" initiative, empowering corporate governance, and strengthening service capabilities, the Group aims to build a distinctive technology-driven enterprise with AI at its core, driving comprehensive smart services, and actively expanding into emerging markets to achieve high-quality development and high-level security - Firmly positioning as a "**new-generation integrated smart service provider**", fully embracing **AI**, further deepening comprehensive reforms, and developing **new quality productive forces** tailored to local conditions[23](index=23&type=chunk) - Deeply advancing the "**AI+**" initiative, internally empowering corporate governance, externally strengthening service capabilities, and building a distinctive technology-driven enterprise with **AI** at its core, driving comprehensive smart services[23](index=23&type=chunk) - Actively expanding into emerging markets, focusing on **intelligent computing centers**, **smart operations and maintenance**, **new energy**, and other fields, continuously innovating business models, and creating industry-leading products[23](index=23&type=chunk) [Group Performance](index=11&type=section&id=%E9%9B%86%E5%9C%98%E6%A5%AD%E7%B8%BE) This section presents the Group's core consolidated financial statements for H1 2025, including income, comprehensive income, and financial position, providing an overview of key financial data [Consolidated Financial Statements](index=11&type=section&id=%E5%90%88%E4%BD%B5%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) This section presents the Group's core consolidated financial statements for H1 2025, including income, comprehensive income, and financial position, providing an overview of key financial data [Consolidated Income Statement](index=11&type=section&id=%E5%90%88%E4%BD%B5%E6%90%8D%E7%9B%8A%E8%A1%A8) This statement provides a detailed breakdown of the Group's revenues, costs, and profits for H1 2025 Consolidated Income Statement | Metric | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Operating Revenue | 76,939,251 | 74,411,953 | | Operating Costs | (69,051,641) | (66,296,374) | | Gross Profit | 7,887,610 | 8,115,579 | | Other Income | 839,173 | 879,847 | | Selling, General and Administrative Expenses | (6,181,999) | (6,541,835) | | Finance Costs | (43,911) | (59,026) | | Profit Before Tax | 2,440,726 | 2,405,105 | | Income Tax | (234,123) | (207,155) | | Profit for the Period | 2,206,603 | 2,197,950 | | Profit Attributable to Equity Holders of the Company | 2,128,715 | 2,124,984 | | Basic Earnings Per Share (RMB) | 0.307 | 0.307 | [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=12&type=section&id=%E5%90%88%E4%BD%B5%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E7%B6%9C%E5%90%88%E6%94%B6%E7%9B%8A%E8%A1%A8) This statement presents the Group's profit for the period and other comprehensive income components for H1 2025 Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit for the Period | 2,206,603 | 2,197,950 | | Equity instruments measured at fair value through other comprehensive income: Net change in fair value reserve | 394,782 | 501,997 | | Exchange differences on translation of financial statements of subsidiaries outside Mainland China | 16,089 | (14,030) | | Total Comprehensive Income for the Period | 2,617,474 | 2,685,917 | | Total comprehensive income attributable to equity holders of the Company | 2,539,573 | 2,612,916 | [Consolidated Statement of Financial Position](index=13&type=section&id=%E5%90%88%E4%BD%B5%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) This statement outlines the Group's assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Consolidated Statement of Financial Position | Metric | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Total Non-current Assets | 35,007,293 | 31,944,591 | +9.6% | | Total Current Assets | 103,240,919 | 104,672,985 | -1.4% | | Total Assets | 138,248,212 | 136,617,576 | +1.19% | | Total Current Liabilities | 88,449,062 | 87,954,679 | +0.56% | | Total Non-current Liabilities | 2,149,252 | 2,049,745 | +4.85% | | Total Liabilities | 90,598,314 | 90,004,424 | +0.66% | | Equity Attributable to Equity Holders of the Company | 46,460,941 | 45,435,871 | +2.26% | | Total Equity | 47,649,898 | 46,613,152 | +2.22% | - Term deposits with financial institutions for over one year increased significantly from **RMB 12,170,901 thousand** at the end of 2024 to **RMB 15,163,324 thousand** as of June 30, 2025[30](index=30&type=chunk) - The **asset-liability ratio** slightly decreased from **65.88%** at the end of 2024 to **65.54%** as of June 30, 2025[30](index=30&type=chunk)[31](index=31&type=chunk)[64](index=64&type=chunk) [Notes to the Financial Statements](index=15&type=section&id=%E9%99%84%E8%A8%BB) This section provides detailed notes to the consolidated financial statements, covering the basis of preparation, changes in accounting policies, segment reporting, and the specific composition and changes of various revenues, costs, expenses, assets, and liabilities, offering essential background information for understanding the financial data [Basis of Preparation](index=15&type=section&id=1.%20%E7%B7%A8%E8%A3%BD%E5%9F%BA%E6%BA%96) This section details the basis of preparation for the interim financial information, adhering to International Accounting Standard 34 and HKEX Listing Rules - Interim financial information is prepared in accordance with **International Accounting Standard 34 'Interim Financial Reporting'** and complies with the disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[32](index=32&type=chunk) [Changes in Accounting Policies](index=15&type=section&id=2.%20%E6%9C%83%E8%A8%88%E6%94%BF%E7%AD%96%E8%AE%8A%E6%9B%B4) This section details changes in accounting policies, noting the first-time application of revised IAS 21 with no material impact on interim financial information - The first-time application of the revised **International Accounting Standard 21 'The Effects of Changes in Foreign Exchange Rates – Lack of Exchangeability'** had no material impact on the interim financial information[33](index=33&type=chunk) [Segment Reporting](index=15&type=section&id=3.%20%E5%88%86%E9%83%A8%E5%A0%B1%E5%91%8A) This section details segment reporting, indicating the Group primarily operates in one business segment providing integrated smart solutions - The Group primarily operates in one business segment, providing **integrated smart solutions** for the informatization and digitalization sectors[35](index=35&type=chunk) [Details of Operating Revenue](index=16&type=section&id=4.%20%E7%B6%93%E7%87%9F%E6%94%B6%E5%85%A5) This section details operating revenue, providing a breakdown by business nature and highlighting contributions from major clients and overseas markets Operating Revenue by Business Nature | Business Nature | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Telecom Infrastructure Services | 38,272,609 | 37,666,188 | | Business Process Outsourcing Services | 22,382,937 | 22,162,474 | | Application, Content and Other Services | 16,283,705 | 14,583,291 | | **Total Operating Revenue** | **76,939,251** | **74,411,953** | - Revenue contributions from China Telecom Group and China Mobile Group decreased from **36.4%** and **9.4%** to **33.6%** and **8.3%** respectively[37](index=37&type=chunk) - **Operating revenue** from regions outside Mainland China was **RMB 2,151 million**, representing a **YoY increase of 8.7%**[37](index=37&type=chunk) [Details of Operating Costs](index=17&type=section&id=5.%20%E7%B6%93%E7%87%9F%E6%88%90%E6%9C%AC) This section details operating costs, presenting a breakdown by cost item and explaining changes in direct staff costs and material costs Operating Cost Breakdown | Cost Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Subcontracting Costs | 42,932,050 | 41,233,277 | | Material Costs | 13,341,575 | 12,336,999 | | Direct Staff Costs | 3,707,393 | 3,807,665 | | **Total Operating Costs** | **69,051,641** | **66,296,374** | - **Direct staff costs** decreased by **2.6%**, reflecting the Group's **effective control over total employment** and **optimization of its employment structure**[38](index=38&type=chunk) - **Material costs** increased by **8.1%**, primarily due to the Group's optimized business model and proactive engagement in large projects under the **general contracting model**[38](index=38&type=chunk) [Details of Other Income](index=17&type=section&id=6.%20%E5%85%B6%E4%BB%96%E6%94%B6%E5%85%A5) This section details other income, providing a breakdown of various income streams for H1 2025 and H1 2024 Other Income Breakdown | Other Income Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest Income | 270,299 | 325,641 | | Dividend Income | 211,712 | 191,435 | | Management Fee Income | 166,948 | 165,747 | | Government Grants | 93,034 | 87,807 | | Additional Deduction for Input VAT | 2,750 | 29,241 | | **Total Other Income** | **839,173** | **879,847** | [Details of Finance Costs](index=17&type=section&id=7.%20%E8%B2%A1%E5%8B%99%E8%B2%BB%E7%94%A8) This section details finance costs, presenting a breakdown of interest expenses on bank loans and lease liabilities for H1 2025 and H1 2024 Finance Cost Breakdown | Finance Cost Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest on Bank and Other Borrowings | 20,419 | 31,503 | | Interest on Lease Liabilities | 23,492 | 27,523 | | **Total Finance Costs** | **43,911** | **59,026** | [Details of Profit Before Tax](index=18&type=section&id=8.%20%E9%99%A4%E7%A8%85%E5%89%8D%E5%88%A9%E6%BD%A4) This section details profit before tax, outlining key components such as staff costs, amortization, depreciation, and impairment losses Profit Before Tax Components | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Staff Costs | 7,987,519 | 8,417,643 | | Amortization | 99,633 | 98,587 | | Depreciation | 709,824 | 729,391 | | Impairment Losses on Inventories and Reversals, Net | 27,729 | 18,604 | | Impairment Losses on Trade and Other Receivables, Contract Assets and Others, and Reversals, Net | 161,577 | 118,914 | - Selling and marketing expenses, administrative expenses, research and development costs, and other expenses either decreased or remained stable[41](index=41&type=chunk) [Details of Income Tax](index=19&type=section&id=9.%20%E6%89%80%E5%BE%97%E7%A8%85) This section details income tax, presenting the calculation of income tax expense and highlighting tax concessions and R&D deductions Income Tax Calculation | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit Before Tax | 2,440,726 | 2,405,105 | | Expected Income Tax Expense at Statutory Tax Rate of 25% | 610,182 | 601,276 | | Tax Concessions and Tax Rate Differences for Subsidiaries' Profits | (128,031) | (100,644) | | Additional Deduction for R&D Expenses | (239,848) | (292,495) | | **Income Tax** | **234,123** | **207,155** | - Subsidiaries qualified as high-tech enterprises, those in the Western Development region, and small-profit enterprises are eligible for preferential income tax rates of **15%**, **15%**, and **20%** respectively[44](index=44&type=chunk) - Certain R&D costs are eligible for an **additional 100% deduction**[44](index=44&type=chunk) [Earnings Per Share](index=20&type=section&id=10.%20%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) This section details earnings per share, presenting basic earnings per share and noting the absence of dilutive ordinary shares Earnings Per Share Details | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Profit Attributable to Equity Holders of the Company (RMB thousands) | 2,128,715 | 2,124,984 | | Number of Ordinary Shares Issued (thousand shares) | 6,926,018 | 6,926,018 | | **Basic Earnings Per Share (RMB)** | **0.307** | **0.307** | - As there were no potentially dilutive ordinary shares issued during either period, diluted earnings per share are the same as basic earnings per share[46](index=46&type=chunk) [Other Comprehensive Income](index=20&type=section&id=11.%20%E5%85%B6%E4%BB%96%E7%B6%9C%E5%90%88%E6%94%B6%E7%9B%8A) This section details other comprehensive income, outlining components such as fair value changes of equity instruments and exchange differences Other Comprehensive Income Components | Item | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Fair Value Changes of Equity Instruments Measured at Fair Value Through Other Comprehensive Income Recognized in the Period | 526,396 | 670,820 | | Net Deferred Tax Recognized in Other Comprehensive Income | (131,614) | (168,823) | | Exchange Differences on Translation of Financial Statements | 16,089 | (14,030) | | **Other Comprehensive Income for the Period** | **410,871** | **487,967** | [Dividend Policy](index=20&type=section&id=12.%20%E8%82%A1%E6%81%AF) This section details dividend policy, stating the Board's resolution not to declare an interim dividend and providing information on final dividends - The Board resolved not to declare an interim dividend for the six months ended June 30, 2025[48](index=48&type=chunk) Dividend Information | Dividend Type | H1 2025 (RMB thousands) | H1 2024 (RMB thousands) | | :--- | :--- | :--- | | Final Dividend (per share) Pertaining to Previous Financial Year, Approved in Current Period | 0.2187 RMB | 0.2174 RMB | | **Total Final Dividend** | **1,514,720** | **1,505,716** | [Trade and Bills Receivables](index=21&type=section&id=13.%20%E6%87%89%E6%94%B6%E5%B8%B3%E6%AC%BE%E5%8F%8A%E6%87%89%E6%94%B6%E7%A5%A8%E6%93%9A%EF%BC%8C%E6%B7%A8%E9%A1%8D) This section details trade and bills receivables, presenting their net amount and aging profile as of June 30, 2025 Trade and Bills Receivables, Net | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Bills Receivable | 869,866 | 1,410,736 | | Trade Receivables | 31,479,179 | 26,509,784 | | Provision for Credit Losses | (2,760,843) | (2,624,315) | | **Net Amount** | **29,588,202** | **25,296,205** | - Over **78%** of **trade and bills receivables** (net of provision for credit losses) have an aging profile of less than one year[51](index=51&type=chunk) [Contract Assets](index=22&type=section&id=14.%20%E5%90%88%E5%90%8C%E8%B3%87%E7%94%A2%EF%BC%8C%E6%B7%A8%E9%A1%8D) This section details contract assets, presenting their net amount by business type and explaining their nature as unbilled conditional receivables Contract Assets, Net | Business Type | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Telecom Infrastructure Services | 36,472,255 | 32,552,493 | | Business Process Outsourcing Services | 1,610,953 | 1,469,655 | | Application, Content and Other Services | 5,015,331 | 4,271,528 | | Provision for Credit Losses | (538,668) | (525,867) | | **Net Amount** | **42,559,871** | **37,767,809** | - **Contract assets** represent unbilled amounts receivable for construction, design, and other services, where the right to receive payment is conditional[52](index=52&type=chunk) [Trade and Bills Payables](index=23&type=section&id=15.%20%E6%87%89%E4%BB%98%E5%B8%B3%E6%AC%BE%E5%8F%8A%E6%87%89%E4%BB%98%E7%A5%A8%E6%93%9A) This section details trade and bills payables, presenting their total amount and aging profile as of June 30, 2025 Trade and Bills Payables | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade Payables | 62,688,302 | 59,837,140 | | Bills Payable | 4,889,247 | 6,057,749 | | **Total** | **67,577,549** | **65,894,889** | - Over **96%** of **trade and bills payables** have an aging profile of less than one year[53](index=53&type=chunk) [Contract Liabilities](index=23&type=section&id=16.%20%E5%90%88%E5%90%8C%E8%B2%A0%E5%82%B5) This section details contract liabilities, presenting their total amount by business type and explaining their nature as customer prepayments Contract Liabilities | Business Type | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Telecom Infrastructure Services | 4,951,610 | 6,700,059 | | Other Services | 2,195,968 | 2,489,991 | | **Total** | **7,147,578** | **9,190,050** | - **Contract liabilities** represent customer prepayments received by the Group before fulfilling performance obligations, recognized until the completion of related contractual obligations[54](index=54&type=chunk) [Financial Performance Analysis](index=24&type=section&id=%E8%B2%A1%E5%8B%99%E8%A1%A8%E7%8F%BE%E5%88%86%E6%9E%90) This section provides a detailed analysis of the Group's financial performance in H1 2025, covering operating revenue, costs, gross profit, expenses, net profit, cash flow, and balance sheet [Operating Revenue Analysis](index=24&type=section&id=%E7%B6%93%E7%87%9F%E6%94%B6%E5%85%A5) The Group's **operating revenue** increased by **3.4%** YoY in H1 2025, with **service revenue** growing by **2.9%**. Revenue growth was primarily driven by the advancement of the Digital China strategy, opportunities in computing network construction, and deepening AI application scenarios, leading to rapid growth in application, content, and other services revenue [Revenue Analysis by Business Segment](index=24&type=section&id=%E6%8C%89%E6%A5%AD%E5%8B%99%E6%94%B6%E5%85%A5) This section details revenue by business segment, highlighting contributions and growth drivers across different service areas Revenue by Business Segment | Business Segment | H1 2025 Revenue (RMB millions) | YoY Growth | | :--- | :--- | :--- | | Telecom Infrastructure Services | 38,272 | 1.6% | | Business Process Outsourcing Services | 22,383 | 1.0% | | Application, Content and Other Services | 16,284 | 11.7% | - **Application, content, and other services** revenue maintained rapid growth, serving as the core driver for revenue growth for consecutive years, benefiting from **deepening AI application scenarios** and **accelerated digital transformation** across various industries[56](index=56&type=chunk) [Revenue Analysis by Market Segment](index=25&type=section&id=%E6%8C%89%E5%B8%82%E5%A0%B4%E6%94%B6%E5%85%A5) This section details revenue by market segment, analyzing trends and strategic initiatives across domestic telecom, non-telecom, and overseas markets Revenue by Client Market | Client Market | H1 2025 Revenue (RMB millions) | YoY Growth/Decrease | | :--- | :--- | :--- | | Domestic Telecom Operator Market | 38,203 | -4.6% | | Domestic Non-Telecom Operator Enterprise Market | 36,585 | +12.9% | | Overseas Market | 2,151 | +8.7% | - Revenue from the domestic non-telecom operator enterprise market achieved **rapid growth**, attributed to the Group's **integrated service capabilities** and focus on **strategic emerging industries**[58](index=58&type=chunk) - Overseas market **operating revenue** showed **stable growth** by integrating into the "Belt and Road" initiative, expanding into **high-value projects** and **new sectors**[58](index=58&type=chunk) [Operating Cost Analysis](index=26&type=section&id=%E7%B6%93%E7%87%9F%E6%88%90%E6%9C%AC) The Group's **operating costs** increased by **4.2%** YoY in H1 2025. **Direct staff costs** decreased by **2.6%**, **subcontracting costs** increased by **4.1%**, and **material costs** increased by **8.1%**. Changes in cost structure reflect the Group's strategic adjustments in employment optimization, subcontracting management, and the general contracting model Operating Cost Breakdown | Cost Item | H1 2025 (RMB millions) | H1 2024 (RMB millions) | YoY Growth/Decrease | | :--- | :--- | :--- | :--- | | Operating Costs | 69,051 | 66,296 | +4.2% | | Direct Staff Costs | 3,707 | 3,808 | -2.6% | | Subcontracting Costs | 42,932 | 41,233 | +4.1% | | Material Costs | 13,341 | 12,337 | +8.1% | - The increase in **material costs** is primarily due to the Group's optimized business model, actively undertaking large projects under the **general contracting model**[59](index=59&type=chunk) [Gross Profit Analysis](index=26&type=section&id=%E6%AF%9B%E5%88%A9%E6%BD%A4) The Group's **gross profit** decreased by **2.8%** YoY to **RMB 7,888 million** in H1 2025, with **gross profit margin** declining by **0.6 percentage points** to **10.3%**, primarily due to factors such as decreased client capital expenditure. The Group is working to improve gross profit margin by increasing the proportion of high-value businesses, optimizing R&D mechanisms, and strengthening cost control Gross Profit and Margin | Metric | H1 2025 (RMB millions) | H1 2024 (RMB millions) | YoY Decrease | | :--- | :--- | :--- | :--- | | Gross Profit | 7,888 | 8,116 | -2.8% | | Gross Profit Margin | 10.3% | 10.9% | -0.6 percentage points | - The decline in **gross profit margin** was mainly influenced by factors such as **decreased capital expenditure from clients**[60](index=60&type=chunk) - The Group aims to improve **gross profit margin** by selecting **high-margin projects**, increasing the proportion of **high-value businesses**, optimizing R&D mechanisms, and strengthening project management and cost control[60](index=60&type=chunk) [Selling, General and Administrative Expenses Analysis](index=27&type=section&id=%E9%8A%B7%E5%94%AE%E3%80%81%E4%B8%80%E8%88%AC%E5%8F%8A%E7%AE%A1%E7%90%86%E8%B2%BB%E7%94%A8) The Group's **selling, general, and administrative expenses** decreased by **5.5%** YoY to **RMB 6,182 million** in H1 2025, with its share of **operating revenue** decreasing by **0.8 percentage points** to **8.0%**, reflecting the Group's effective cost control and precise investment in R&D resources Selling, General and Administrative Expenses | Metric | H1 2025 (RMB millions) | H1 2024 (RMB millions) | YoY Decrease | | :--- | :--- | :--- | :--- | | Selling, General and Administrative Expenses | 6,182 | 6,542 | -5.5% | | Percentage of Operating Revenue | 8.0% | 8.8% | -0.8 percentage points | - The Group actively controls **selling, general, and administrative expenses**, strictly implements quality and efficiency improvement measures, and precisely invests in R&D capabilities related to **AI and digital infrastructure**[61](index=61&type=chunk) [Profit Attributable to Equity Holders of the Company Analysis](index=27&type=section&id=%E6%9C%AC%E5%85%AC%E5%8F%B8%E8%82%A1%E6%9D%B1%E6%87%89%E4%BD%94%E5%88%A9%E6%BD%A4) The Group's **profit attributable to equity holders of the Company** was **RMB 2,129 million** in H1 2025, representing a **YoY increase of 0.2%**, maintaining stable growth Profit Attributable to Equity Holders of the Company | Metric | H1 2025 (RMB millions) | H1 2024 (RMB millions) | YoY Growth | | :--- | :--- | :--- | :--- | | Profit Attributable to Equity Holders of the Company | 2,129 | 2,125 | +0.2% | [Cash Flow Analysis](index=27&type=section&id=%E7%8F%BE%E9%87%91%E6%B5%81) The Group's **net cash outflow** was **RMB 8,073 million** in H1 2025, an improvement compared to **RMB 9,123 million** in the same period last year. The Group will continue to strengthen working capital management to maintain a healthy cash flow level Net Cash Flow | Metric | H1 2025 (RMB millions) | H1 2024 (RMB millions) | Change | | :--- | :--- | :--- | :--- | | Net Cash Flow | -8,073 | -9,123 | Outflow decreased by 1,050 | - The Group consistently prioritizes working capital management and will continue to strengthen related efforts to maintain a **healthy cash flow level**[63](index=63&type=chunk) [Assets and Liabilities Analysis](index=27&type=section&id=%E8%B3%87%E7%94%A2%E8%B2%A0%E5%82%B5) As of June 30, 2025, the Group's total assets and total liabilities both increased, but the asset-liability ratio slightly decreased to **65.5%**, indicating a stable financial position Assets, Liabilities and Ratios | Metric | June 30, 2025 (RMB millions) | December 31, 2024 (RMB millions) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 138,248 | 136,618 | +1,630 | | Total Liabilities | 90,598 | 90,004 | +594 | | Asset-Liability Ratio | 65.5% | 65.88% | -0.38 percentage points | [Corporate Governance and Other Disclosures](index=28&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E8%88%87%E5%85%B6%E4%BB%96%E6%8A%AB%E9%9C%B2) This section outlines the Group's adherence to corporate governance principles, compliance with regulatory codes, and other relevant disclosures for H1 2025 [Audit Committee](index=28&type=section&id=%E5%AF%A9%E6%A0%B8%E5%A7%94%E5%93%A1%E6%9C%83) The Audit Committee has reviewed the Group's accounting principles and practices with management and discussed matters related to risk management, internal control, and financial reporting, including the **H1 2025 interim results** - The **Audit Committee** has reviewed the Group's accounting principles and practices with management and discussed matters related to risk management, internal control, and financial reporting, including the **H1 2025 interim results**[65](index=65&type=chunk) [Compliance with Corporate Governance Code](index=28&type=section&id=%E9%81%B5%E5%AE%88%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%AE%88%E5%89%87) The Board confirms that for the six months ended June 30, 2025, the Company has complied with all code provisions set out in Appendix C1 'Corporate Governance Code' of the Listing Rules - The Board confirms that for the six months ended June 30, 2025, the Company has complied with all code provisions set out in **Appendix C1 'Corporate Governance Code'** of the Listing Rules[66](index=66&type=chunk) [Compliance with Model Code for Securities Transactions by Directors](index=28&type=section&id=%E9%81%B5%E5%AE%88%E4%B8%8A%E5%B8%82%E5%85%AC%E5%8F%B8%E8%91%A3%E4%BA%8B%E9%80%B2%E8%A1%8C%E8%AD%89%E5%88%B8%E4%BA%A4%E6%98%93%E7%9A%84%E6%A8%99%E6%BA%96%E5%88%99%E5%89%87) Following specific inquiries by the Company, each Director and Supervisor confirmed compliance with the 'Model Code for Securities Transactions by Directors of Listed Issuers' as set out in Appendix C3 of the Listing Rules for dealings in the Company's securities during the six months ended June 30, 2025 - Each Director and Supervisor confirmed that for the six months ended June 30, 2025, they have complied with the **'Model Code for Securities Transactions by Directors of Listed Issuers'** as set out in Appendix C3 of the Listing Rules regarding dealings in the Company's securities[67](index=67&type=chunk) [Compliance with Appendix D2 of Listing Rules](index=28&type=section&id=%E9%81%B5%E5%AE%88%E4%B8%8A%E5%B8%82%E8%A6%8F%E5%89%87%E9%99%84%E9%8C%84D2) Except for publicly announced disclosures, the Company confirms that there have been no material changes to the existing company information regarding matters listed in paragraph 32 of Appendix D2 of the Listing Rules compared to the information disclosed in the 2024 Annual Report - The Company confirms that there have been no material changes to the existing company information regarding matters listed in **paragraph 32 of Appendix D2 of the Listing Rules** compared to the information disclosed in the 2024 Annual Report[68](index=68&type=chunk) [Dealings in Listed Securities](index=29&type=section&id=%E8%B3%BC%E5%9B%9E%E3%80%81%E5%87%BA%E5%94%AE%E6%88%96%E8%B3%96%E5%9B%9E%E6%9C%AC%E5%85%AC%E5%8F%B8%E4%B9%8B%E4%B8%8A%E5%B8%82%E8%AD%89%E5%88%B8) For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[69](index=69&type=chunk) [Interim Report Publication](index=29&type=section&id=%E4%B8%AD%E6%9C%9F%E5%A0%B1%E5%91%8A) The interim report for the six months ended June 30, 2025, will be published later on the HKEXnews website and the Company's website, and dispatched to shareholders who request it - The interim report will be published later on the **HKEXnews website (www.hkexnews.hk)** and the **Company's website (www.chinaccs.com.hk)**[70](index=70&type=chunk) [Forward-Looking Statements](index=29&type=section&id=%E5%89%8D%E7%9E%BB%E6%80%A7%E9%99%B3%E8%BF%B0) The report reminds readers that forward-looking statements are subject to various risks, uncertainties, and assumptions, including changes in macroeconomic environment, natural disasters, industry growth, regulatory changes, and execution of business strategies, and actual results may differ materially, with no commitment from the Company to update these statements - **Forward-looking statements** are subject to various risks, uncertainties, and assumptions, including changes in macroeconomic environment, natural disasters, industry growth, regulatory changes, and execution of business strategies[71](index=71&type=chunk) - The Company's actual results may differ materially from those described in **forward-looking statements**, and the Company undertakes no obligation to update these statements[71](index=71&type=chunk)

格隆汇8月8日丨中国通信服务(00552.HK)公告，将于2025年8月21日(星期四)举行公司董事会会议，藉 以批准(其中包括)公司及其附属公司截至2025年6月30日止6个月期间的中期业绩。 相关事件 中国通信服务(00552.HK)拟8月21日举行董事会会议以审批中期业绩 中国通信服务(0552.HK)：中国综合 智慧服务龙头 AI大模型浪潮点燃增长新引擎 ...

中國通信服務股份有限公司 中國通信服務股份有限公司 CHINA COMMUNICATIONS SERVICES CORPORATION LIMITED （於中華人民共和國註冊成立之股份有限公司） （股份編號：552） 董事會召開日期 中國通信服務股份有限公司（「本公司」）董事會（「董事會」）宣佈將於二零二五年 八月二十一日（星期四）舉行本公司董事會會議，藉以批准（其中包括）本公司及其附 屬公司截至二零二五年六月三十日止六個月期間的中期業績。 承董事會命 香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完整性 亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚賴該等內容而引致 的任何損失承擔任何責任。 公司秘書 鍾偉祥 中國北京 二零二五年八月八日 於本公告刊發之日期，本公司執行董事為欒曉維先生、崔占偉先生及沈阿強先生；非執 行董事為程建軍先生、唐永博先生、劉愛華先生及陳力先生；以及獨立非執行董事為呂 廷杰先生、王琪先生、王春閣先生及招敏慧女士。 1 ...

FF301 股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 公司名稱: 中國通信服務股份有限公司 呈交日期: 2025年8月1日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | H | | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 00552 | 說明 | H股 | | | | | | | | | | 法定/註冊股份數目 | | | 面值 | | | 法定/註冊股本 | | | 上月底結存 | | | 2,391,420,240 | RMB | | 1 | RMB | | 2,391,420,240 | | 增加 / 減少 (-) | | | 0 | | | | RMB | | | | 本月底結存 | | | 2,391,420,240 | RMB | | | 1 RMB | | 2,391,420,240 | | 2. 股份分類 | 普通股 | 股份類別 | 其他類別 (請註明) | | ...

Core Viewpoint - The company aims to position itself as a "new generation comprehensive intelligent service provider," focusing on continuous innovation and transformation in the telecommunications infrastructure sector [1] Group 1: Shareholder Returns - The company is a state-owned enterprise with significant shareholding from major telecom operators, emphasizing shareholder returns through a policy of "sustained growth and steady increase" in dividends, with the payout ratio rising from 36% to 42% over the past five years [1] - As of the end of 2024, the company's cash and deposits are projected to reach 38.11 billion yuan, a year-on-year increase of 7.5%, while the net operating cycle is expected to be -20.3 days, an expansion of 68.7% year-on-year, indicating improved capital management and operational efficiency [1] Group 2: Strategic Emerging Fields - The company has made significant strides in four strategic emerging fields: digital infrastructure, green low-carbon initiatives, smart cities, and emergency safety, with total new contract signings in 2024 reaching 211 billion yuan [2] - New contracts in strategic emerging businesses exceeded 78 billion yuan, a year-on-year growth of 30%, accounting for 37% of total new contracts, up 7 percentage points year-on-year, marking these areas as the main growth drivers [2] - In the digital infrastructure sector, the company secured 21 projects worth over 100 million yuan, representing 51% of major new projects, benefiting directly from the AI model wave [2] Group 3: Profitability and R&D Investment - The company's revenue is expected to surpass 150 billion yuan in 2024, with gross margin increasing from 11.03% to 11.73% over the past three years, reflecting ongoing improvements in profitability [2] - The company is responding to fluctuations in telecom operators' capital expenditures (CAPEX) by seizing opportunities in AI computing power and increasing its share in the operating expenses (OPEX) market, with a projected 2.3% growth in revenue from this sector in 2024 [2] - R&D investment is anticipated to exceed 5.5 billion yuan in 2024, focusing on the intelligent and green transformation of data centers, as well as expanding demands in AI and cloud computing, thereby enhancing the company's high-tech attributes [2] Group 4: Business Segments and Profit Forecast - The company is strategically positioned in three business segments: TIS (telecom infrastructure services related to CAPEX), BPO (business process outsourcing related to OPEX), and ACO (application, content, and other software services), with the latter showing a compound annual growth rate of over 14% over the past decade [3] - Profit forecasts for the company are 3.731 billion yuan, 3.901 billion yuan, and 4.105 billion yuan for the years 2025, 2026, and 2027 respectively, with corresponding price-to-earnings ratios of 7.6X, 7.3X, and 6.9X, leading to a strong buy recommendation [3]

Investment Rating - The report gives a "Strong Buy" investment rating for the company [4]. Core Views - The company is positioned as a leading provider of integrated smart services in the telecommunications sector, leveraging the AI model wave to ignite new growth engines [1][8]. - The company has a strong focus on shareholder returns, with a dividend payout ratio increasing from 36% to 42% over the past five years, and a significant cash reserve of 38.11 billion yuan as of the end of 2024 [8][24]. - The strategic focus on emerging industries, particularly in digital infrastructure, green low-carbon initiatives, smart cities, and emergency safety, has resulted in substantial growth, with new contracts in these areas exceeding 78 billion yuan in 2024, marking a 30% year-on-year increase [8][28]. - The company's profitability is on the rise, with a projected revenue of over 150 billion yuan in 2024 and a continuous improvement in gross margin from 11.03% in 2021 to 11.73% in 2024 [8][28]. Company Overview - The company is a major player in the telecommunications infrastructure sector, providing comprehensive services including planning, construction, and operational support [12]. - It operates under a diversified ownership structure, with significant stakes held by major telecommunications operators, ensuring stable governance and strategic alignment [22][24]. Business and Market - The company operates three main business segments: Telecommunications Infrastructure Services (TIS), Business Process Outsourcing (BPO), and Applications, Content, and Other Services (ACO) [28]. - In 2024, TIS is expected to contribute 75.17 billion yuan, accounting for 50.1% of total revenue, while BPO and ACO are projected to contribute 43.46 billion yuan and 31.37 billion yuan, respectively [28][31]. - The company serves various markets, including domestic telecommunications operators, enterprise customers, and international markets across Asia-Pacific, the Middle East, Africa, and Latin America [29]. Financial Analysis - The financial forecast indicates a steady increase in total revenue from 149.14 billion yuan in 2023 to 166.01 billion yuan by 2027, with a compound annual growth rate (CAGR) of approximately 4% [3]. - The net profit is projected to grow from 3.58 billion yuan in 2023 to 4.10 billion yuan in 2027, reflecting a consistent upward trend in profitability [3][8]. Emerging Strategic Industries - The company is actively expanding into strategic emerging industries, with a focus on digital infrastructure, which is expected to be a primary growth driver, particularly benefiting from the AI model wave [8][18]. - The company has secured 21 major projects in the digital infrastructure sector, which represents 51% of its new large-scale contracts [8].

Investment Rating - The report gives a "Strong Buy" investment rating for the company [4]. Core Viewpoints - The company is positioned as a leading provider of integrated smart services in the telecommunications sector, focusing on digital infrastructure and emerging strategic industries driven by AI [8]. - The company has shown a commitment to shareholder returns, with a dividend payout ratio increasing from 36% to 42% over the past five years [8]. - The strategic focus on emerging industries has resulted in significant growth, with new contracts in strategic sectors exceeding 78 billion yuan in 2024, marking a 30% year-on-year increase [8]. - The company's profitability is on the rise, with a projected revenue of over 150 billion yuan in 2024 and a continuous improvement in gross margin [8]. Financial Data and Valuation - Total revenue is projected to grow from 149.139 billion yuan in 2023 to 166.007 billion yuan by 2027, with a compound annual growth rate (CAGR) of approximately 4% [3]. - Operating profit is expected to increase from 2.849 billion yuan in 2023 to 3.553 billion yuan in 2027, reflecting a growth rate of 16% in 2023 [3]. - Net profit attributable to shareholders is forecasted to rise from 3.584 billion yuan in 2023 to 4.105 billion yuan in 2027, with a steady growth rate of around 5% [3]. - The company’s price-to-earnings (PE) ratio is projected to decrease from 7.9 in 2023 to 6.9 by 2027, indicating potential undervaluation [3]. Company Overview - The company is a major player in the telecommunications infrastructure sector, providing a comprehensive range of services including planning, construction, and operational support [12]. - It operates under a diversified ownership structure, with significant stakes held by major telecommunications operators [22]. - The company has evolved from being a service provider for telecom operators to a comprehensive smart service provider, focusing on digital transformation and innovation [21]. Business and Market Segmentation - The company’s business is divided into three main segments: Telecommunications Infrastructure Services (TIS), Business Process Outsourcing (BPO), and Applications, Content, and Other Services (ACO) [28]. - TIS is the largest segment, expected to generate approximately 75.172 billion yuan in revenue in 2024, accounting for 50.1% of total revenue [28]. - BPO and ACO segments are also significant, contributing 29.0% and 20.9% to total revenue, respectively [28]. Strategic Emerging Industries - The company is actively expanding into strategic emerging industries such as digital infrastructure, green low-carbon solutions, smart cities, and emergency safety [8]. - In 2024, new contracts in these strategic sectors are expected to account for 37% of total new contracts, highlighting their importance as a growth engine [8]. Profitability and R&D Investment - The company’s gross margin has improved from 11.03% in 2021 to 11.73% in 2024, indicating enhanced profitability [8]. - R&D investment is projected to exceed 5.5 billion yuan in 2024, reflecting the company’s commitment to innovation and technology advancement [8].

Investment Rating - The report assigns a "Buy" rating for the company [10] Core Views - The company benefits from good collection quality from both operator and non-operator customers, leading to ample cash on hand and stable free cash flow growth. The dividend per share has been increasing annually, with a payout ratio expected to reach 42% in 2024, indicating significant potential for further increases. The company relies on operators for a stable performance base while capitalizing on the growth in strategic emerging and ACO businesses, maintaining a non-GAAP growth rate of approximately double digits over the past three years, making the current valuation attractive [2][8]. Summary by Sections Company Overview - The company is backed by China Telecom Group, with the actual controller being the State-owned Assets Supervision and Administration Commission. As of the 2024 interim report, China Telecom Group holds 48.99% of the company's shares [5][17]. Business Performance - The company has shown steady revenue and profit growth, with 2022-2024 revenues of 140.7 billion, 148.6 billion, and 150 billion respectively, reflecting year-on-year growth rates of 5.04%, 5.59%, and 0.93%. Net profits for the same period were 3.358 billion, 3.584 billion, and 3.607 billion, with growth rates of 6.36%, 6.69%, and 0.63% [22][24]. Strategic Emerging Business Contribution - The company signed new contracts worth approximately 211 billion in 2024, a year-on-year increase of about 3%. The strategic emerging business contributed over 78 billion in new contracts, effectively offsetting pressures from other orders. The four main strategic emerging business areas and their respective growth rates for new contracts in 2024 are: digital infrastructure 30%+, green low-carbon 25%+, smart city 40%+, and emergency safety 30%+ [6][57]. Main Business Segments - TIS (Telecom Infrastructure Services) and BPO (Business Process Outsourcing) have maintained steady growth, while ACO (Application, Content, and Other Services) has seen rapid growth, becoming a key driver of the company's performance. In 2024, revenues from TIS, BPO, and ACO were 751.72 billion, 434.59 billion, and 313.69 billion respectively, with year-on-year changes of -1.27%, -0.21%, and +8.44% [40][75]. Cash Flow and Dividend Policy - The company has a strong cash flow position, with free cash flow steadily increasing. The cash assets on hand are sufficient to cover annual rigid expenditures, including capital expenditures and dividends. The dividend payout ratio is expected to reach 42% in 2024, indicating significant room for further increases [49][54].

Financial Performance - Operating revenue for 2024 is projected to be RMB 150 billion, a 0.9% increase from RMB 148.615 billion in 2023[41] - Profit attributable to shareholders is expected to reach RMB 3.607 billion, reflecting a 0.6% growth from RMB 3.584 billion in the previous year[41] - Free cash flow is anticipated to increase by 20.4% to RMB 5.214 billion, up from RMB 4.333 billion in 2023[41] - Basic earnings per share are forecasted to be RMB 0.521, a slight increase of 0.6% from RMB 0.518 in 2023[41] - The company achieved operating revenue of RMB 150 billion, a year-on-year increase of 0.9%[56] - Net profit amounted to RMB 3.607 billion, showing a year-on-year increase of 0.6%[56] - Free cash flow improved to RMB 5.214 billion, indicating good growth[56] - Return on equity (ROE) stood at 8.2%[56] - The board proposed a final dividend of RMB 0.2187 per share, with a payout ratio of 42%[56] - The free cash flow for the year was RMB 5,214 million, with a healthy profit cash ratio of 172.5%[144] - The company's net profit attributable to shareholders in 2024 was RMB 3,607 million, a 0.6% increase from RMB 3,584 million in 2023, with basic earnings per share of RMB 0.521[172] Revenue Breakdown - Service revenue reached RMB 146.212 billion, reflecting a year-on-year growth of 1.9%[56] - Telecommunications infrastructure service revenue reached RMB 75,172 million, a year-on-year decrease of 1.3%, accounting for 50.1% of total operating revenue[57] - Revenue from overseas customers in telecommunications infrastructure services grew by 17.5% year-on-year[57] - Business process outsourcing service revenue was RMB 43,459 million, down 0.2% year-on-year, representing 29.0% of total operating revenue[57] - Revenue from applications, content, and other services increased by 8.4% year-on-year to RMB 31,369 million, surpassing 20% of total operating revenue at 20.9%[57] - Revenue from domestic telecommunications operators reached RMB 83,603 million, a year-on-year increase of 2.3%[59] - Revenue from the domestic non-telecom operator market was RMB 62,169 million, down 2.0% year-on-year[59] - Overseas market revenue grew by 22.3% year-on-year, reaching RMB 4,228 million[59] Strategic Initiatives - The company plans to enhance its focus on cutting-edge technologies such as 5G-A, blockchain, and artificial intelligence[8] - The acquisition of a 49% stake in the China-UK submarine system company has been completed, making it a wholly-owned subsidiary[36] - The company aims to strengthen its integration capabilities across various sectors, providing comprehensive services in cloud, AI, and security[7] - The establishment of a wholly-owned subsidiary for smart property development is part of the company's strategy for market expansion[34] - The company is focusing on digital infrastructure, green low-carbon solutions, and smart city services, aligning with national strategies[84][85] - The company is actively participating in national data center construction projects, contributing to the "East Data West Computing" initiative[84] - The company is actively pursuing opportunities for mergers and acquisitions to enhance its competitive position in the market[192][193][194][195][196][197][198][199] Awards and Recognition - The company has been recognized as one of the top four software and information technology service companies in China for three consecutive years[30] - The company has been recognized with over 30 significant technology awards at national and provincial levels in recent years[49] - The company ranked 1,429th in the 2024 Forbes Global 2000, improving by 70 places from the previous year[48] - The company received multiple accolades for corporate governance and ESG performance, including recognition in the 2024 Forbes Global 2000 list[75] Research and Development - Research and development investment exceeded RMB 5.5 billion in 2024, focusing on strategic emerging industries[110] - The company has developed over 40 self-controlled cybersecurity products and a one-stop overall solution, responding to the data security needs of various industries[65] - The company has launched nearly 100 key industry products focusing on smart photovoltaic, smart buildings, and smart sports, addressing customer needs for intelligence and safety[67] Operational Efficiency - The company has implemented over 12 comprehensive solutions across more than 50% of provinces in the country, significantly enhancing operational efficiency[67] - The company's total assets as of the end of 2024 were RMB 136,618 million, an increase of RMB 14,828 million from RMB 121,790 million at the end of 2023[178] - The total liabilities at the end of 2024 were RMB 90,004 million, an increase of RMB 11,882 million from RMB 78,122 million at the end of 2023, with a debt-to-asset ratio of 65.9%, up 1.8 percentage points[178] Corporate Governance - The company has a strong management team with over 20 years of experience in the telecommunications industry, including expertise in finance, auditing, and corporate governance[192][193][194][195][196][197][198][199] - The company has a diverse board of directors with extensive backgrounds in law, finance, and corporate management, ensuring robust governance practices[191][192][193] - The company is committed to maintaining high standards of corporate governance and compliance, as evidenced by the qualifications of its board members and management[191][192][193]