China Communications Services Corp. Ltd. Class H · HKEX:552
China Communications Services Corp. Ltd. Class H — H1 2023 Earnings Presentation
37 slides from China Communications Services Corp. Ltd. Class H's earnings presentation, Aug 24, 2023
Slide 1: 2023 Interim Results
CHINA COMMUNICATIONS SERVICES CORPORATION LIMITED Stock Code : 00552.HK 2023 Interim Results 24 August 2023 ACHIEVE HIGH-QUALITY DEVELOPMENT FORGE NEW GROWTH CURVE www.chinaccs.com.hk
Slide 2: Management Present
Management Present EXECUTIVE DIRECTOR, MR. LIU GUIQING CHAIRMAN EXECUTIVE DIRECTOR, MR. YAN DONG PRESIDENT EXECUTIVE VICE PRESIDENT MR. LIANG SHIPING EXECUTIVE DIRECTOR, MS. ZHANG XU EXECUTIVE VICE PRESIDENT & CFO 2
Slide 3: Agenda
Agenda Overview Business Review Financial Results 3
Slide 4: Overview
aed Fk a CHINA COMSERVICE Overview
Slide 5: Highlights
Highlights Continued to achieve high-quality operating results by implementing strategies progressively Operating efficiency improved comprehensively with gross profit margin continuing to rebound High-margin businesses fueled growth with technological innovation leading development Growth momentum
Slide 6: Results Highlights: Efficiency Improved Across the Board and Development Momentum Emerged
Results Highlights: Efficiency Improved Across the Board and Development Momentum Emerged • Gross Profit Margin Strategic Emerging Industries1 New Contracts • Net Profit Margin • Growth>30% • ROE • As a % of Total New Contracts>27% Improved Across the Board 6 (1) Please refer to p.11 for the details
Slide 7: Results Overview (1): Achieved Sustainable and High-quality Operating Results
Results Overview (1) : Achieved Sustainable and High-quality Operating Results ...... Effective Implementation Revenue Net Profit1 Free Cash Flow2 (RMB’ M) (RMB’ M) (RMB’ M) “Effective Improvement in Quality Reasonable Growth in Quantity” 73,170 2,034 -1,122 +5.7% +7.3% Improved y-o-y Steady growt
Slide 8: Results Overview (2): Gross Profit Margin Continued the Recovery Trend
Results Overview (2) : …… Gross Profit Margin Continued the Recovery Trend Gross Profit Margin Reversed the Downward Trend and Domestic Operator Market Gross Profit Domestic Non-operator Market Gross Margin Stabilized and Improved Profit Margin Remained Largely Stable Continued the Stabilization and
Slide 9: Results Overview (3): Growth in All Three Major Markets and Businesses
Results Overview (3) : Achieved Growth in All Three Major Markets and Three Major Businesses …… Seized Opportunities from Digital Information Infrastructure Construction and Industrial Digital Transformation Amid the Accelerating Development of Digital Economy Revenue Growth – By Market Revenue Grow
Slide 10: Results Overview (4): Contributions from Consultation Design and Software Businesses
Results Overview (4) : …… Noticeable Contributions from Consultation Design and Software Businesses in Driving Revenue Growth Technological Innovation Led Development Revenue Growth – By Sub-business The top three sub-businesses that drove (RMB’M) +5.7% revenue growth included consultation design
Slide 11: Growth Momentum Emerging by Focusing on Strategic Emerging Industries
Growth Momentum Emerging by Focusing on Strategic Emerging Industries New Contracts from Strategic Emerging Businesses Penetrating Advantaged Areas, Fostering New Growth Drivers ➢ Proportion increased gradually: New contracts in 1H2023 accounted for more than 27% of total new contracts Digital Infra
Slide 12: The Main Force in Digital Infrastructure Construction
The Main Force in Digital Infrastructure Construction Building a Solid Foundation for “Digital China” Leveraging the Integrated Service Capabilities of Full-process Consultation, Design/General Contracting, Construction and Maintenance We Vigorously Develop Three Major Sectors of Data Center, Cloud
Slide 13: Persisting in Technological Innovation to Enhance Market Competitiveness
Persisting in Technological Innovation to Enhance Market Competitiveness Continuously…… Facilitates High-quality Business Fruitful Technological Technological Innovation Capability Development Innovation Recognized by Industry ⚫ Software Development and System Support ⚫ Cumulative Patents 3613 ⚫ A r
Slide 14: Deepening Reform to Facilitate High-quality Development
…… Deepening Reform to Facilitate High-quality Development …… Pursue Corporate Reform Proactively, and Awarded “Double-hundred Reform” Excellence for Two Consecutive Years Digital Transformation - Building a Forward-looking Reform in Key Areas - Building Leading Enterprises Technology Innovative Ent
Slide 15: Strengthening "Four Capabilities" to Nurture New Growth Curve
…… Strengthening “Four Capabilities” to Nurture New Growth Curve Adhere to the Positioning of “1 Positioning, 4 Roles”, Accelerate the Building of a “First-class Smart Service Innovative Enterprise” Central SOE Background, Over 70 years of Service Experience in Industry Leverage Our Resources and En
Slide 16: Business Overview
aed Fk a CHINA COMSERVICE Business Overview
Slide 17: Business Revenue Breakdown
Business Revenue Breakdown (RMB’ M) 1H2022 1H2023 Change % % of Revenue TIS (Telecommunications Infrastructure Services) Design 4,508 5,200 15.3% 7.1% Construction 28,608 30,417 6.3% 41.6% Supervision 1,933 2,071 7.1% 2.8% Subtotal 35,049 37,688 7.5% 51.5% BPO (Business Process Outsourcing Services)
Slide 18: Overall Performance by Business and Market
Overall Performance by Business and Market By Business By Market +5.7% +5.7% (RMB’ M) 73,170 (RMB’ M) 73,170 69,254 69,254 1,570 +1.2% 1,551 12,668 +8.6% 13,753 Overseas Customer 21,729 ACO 31,623 Domestic 21,537 +0.9% 30,510 +3.6% Non-operator BPO Domestic Operator TIS 14,468 14,154 -2.2% China Mob
Slide 19: Domestic Non-Operator Market (1/2)
Domestic Non-Operator Market (1/2): Continued to Optimize Business Mix to Reinforce Development Quality Revenue Growth Drivers Focused on the Opportunities from Digital and Intelligent (RMB’ M) +3.6% Transformation of Traditional Infrastructure, Data Center Construction and Industrial Digital Transf
Slide 20: Domestic Non-Operator Market (2/2)
Domestic Non-Operator Market (2/2): Achieved Good Results in Penetrating Focused Areas 1H2023 New Contracts in Domestic Non-operator Market Projects with Contract Value over RMB100 Million Each Amounted to ~RMB43.2 Bn Total Value Exceeded RMB3.4 Bn The Proportion from Strategic Emerging Businesses E
Slide 21: Domestic Operator Market
Domestic Operator Market: Kept Abreast of Changes in Customer Needs to Facilitate Faster Business Growth Revenue Growth Drivers Seized Opportunities from the State in Promoting the (RMB’ M) +7.5% Moderately Accelerating Deployment of New Infrastructure +1,191 39,977 Construction, as well as the Rapi
Slide 22: Overseas Market
Overseas Market: Continued to Optimize Deployment and Expanded the Market Steadily Revenue from Overseas Market (RMB’ M) Made Steady Progress in the Implementation of Overseas Projects, Including +1.2% Communications Projects and New Energy Projects in the Middle East, as well as Communications Proj
Slide 23: Leveraging Integrated Comprehensive Capabilities to Promote Sustainable Business Development
Leveraging the Advantages of Integrated Comprehensive Capabilities to Promote Sustainable Business Development Underpinned by the 4T (1) Capabilities Integration, Penetrate High-value Markets Such as Digital Infrastructure and Smart Services New Generation Integrated Smart Service Provider Core Mark
Slide 24: Financial Results
aed Fk a CHINA COMSERVICE Financial Results
Slide 25: Key Financial Indicators
Key Financial Indicators (RMB’M, Except EPS) 1H2022 1H2023 Change % % of Revenue Revenue 69,254 73,170 5.7% 100% Cost of Revenue 61,960 65,336 5.4% 89.3% Direct Personnel Costs 4,030 3,871 -3.9% 5.3% Materials Costs 10,896 11,886 9.1% 16.2% Direct Cost of Products Distribution 2,033 1,683 -17.2% 2.3
Slide 26: Operating Efficiency (1)
Operating Efficiency (1) The Growth of Major Profit Indicators Accelerated, Higher than Revenue Growth Operating Efficiency was Improved Revenue Growth Gross Profit Growth Operating Profit Growth Net Profit Growth （Gross Profit-SG&A） Effective Implementation 8.0% 7.8% “Effective Improvement in Quali
Slide 27: Operating Efficiency (2)
Operating Efficiency (2) Profitability Indicators Continued the Recovery Trend Gross Profit Margin Net Profit Margin 10.7% 10.7% 10.5% 2.8% 2.8% 2.7% 1H2021 1H2022 1H2023 1H2021 1H2022 1H2023 Endeavoured to Implementing the Quality and Efficiency Improvement Measures Strengthened the Strengthened Ca
Slide 28: Cost Structure
Cost Structure Cost / Expense as a % of Revenue Materials Cost Subcontracting Charges Growth Rate Dropped Sharply Under Effective Control 6.4% -0.6pp 5.8% -0.5pp 5.3% Direct Personnel Costs ⚫ Strengthened the control of materials costs ⚫ Enhanced self-sufficient delivery capability, by digitalizing
Slide 29: Financial Position
Financial Position Continue to Maintain Solid Financial Position Capture Opportunities from Digital China and Industrial Digitalization to Facilitate the Long-term Sustainable Development (RMB’ M) 31.12.2022 30.6.2023 Total Assets 110,269 119,040 In which: Cash and Deposits 1 24,256 21,867 Accounts
Slide 30: Company Valuation
Company Valuation Blessing from National Policies • Policies of Digital China, East-To-West Solid Industry Leading Position Computing Resources Transfer and Dual Profitability Inflection Point Emerged Carbon bring continuous and huge • Possess over 70 years of experience in development potential com
Slide 31: Thank You!
Institutional Investor “2023 Asia Executive Team Rankings” ⚫ Most Honored Company ⚫ Overall (Small & Midcap) category rankings in the telecommunications sector ⚫ Best CEO ⚫ Best CFO ⚫ Best IR Professional ⚫ Best IR Enterprise ⚫ Best ESG ⚫ Best Board of Directors Corporate Governance Asia “13th Asian
Slide 32: Appendix
=P i te ARS CHINA COMSERVICE Appendix
Slide 33: Business Revenue Breakdown – by Market
Business Revenue Breakdown – by Market (RMB’ M) 1H2022 1H2023 Change Change % TIS (Telecommunications Infrastructure Services) Domestic Operator 18,450 19,929 1,479 8.0% Domestic Non-operator 15,354 16,528 1,174 7.6% Overseas Customer 1,245 1,231 -14 -1.2% Subtotal 35,049 37,688 2,639 7.5% BPO (Busi
Slide 34: Strategic Emerging Industries - Smart City
Strategic Emerging Industries - Smart City Led by the Top-level Planning of Smart City, We Empower Government Affairs and Services, Urban Governance, Livelihood Protection, Industrial Economy and Other Fields, Giving Full Play to the Integrated Capability of Consultation + General Contracting + Soft
Slide 35: Strategic Emerging Industries - Green and Low-Carbon
Strategic Emerging Industries - Green and Low-Carbon Under the Guidance of the National “Dual Carbon" Strategy, We not only Provide Traditional Electricity Infrastructure and Supporting Services, but also Extend Our Services and Provide Upgraded Services such as New Energy, Energy Usage Services and
Slide 36: Strategic Emerging Industries - Emergency Management and Security
Strategic Emerging Industries - Emergency Management and Security Cybersecurity Emergency Management Regulation Departments Key Industries and Enterprises Regulation Department Park Enterprises Departments related to the Work of Communications and Information, Emergency Management, Chemical Park, In
Slide 37: Forward-looking Statements
Forward-looking Statements The Company would like to caution readers about the forward-looking nature of certain statements herein. These forward-looking statements are subject to risks, uncertainties and assumptions, which are beyond its control. Potential risks and uncertainties include those conc
China Communications Services — H1 2023 Earnings Presentation on 6ix