Huashi Group Holdings (1111) investor relations material

Executive summary

• H1 revenue rose 16.5% YoY to RMB181.1m; profit for the period increased 7.3% to RMB57.6m, while net profit margin declined to 31.8% from 34.6%.

• AI Application services began during H1, adding a new business stream and supporting AI-led transformation and overseas expansion.

• Customer contracts signed totaled RMB935.3m; 98.0%, or RMB916.8m, of contracted services were provided during H1.

Financial highlights

• Gross profit rose 19.6% to RMB129.2m and profit before tax increased 18.6% to RMB77.1m; cost of services was RMB51.9m versus RMB47.4m.

• Profit for the period and adjusted net profit were RMB57.6m, up 7.3%; basic and diluted EPS increased to RMB7.47 cents from RMB6.97 cents.

• Selling and marketing expenses rose to RMB15.8m from RMB9.2m, and administrative expenses to RMB30.3m from RMB24.2m, reflecting workforce and business expansion.

• Income tax expense increased to RMB19.5m from RMB11.3m, partly because a smaller proportion of business was subject to the 15% preferential rate rather than the standard 25% rate.

• Operating cash flow was an outflow of RMB44.1m versus an inflow of RMB3.8m, as increased receivables and contract assets drove working-capital use.

Outlook and guidance

• Priorities include R&D in AIGC video, multimodal interaction and industry-specific models; commercializing AI products and exploring AI computing-power services.

• Plans include embedding AI in marketing delivery, expanding from Hubei through Shenzhen and the Greater Bay Area, and growing overseas marketing and cross-border e-commerce through a dual-track model.

• Management plans to apply AI to standardized workflows, control non-core spending and improve productivity while building technology-and-marketing talent.