China Communications Services (552) H1 2024 earnings summary

Executive summary

• Revenue reached RMB74.4 billion in H1 2024, up 1.7% year-on-year, with service revenue rising 3%.

• Net profit grew 4.4% year-on-year to RMB2.13 billion, outpacing revenue growth.

• Gross profit margin improved to 10.9%, up 0.2 percentage points year-on-year.

• Strategic Emerging Businesses and industries became the main growth driver, with new contract value up over 40% year-on-year and now over 35% of total new contracts.

• Overseas revenue surged 26% year-on-year, driven by strong project execution in the Middle East and Asia Pacific.

Financial highlights

• Gross profit increased 3.6% to RMB8.12 billion.

• Net profit margin was 2.9%, up 0.1 percentage points year-on-year.

• Basic earnings per share were RMB0.307, up 4.4% year-on-year.

• R&D expenses increased 11.1% year-on-year to RMB2,314 million, 3.1% of revenue.

• Free cash flow was negative RMB2,165 million, reflecting cyclical working capital needs.

Outlook and guidance

• Plans to deepen reform and expansion in strategic emerging industries, focusing on digital infrastructure, green and low-carbon, and AI.

• Aims for steady, high-quality growth and improved operating efficiency.

• Focus on leveraging new-generation technologies such as 5G-A, AI, and computing power networks.

• Expectation for positive free cash flow for the full year.

• Company aims to leverage integrated service capabilities and strengthen professional management.