Chinasoft International (354) H1 2024 earnings summary

Executive summary

• Revenue for H1 2024 was RMB7,926.2 million, down 6.2% year-over-year; profit for the period was RMB285.4 million, down 18.6%.

• Service revenue declined 7.8% year-over-year, mainly due to reduced demand from core clients.

• Gross profit margin decreased to 23.1% from 23.7% year-over-year, impacted by price reductions from major clients.

• The company advanced its “1+3” strategic business layout, focusing on AIGC, HarmonyOS, ERP, and cloud services, with a strategic focus on AI, cloud intelligence, and digital transformation.

• No interim dividend declared for H1 2024.

Financial highlights

• Gross profit was RMB1,831.4 million, down 8.5% year-over-year; gross margin at 23.1%.

• Basic EPS: RMB10.93 cents, down 12.1% year-over-year.

• Other income decreased 34.2% due to lower government subsidies and VAT policy changes.

• Finance costs rose 20.2% to RMB99.8 million, mainly from higher interest on overseas syndicated loans.

• Net cash used in operating activities was RMB686.4 million; cash and cash equivalents at period end were RMB1,841.6 million.

Outlook and guidance

• The company expects stabilization and recovery in cornerstone businesses and continued growth in innovative segments.

• Focus remains on expanding high-margin services, cloud, AIGC, AloT, ERP, and global expansion to improve profitability.

• Strategic push to become a globally leading technology-driven IT service provider.