Zhonggan Communication (Group) Holdings (2545) H2 2024 earnings summary

Executive summary

• FY24 revenue fell to RMB551.1m from RMB609.3m; profit for the year declined to RMB9.7m from RMB68.7m, reflecting weaker digitalisation services and higher income tax expense.

• Telecommunications infrastructure services represented 92.7% of revenue; cash generation was pressured by a sharp rise in contract assets and delayed customer reviews.

Financial highlights

• Revenue was RMB551.1m, down RMB58.2m YoY; cost of services decreased RMB15.2m to RMB444.8m.

• Gross profit decreased to RMB106.2m from RMB149.3m; gross margin fell to 19.3% from 24.5%.

• Operating profit was RMB38.8m vs RMB86.7m; profit before tax was RMB23.5m vs RMB70.0m; profit for the year was RMB9.7m vs RMB68.7m.

• Income tax expense rose to RMB13.8m from RMB1.3m; finance costs declined to RMB15.3m from RMB16.7m.

• Basic and diluted EPS were RMB0.02 vs RMB0.14; 2024 listing expense was RMB11.6m vs RMB8.6m in 2023.

Outlook and guidance

• RMB872m of remaining performance obligations under digitalisation solution contracts was expected to be recognised over the next 1–2 years, compared with RMB1,274m over 1–3 years at FY23.

• Unutilised IPO proceeds are planned for use in 2025, including strategic acquisitions, prospective integrated-solution project costs and R&D; no suitable digitalisation-services acquisition had been identified by the announcement date.