China Communications Services Corp. Ltd. Class H · HKEX:552
China Communications Services Corp. Ltd. Class H — FY2023 Earnings Presentation
37 slides from China Communications Services Corp. Ltd. Class H's earnings presentation, Mar 27, 2024
Slide 1: 2023 Annual Results
CHINA COMMUNICATIONS SERVICES CORPORATION LIMITED Stock Code : 00552.HK 2 0 2 3 A n n u a l Re s u l t s 27 March 2024 PENETRATING STRATEGIC EMERGING INDUSTRIES ACHIEVING HIGH-QUALITY SUSTAINABLE DEVELOPMENT www.chinaccs.com.hk
Slide 2: Management Present
Management Present EXECUTIVE DIRECTOR, MR. LUAN XIAOWEI CHAIRMAN EXECUTIVE DIRECTOR, MR. YAN DONG PRESIDENT EXECUTIVE DIRECTOR, MS. ZHANG XU EXECUTIVE VICE PRESIDENT & CFO EXECUTIVE VICE PRESIDENT MR. ZHANG HAO 2
Slide 3: Agenda
Agenda Overview Business Review Financial Results 3
Slide 4: Overview
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Slide 5: Highlights
Highlights Strong Resilience, Stable Growth, Favorable Return Demonstrating Resilience Amid Challenges, Operating Results Achieved Continuous Improvement Enhancing Efficiency and Quality Effectively, Gross Profit Margin Continued to Rise Strengthening the Drive of Technological Innovation, Industria
Slide 6: Results Overview (1): Continued to Achieve High-quality Operating Results
Results Overview (1): Continued to Achieve High-quality Operating Results Improvement in both Efficiency and Quality while Achieving “Four Continuities” Revenue Continued to Grow Steadily with Gross profit Margin Rose Continuously Growth Rate Accelerating for Two Consecutive Years (RMB’M) +5.6% (％)
Slide 7: Results Overview (2): Growth in All Three Major Markets and Businesses
Results Overview (2): Solid and Progressive Growth in All Three Major Markets and Three Major Businesses…… Focused on Opportunities from Digitalization, Intelligentization and Green Development of the Society Revenue Growth – By Market Revenue Growth – By Business Domestic Non-operator Market Showed
Slide 8: Results Overview (3): Revenue Contribution from ACO Business Increased
Results Overview (3): ……Revenue Contribution from ACO Business Increased Continuously Technological Innovation Led the Rapid Development of Industrial Digitalization Businesses ACO Business Revenue Nearly Quadrupled in the Past Decade Proportion to Total Revenues Continued to Increase 19.5% ⚫ The Co
Slide 9: Strategic Emerging Businesses: Deploying in New Sectors to Forge New Momentum
Strategic Emerging Businesses: Deploying in New Sectors to Forge New Momentum …… More than 85% of New Contract Growth Contributed by Strategic Emerging Businesses Total New Contracts + >8% Strategic Emerging Businesses (RMB’Bn) ~204.0 ~188.0 ⚫ New Contracts: (RMB’Bn) Strategic Emerging Growth Busine
Slide 10: Strengthening and Optimizing our Development in Four Sectors
…… Seizing Ample Opportunities, Strengthening and Optimizing our Development in Four Sectors Digital Infrastructure New Contracts +~30% Green and Low-carbon New Contracts +>50% Opportunities: Digital China development, AI, computing Opportunities: The national “Dual Carbon” Goals have led to a power
Slide 11: Scaling up R&D Investment and Elevating Technological Innovation
Scaling up R&D Investment Consistently and Elevating the Level of Technological Innovation Continuously R&D Expenses in 2023 Amounted to ~RMB5.6 bn, + ~12% y-o-y, Maintaining Double-digit Growth for Three Consecutive Years Technological Innovation Results Technological Innovation Constantly Technolo
Slide 12: Proactively Rewarding Shareholders with Dividend Increasing Year by Year
Proactively Rewarding Shareholders with Dividend Increasing Year by Year Dividend Policy: The Board recommends: Continuous Growth, Steady Enhancement ⚫ Dividend per Share: RMB0.2174 per share（+ 12.1% y-o-y） ⚫ Total Dividend Payout Ratio ⚫ Dividend Payout Ratio: 42%（+ 2pp y-o-y） (%) 42% 40% 38% 36% 3
Slide 13: Elevating ESG Standard Constantly
Elevating ESG Standard Constantly Fulfilling the Corporate Mission of “Building Smart Society, Boosting Digital Economy, Serving a Good Life” Environment Social Governance Adapting Climate Change Fulfilling Social Responsibility Optimizing Corporate Governance ⚫ Established a “Carbon Peak, Carbon Ne
Slide 14: Accelerating the Building of First-class Enterprise
Accelerating the Building of First-class Enterprise to Facilitate High-quality Development Accelerating the Building of “First-class Smart Service Innovative Enterprise”, Constructing a Strategic System for “New Generation Integrated Smart Service Provider” at High Standard Healthy and High-quality
Slide 15: Business Review
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Slide 16: Business Revenue Breakdown
Business Revenue Breakdown (RMB’ M) 2022 2023 Change % % of Revenue TIS (Telecommunications Infrastructure Services) Design 9,621 10,550 9.7% 7.1% Construction 59,232 61,188 3.3% 41.1% Supervision 4,054 4,399 8.5% 3.0% Subtotal 72,907 76,137 4.4% 51.2% BPO (Business Process Outsourcing Services) Mai
Slide 17: Overall Performance by Business and Market
Overall Performance by Business and Market By Business By Market (RMB’ M) +5.6% (RMB’ M) +5.6% 148,615 148,615 140,748 140,748 3,456 2,998 +15.3% 24,768 28,927 Overseas +16.8% Customer 59,697 63,433 43,551 ACO Domestic 43,073 +1.1% +6.3% Non-operator BPO Domestic Operator TIS 27,785 -1.6% 27,327 Chi
Slide 18: Domestic Non-Operator Market (1/2)
Domestic Non-Operator Market (1/2): Achieved Steadily Improving Development and Continuous Enhancement in Efficiency Focused on the Opportunities from Industrial Digitalization, Photovoltaic New Energy Construction and Digital Infrastructure Including Data Center Revenue Growth Drivers (RMB’M) +6.3%
Slide 19: Domestic Non-Operator Market (2/2)
Domestic Non-Operator Market (2/2): Achieved Good Results in Penetrating Focused Areas Strategic Emerging Businesses Accounted for Approximately 75% of the Large Projects with Contract Value over RMB100 Million Each 2023 New Contracts in Domestic Non-operator Market Projects with Contract Value over
Slide 20: Domestic Operator Market
Domestic Operator Market: Continued to Maintain Steady Growth with Industrial Digitalization Business as Main Growth Driver Seized Construction Demand for Computing Power and Opportunities from Industrial Applications Empowered by Computing Power Revenue Growth Drivers (RMB’M) +4.7% +2,149 81,726 +1
Slide 21: Overseas Market
Overseas Market: Improved Development Progressively and Enhanced Quality Continuously Focused on Opportunities from the “Belt & Road” and Market Recovery after Overseas Pandemic Subsided ⚫ Steady Progress Was Achieved in the Implementation of Overseas Projects, Including Electricity, Revenue from Ov
Slide 22: Strategic Emerging Businesses (1): Digital Infrastructure
Strategic Emerging Businesses (1): Digital Infrastructure Seizing the Demand of Large Model and Cloud Computing, Digital Infrastructure Business Achieved Fast Growth Leveraging the Integrated Service Capabilities of Full-process Consultation, Design/General Contracting, Construction and Maintenance,
Slide 23: Strategic Emerging Businesses (2): Green and Low-carbon
Strategic Emerging Businesses (2): Green and Low-carbon Seizing Opportunities from the Markets of New Energy Construction and Energy Usage Services, Green and Low-carbon Business Achieved Rapid Growth Under the Guidance of the National “Dual Carbon” Strategy, We not only Provide Traditional New Cont
Slide 24: Strategic Emerging Businesses (3): Smart City
Strategic Emerging Businesses (3): Smart City Grasping the Opportunity of Digital China Construction, Series of Applications of Smart City Achieved Fast Growth Led by Top-level Planning of Smart City, We Empower Smart Government Affairs, Urban Governance, Industrial Economy, Livelihood Services and
Slide 25: Strategic Emerging Businesses (4): Emergency Management & Security
Strategic Emerging Businesses (4): Emergency Management & Security Forging Core Products for Cybersecurity and Emergency Management Cybersecurity Emergency Management 2023 New Contracts: over RMB2.7 Bn 2023 New Contracts: over RMB4.3 Bn With eight major industry sectors (including emergency manageme
Slide 26: Persisting in the High-quality Strategy to Achieve Sustainable Development
Persisting in the High-quality Strategy to Achieve Sustainable Development Adhering to the Overall Roadmap of “Value-driven, Seeking Steady yet Progressive Growth and High-quality Development” Major Development Initiatives Intelligentization, … Informatization ... Digitalization … Green Transformati
Slide 27: Financial Results
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Slide 28: Key Financial Indicators
Key Financial Indicators (RMB’M, Except EPS) 2022 2023 Change % % of Revenue Revenue 140,748 148,615 5.6% 100% Cost of Revenue 124,766 131,358 5.3% 88.4% Direct Personnel Costs 8,559 8,644 1.0% 5.8% Materials Costs 21,657 24,671 13.9% 16.6% Direct Cost of Products Distribution 4,065 3,518 -13.5% 2.4
Slide 29: Operating Efficiency
Operating Efficiency Gross Profit Margin Improved for Two Consecutive Years Back to the Level Nearly Four Years Ago 11.7% 11.6% Implemented Managed and controlled 11.4% High-quality the development of Development businesses with low gross 11.2% Strategy profit margin 11.0% Strengthened technological
Slide 30: Cost Structure
Cost Structure Cost/Expense as a % of Revenue Direct Personnel Costs ⚫ Controlled the total number of employees to as a % of Revenue enhance labor productivity Continued to Decline Direct Personnel 6.6% -0.5pp 6.1% -0.3pp 5.8% ⚫ The increase in general contracting projects drove Costs a relatively f
Slide 31: Free Cash Flow
Free Cash Flow Free Cash Flow Cash Conversion Ratio1 Amid the Challenging Economic (RMB’M) (%) Environment, Cash Flow 4,353 4,333 4,060 142.7% 146.1% 149.4% Continued to Maintain at a Healthy Level, Demonstrating Our +7.2% -0.5% Strong Management Capability +3.3pp +3.4pp ⚫ Free cash flow and cash co
Slide 32: Financial Position
Financial Position Maintaining Solid Financial Position to Facilitate Long-term Sustainable Development (RMB’M) 31.12.2022 31.12.2023 Total Assets 110,269 121,790 In which: Cash and Deposits1 32,130 35,460 Accounts Receivable and Contract Assets 45,579 52,505 Total Liabilities 68,645 78,122 In which
Slide 33: Our Valuation in Capital Market
Our Valuation in Capital Market Development in Digital China, AI, Dual Carbon and Green Transformation, etc., Bring Opportunities for the Company’s Sustainable Development and Value Enhancement Strong Resilience Stable Growth Favorable Return ⚫ Possess over 70 years of industry ⚫ Strong operation an
Slide 34: Thank You
Institutional Investor “2023 Asia Executive Team Rankings” ⚫ Most Honored Company ⚫ Small & Midcap category in the telecommunications sector ⚫ Best CEO ⚫ Best CFO Thank You！ ⚫ Best IR Professional ⚫ Best IR Program ⚫ Best ESG ⚫ Best Company Board Corporate Governance Asia “13th Asian Excellence Awar
Slide 35: Appendix
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Slide 36: Business Revenue Breakdown – by Market
Business Revenue Breakdown – by Market (RMB’M) 2022 2023 Change Change % TIS (Telecommunications Infrastructure Services) Domestic Operator 39,694 40,886 1,192 3.0% Domestic Non-operator 30,745 32,658 1,913 6.2% Overseas Customer 2,468 2,593 125 5.1% Subtotal 72,907 76,137 3,230 4.4% BPO (Business P
Slide 37: Forward-looking Statement
Forward-looking Statement 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 conce
China Communications Services — FY2023 Earnings Presentation on 6ix