AsiaInfo Technologies Announces Interim Results 2023

The overall operations maintained a sound growth momentum New orders up by over 20% Net profit up by 12.3% stood at RMB212 million

Results Highlights:

• Revenue amounted to RMB3,282 million, a year-on-year increase of 5.6%, new orders up by over 20%
• Revenue from Three New business* amounted to RMB1,091 million, a year-on-year increase of 8.7%, the new orders of Three New business achieved a year-on-year growth of over 70%
• Gross profit amounted to RMB1,144 million, a year-on-year increase of 8.6%
• Gross profit margin reached 34.9%, an increase of 1.0 percentage point year-on-year
• Net profit amounted to RMB212 million, a year-on-year increase of 12.3%
• Operating cash flow improved by 13.7%
• Not to distribute interim dividends and proposed to maintain the dividend payout ratio guidance of no less than 40% of the net profit for 2023

Note*: Three New business represents digital intelligence-driven operation, vertical industries and enterprise cloudification, and Operation Support Systems (“OSS”)

HONG KONG SAR – Media OutReach – 2 August 2023 – AsiaInfo Technologies Limited (“AsiaInfo Technologies” or the “Company”, which together with its subsidiaries, is referred to as the “Group”; HKEX stock code: 1675), is pleased to announce its interim results for the six months ended 30 June 2023 (the “Period”).

Overall results

In the first half of 2023, the overall operations of AsiaInfo Technologies maintained a sound growth momentum. The Company’s new orders increased by more than 20% year-on-year, among which, new orders for the Three New Business increased by more than 70% year-on-year. The Company’s revenue amounted to RMB3,282 million, up by 5.6% year-on-year. Among which, the revenue from the Three New Business amounted to RMB1,091 million, up by 8.7% year-on-year. The proportion of revenue from the Three New Business to the total revenue increased to 33.3%. Gross profit margin reached 34.9%, increased by 1.0 percentage point year-on-year. Net profit amounted to RMB212 million, representing a year-on-year increase of 12.3%. Operating cash flow improved by 13.7% year-on-year. Basic earnings per share were RMB0.24, an increase by 14.3% year on year.

Commenting on the Group’s results performance in the first half of 2023, Dr. TIAN Suning, Chairman and Executive Director of the Group, said, “Under the complex external environment, by adhering to the ‘One consolidation, Three developments’ strategy, we proactively and appropriately controlled the pace of business expansion with the principle of high-quality development to assure the healthy and sustainable development of the Company. On the one hand, we continued to grasp the sound growth momentum of the telecommunications industry, further consolidating the leading position of the Company in the telecommunications market. On the other hand, while firmly exploring new business, the Company attached greater attention to the quality of the business and expansion models, and drove high-quality and scale expansion of new businesses with the ‘standard products + solutions’ model. In the first half of 2023, while steadily expanding our business and stepping up the implementation of refined management in the areas such as cost control, the Company achieved steady revenue growth, enhancement and improvement in various operating metrics including gross profit, net profit and operating cash flow, so as to create value for shareholders continuously.”

After taking into full consideration of various factors including shareholders’ returns, profitability, cash flow level and capital needs for the future development of the Company, the board of directors has decided not to distribute interim dividends for the Period and proposed to maintain the dividend payout ratio guidance of no less than 40% of the net profit for the year of 2023.

Vertical industries continued to grow rapidly, with revenue doubling in the energy sector

In the first half of 2023, the Company continued to focus on five strategic verticals and expand in the energy, government affairs and transportation sectors and built a development model of “standard products + solutions”. Revenue from the vertical industries and enterprise cloudification business reached RMB351 million, up by 29.4% year-on-year. Among which, the revenue from the energy industry exceeded RMB100 million, nearly tripling the business scale of the same period last year and becoming the largest revenue contributor in the vertical industries. The revenue from the transportation and government affairs sectors increased by 71% and 40%, respectively.

In the energy industry, the Company continued to cultivate the nuclear power market in the first half of the year, with a contract from Jiangsu Nuclear Power of RMB140 million. At present, there are in total 78 nuclear power units in operation and/or under construction in mainland China, and the Company’s 5G private network products and services covered up to 23 units. In addition to nuclear power, there could be demand in more than 2,000 thermal power units and thousands of new energy stations in mainland China, which bring huge room for market promotion and replication for the Company’s 5G private network business. In the transportation industry, the Company worked together with the project investment and construction consortium and won Chongqing East Railway Station smart hub project — the largest high-speed railway intelligent hub in Southwest China, with a contract value of more than RMB600 million. In addition, the Company also continued to deepen its participation in the construction of digital highway systems in Yunnan, Hunan, Guangdong and many other provinces, achieving further expansion in the digital highway subsegment. In the government affairs industry, the Company improved its capability, construction and operation of big data business in governmental affairs, and promoted the emergency response platform project in Tianjin Binhai New Area with “product + service”; provided big data related products and solutions for Shanghai Big Data Centre and other departments.

BSS business remained steady growth and OSS business grew rapidly

The new wave of technologies and digital economy have brought continuously evolving market opportunities to telecommunications industry. The Company actively responded to industry demand by continuously innovating 5G business support system and operating support system products, promoting the application of AI large language model and AIGC technology to actual business context such as autonomous network, intelligent customer service, intelligent operation and maintenance, and intelligent billing.

In terms of OSS business, the Company focused on computing power network, autonomous network, network digital twin, cloud network digital-intelligent transformation, network management upgrading and other fields and was committed to investing in research and development in the said areas, empowering the digital and intelligent transformation of telecommunications network. The Company’s network intelligence products maintained its leadership in the industry. Among which orders from 5G network fault management system, network cloud management platform, network resource management system, network function virtualisation pack and other standard products saw rapid growth, leading to continuous expansion of OSS business scale and market share. In the first half of the year, OSS revenue achieved fast growth, reaching RMB285 million and up by 14.9% year on year.

About the BSS business, the Company drove business growth steadily by promoting innovative technologies and responding to customers’ new demand, maintaining its leading position in the BSS market. In terms of digital-intelligent transformation, we are deeply involved in the construction of telecom operators’ IT support system cloudification, digitalisation and centralisation, successfully delivering large-scale projects with high quality. In terms of innovation in digital-intelligent transformation, the Company worked with customers to create innovative applications based on its proprietary innovative products, of which AIGC had already been adopted in a few CRM cloud service desk and metaverse operation and maintenance projects. In terms of new customer development, the Company continued to expand the business for China Broadcast Network, and obtained projects such as IoT operation support platform, achieving a further breakthrough in China Broadcast Network. In addition, the Company provided the core system for China Telecom Shanghai branch for the first time with a new “smart billing system”, relying on AI, big data and other cutting-edge technologies. In the first half of 2023, the Company’s revenue from its BSS traditional business amounted to RMB2,105 million, representing an increase of 1.9% year on year.

Digital intelligence-driven operation business under short-term pressure from the impact of external environment and internal organisational change

The digital intelligence decision business was affected by the weak capital market sentiment and the reduced demand for research reports from industries such as Internet and consumption, as well as the in-depth change in business organisation of iResearch Digital Intelligence after its initial restructuring. The organisational change enables the Company to strengthen the regional market coverage and respond to the digital intelligence-driven operation demand of government and enterprise customers more efficiently. The revenue from digital intelligence-driven operation business showed a slight decline in the first half of the year. However, the Company believes that the market demand for digital intelligence-driven operation business remains robust. With the implementation of the new organisational structure and the gradual recovery of the market, it is expected that digital intelligence-driven operation business will gradually improve in the second half of the year.

In terms of DSaaS business, the revenue of DSaaS TMT business maintained double-digit growth. In the area of DSaaS government and enterprise, the Company secured a number of projects, integrating the construction and operation of digital villages and smart communities. In the area of DSaaS consumption, the Company secured a few digital intelligence-driven operation projects with China Tobacco Guangxi, China UnionPay, Postal Savings, etc. In the area of DSaaS Internet of vehicles (IoV), the Company provided automobile enterprises with user management platform, precise placement, trace operation and other operational services, servicing clients including Changan Automobile, Shenlan Automobile and so on.

In the first half of 2023, revenue from digital intelligence-driven operations amounted to RMB455 million, decreased by 6.0% year-on-year, accounting for 13.9% of the Company’s total revenue. In addition, the Company continued to propel the optimisation of its business model, and the proportion of revenue from results-based and commission-based charging model to the revenue stood at 23%, increased by 3.0 percentage points over the same period last year.

Driven by Innovation, Powered by R&D

The Company has always attached great importance to research and development (“R&D”). By sustained investment, focusing on the three major product series, namely “cloud network”, “digital intelligence” and “IT”, the Company strived to achieve the goal of “dual leadership in both products and services”. The Company maintained internationally influential in cloud network series. It released the industry’s first internal generation of computing power network product, which was based on cloudified 5G and AI technologies to realise the communication and computing integration, assisting telecom operators in constructing networks with “reduced investment, multiplication of resources and adding of capacity”. In terms of digital intelligence products, the Company sustained the domestic leadership and international advancement in selected areas. The Company constantly launches new products including edge AI, edge AIoT data mining/computing/intelligent computing gateway, privacy computing all-in-one machine and other digital intelligence software and hardware integrated standard products. In terms of IT, the Company continued to be tier-1 vendor in China. Its PaaS platform products were fully evolving to cloud-native, continuously improving flexibility, scalability and security, and building a cloud-native technology foundation for AI, big data and other technologies. For the metaverse, the Company continued to advance digital twins, 3D/XR and other technologies and products to promote the construction of ecology of the metaverse with diversity. It continued to participate deeply in the work of 20 international/national technology standard organisations such as 3GPP, ITU, ETSI, IEEE, TMF, O-RAN, etc., resulting in over 240 international/domestic standards. The products and technologies concerned resulted in over 90 international/domestic patents and over 1,300 software copyrights. In the first half of 2023, the Company’s R&D expenses amounted to approximately RMB505 million, representing a year-on-year increase of 3.7% and accounting for 15.4% of its revenue.

Future Prospect

Talking about the future strategies, Dr. TIAN said, “The Company always adheres to the strategy of ‘One consolidation, Three developments’ and firmly advance towards the goal of ‘achieving a business scale of over RMB10 billion in 2025, half of which comprises of the new business’. It is expected that the growth rate of revenue will accelerate in the second half of the year and the profit growth momentum will continue.”

“In connection with BSS business, we will continue to consolidate our market leadership, actively and pragmatically embracing new technologies such as AIGC and AI large language models, jointly drive innovation with customers in practical application context, striving to become a key provider of AIGC products and solutions in telecommunications industry. It is expected that BSS revenue will maintain steady growth in the second half of the year. The Three New Business will maintain a rapid development trend. In OSS business, the development of TelcoGPT, computing power network, autonomous network, network management upgraded, and digital intelligence innovation will continue to bring new business opportunities to the Company. In the development of vertical industries, the Company continues to focus on the energy, government affairs and transportation industries, deepens the high-quality growth model of ‘standard products + solutions’, and continues to have standardised products to penetrate and answer industry demand, promoting business expansion of high-quality and in scale. It is expected that the revenue of OSS and vertical industries business will maintain a rapid growth momentum in the second half of the year. In terms of digital intelligence-driven operation business, the Company will make better use of technologies such as AIGC and AI large language model to empower industry research, consulting and other business development. The Company will also strive to seize the policy opportunity of enhancing the circulation of data as a factor, creating large-scaled replication of scenario specific products in DSaaS TMT, DSaaS government and enterprise business, DSaaS consumption and DSaaS IoV, so as to achieve business recovery in the second half of the year.”

The issuer is solely responsible for the content of this announcement.

AsiaInfo Technologies Limited

AsiaInfo Technologies Limited (“AsiaInfo” or “the Company”; Stock code: 01675. HK), founded in 1993, is a leading software product, solution and service provider, as well as a leading provider of full-stack digital and intelligent capabilities. Capitalising on consulting and planning, product R&D, implementation and delivery, system integration, decision intelligence, data operation, customer service and other digital and intelligent core capabilities, AsiaInfo provides enterprise customers in industries such as telecommunications, government affairs, energy, transportation, cable and postal services with end-to-end close loop digital and intelligent transformation service.

AsiaInfo adheres to the strategy of “One consolidation, Three development”, maintains BSS market leadership with high quality and develops new businesses such as 5G OSS network intelligentisation, digital intelligence-driven operation, vertical industries and enterprise cloudification. The Company actively embraces advanced technologies such as 5G, cloud computing, big data, AI, and Internet of Things, forming three major product systems: cloud network, digital intelligence and IT.