ASIAINFO TECH (01675) announces its full-year performance for 2023, with three new businesses continuing to maintain double-digit growth.

On March 18, 2024, ASIAINFO TECH (01675) announced the company's full-year performance as of December 31, 2023. In 2023, ASIAINFO TECH achieved steady growth in operating income, reaching RMB 7.891 billion, an increase of 2.0% year-on-year. Despite the pressure on traditional BSS and digital operations businesses, the revenue scale remained stable thanks to the rapid growth of OSS and vertical industry digital businesses. Overall, the three new businesses experienced rapid growth, with a year-on-year increase of 12.7%, reaching revenue of RMB 2.899 billion, accounting for 36.7% of total revenue. Meanwhile, the company increased efforts to reduce costs and increase efficiency, with a gross profit margin of 37.7%, which remained stable year-on-year. Excluding non-operating items such as goodwill and amortization of intangible assets, the adjusted net profit for the year reached RMB 851 million, with a net profit margin of 10.8%, maintaining a good profitability. Operating cash flow was RMB 582 million, an increase of 5.9% year-on-year. Looking back at the performance of 2023, Dr. Tian Suning, Chairman of ASIAINFO TECH, said, "In the past year, the external economic situation remained severe and complex, with continued uncertainty in the economic recovery process; meanwhile, customers in the communications industry continued to increase efforts to reduce costs and enhance independent research and development. In this context, the company's traditional businesses faced considerable challenges. Faced with challenges, the company continued to develop new businesses on the one hand, and on the other hand, utilized new technologies such as AIGC/GPT to innovate and upgrade traditional businesses, offsetting the pressure from traditional businesses and maintaining the healthy and stable development of the overall business. In 2023, the company paid more attention to the health of cash flow, strengthened cost management, and ensured the long-term sustainable development of the company. Excluding non-operating items, the company's annual profit continued to grow, and the operating cash flow situation was better than the previous year, continuing to create value for shareholders, customers, and society." After considering various factors comprehensively, especially the cash return to shareholders and the fact that the impact of asset impairment is non-cash in nature, the board of directors decided to propose a final dividend per share of HK$0.412 for the end of 2023 at the shareholders' annual meeting, with a dividend payout ratio equivalent to 40% of adjusted net profit. Taking into account the special dividend of HK$0.6 per share declared in December 2023, the total dividend for the year 2023 was HK$1.012 per share. Vertical Industries: Deepening the high-quality development model of "standard products + solutions" With the deep integration of digital technology and the real economy, industries are striving to accelerate their digital transformation. Against this background, the company continues to focus on key industries such as energy, transportation, and government affairs, further deepening the high-quality development model of "standard products + solutions," while controlling the pace of development appropriately. In 2023, revenue from vertical industry digital expertise reached RMB 965 million, an increase of 27.5% year-on-year, accounting for 12.2% of total revenue. Among them, the transportation industry achieved revenue of RMB 316 million, an increase of 458.5% year-on-year; and the energy industry revenue reached RMB 269 million, an increase of 136.5%. In the transportation industry, the company continued to focus on smart highways and innovate in areas such as intelligent hubs and intelligent logistics. In the field of smart highways, the company has developed digital products and solutions such as 5G+ Beidou free-flow tolling, transportation digital twins, traffic big data governance and applications. In the field of intelligent hubs, the company has created the Chongqing East Station smart hub project with a business model of "standard products + solutions + system integration." In the field of intelligent logistics, the company integrates data from railways, air transport, highways, water transport, and customer-owned data to provide services such as freight data, logistics visualization, and multimodal transportation optimization, achieving rapid growth in orders during the year, with customers including Shougang, Baosteel, Jiangsu Yunlian, Shandong Zhongze Energy Environmental Protection, and Qingdao Shanghai Cooperation Demonstration Zone. In the energy industry, while consolidating its leading position in the nuclear power 5G private network market, the company is expanding into wind power, photovoltaics, and mining. The company's nuclear power plant 5G private network project has signed contracts for 23 nuclear power units, covering nearly 30% of the nuclear power units currently under construction and in operation in China. In the field of wind power, the company's 5G private network project covers over a hundred wind farms, and in cooperation with China Broadcasting Corporation and CGN NEW ENERGY, successfully applies self-developed 700MHz base stations to the construction of 5G private networks for wind power. In the field of photovoltaics, the company has built an integrated cloud-network comprehensive energy platform "Xihe Xingyuan" and successfully completed benchmark projects such as the distributed photovoltaic project of China National Energy in Hainan and the zero-carbon service area of Hainan Jiaotou. In the mining sector, the company breaks through the smart mining market with products and solutions such as 5G private networks, edge intelligence, big data, etc. The energy market space is vast, with thousands of wind power, photovoltaic stations, and mines still needing digital transformation, in addition to nuclear power units not yet covered. Digital Operations: Short-term pressure on the business, negative impact gradually fading In 2023, iResearch experienced the pains of deep organizational changes and significant impact on its industry research business due to weak capital markets and strict budget controls by internet and consumer industry customers, leading to a decrease in revenue compared to the previous year, but the rate of decline in the second half of this year was narrower than the first half. The company believes that there is still huge market demand for digital operations business, and with the gradual fading of negative factors, it is expected that the digital operations business will resume growth in 2024. In the field of intelligent operations services (DSaaS), the company continues to focus on industries such as communications, government enterprises, automobiles, and consumers. In the field of digital communications, the company continues to optimize its business model, with seven additional provinces for internet special zone operations and province customers sharing equity in 2023, bringing the total to 23 provinces; meanwhile, the DSaaS customer base expanded from provincial customers within customer groups to more specialized companies, such as China Mobile Financial Technology and China Mobile Internet. In the field of digital government enterprises, the company won projects such as the Digital Chongqing Credit Infrastructure Database, laying a solid foundation for future government data circulation monetization; in the field of digital connected vehicles, the company uses communication big data combined with AI, privacy computing, and other technologies to create automotive digital marketing solutions, helping expand the customer base in the automotive industry and achieve breakthroughs in joint venture brands, commercial vehicles, and new energy brands.Bing has won projects from multiple clients such as Deep Blue, Guangfeng, Dongfeng Automobile. In terms of digital consumption, the company focuses on brand clients, providing services around member operations, private domain operations, and has obtained the Jingpai member digital marketing project, and continues to provide store insight services for Nike. In the area of Intelligent Decision-making (DI), iResearch has released multiple research reports in fields such as AIGC and digital transformation, gradually forming a significant influence in the digital consulting industry, and winning multiple top-level digital consulting planning projects from clients such as China Mobile Financial Technology, Migu Company, and China Radio and Television.In 2023, the revenue of the smart operation business reached 1.102 billion yuan, a year-on-year decrease of 4.2%, accounting for 14.0% of the total revenue. The revenue from result-based and revenue-sharing models accounted for 24.0% of the smart operation business revenue. Telecommunication Industry: OSS business maintains rapid growth In the OSS business, the company seizes market opportunities in areas such as computing network, self-intelligence network, and ToB 5G network, and continues to promote rapid business growth with industry-leading technology and products. ASIAINFO TECH's self-intelligence network assistant product system (AN CoPilot) effectively supports communication operators to evolve towards L4/L5 advanced self-intelligence networks by building a self-intelligence network assistant exclusive model, cognitive enhancement services, and self-intelligence network assistant toolkit. In 2023, the revenue of the OSS business reached 832 million yuan, a year-on-year increase of 24.9%, accounting for 10.5% of the total revenue. In the BSS aspect, the company is facing challenges brought by customers' increased emphasis on cost reduction, efficiency enhancement, and independent research and development. The company follows the trend and actively utilizes innovative technologies such as AIGC/GPT, edge AI, metaverse, digital twins, etc., to meet customers' innovative needs. The company actively injects intelligence into the business, using AIGC to develop intelligent customer service multimodal interaction, marketing service intelligence, ChatBI, and other products. In addition, in terms of expanding new customers, the company continues to expand its customer base, replace support systems for multiple provincial enterprises, and win projects such as the reconstruction of Shanghai Telecom billing system. In 2023, the revenue of the BSS business reached 4.881 billion yuan, a slight decrease of 0.9% year-on-year. Future Outlook: Based on the "Four Shifts", expand international markets, and continuously provide new productivity Regarding the company's future strategy, Dr. Tian said, "In 2024, there are still many uncertainties in the external economy, and ASIAINFO TECH will continue to seek opportunities and breakthroughs in a challenging environment. Based on promoting the 'one consolidation, three development' business strategy, the company will further implement the development strategy of the 'Four Shifts' to non-telecommunications industries, standard products, integrated hardware and software products, and international markets, providing 'new productivity' for customers, industries, and the whole society." "In terms of the BSS business, the company will continue to inject intelligence into traditional businesses through technological and product innovation to ensure the company's leading position in the BSS market. At the same time, we will continue to expand the boundaries of OSS business and increase the expansion efforts in the ToB 5G network equipment field. In non-telecommunications industries, we will continue to focus on key vertical industries such as energy, government affairs, transportation, grasp policy benefits, strengthen specialized teams, deepen cultivation with the mode of 'standard products + solutions', and achieve scale expansion while creating benchmarks and guaranteeing quality." "Integration is the main theme of the current ICT industry development, and the boundaries between product companies and service companies are continuously being broken. The company will continue to focus on five strategic products: 5G/6G networks, edge intelligence, databases, xGPT, big data, and trusted data circulation, and increase the promotion efforts in key vertical industries such as telecommunications, energy, government affairs, and transportation. In terms of the international market, as the company's standardized product capabilities mature, the company will actively integrate into the international ecosystem, make efforts to explore the Middle East and Southeast Asia markets through overseas channels and leveraging partnerships, and promote the company's 5G private network, O-RAN, edge AI, and other integrated hardware and software standard products to the international market."