Key points:

• Show resilience in the face of challenges and continue to improve business performance
• The quality of benefits has been effectively improved, and the gross profit margin continues to improve
• Strengthen the drive of scientific and technological innovation, and lead the development of production and data business
• Strategic layout is being fought in new fields, and growth momentum is gradually showing
• The financial situation is healthy and stable, and dividends continue to increase

Financial Summaries(Reviewed)

Hong Kong, March 27, 2024 /PRNewswire/ -- China Communications Services Corporation Limited (”China Communications Service” or”incorporation” Together with its subsidiaries”conglomerate”) (Hong Kong stock code: 552) announced today its audited annual results for the year ended December 31, 2023.

Operating performance

In 2023, the country accelerated the construction of a digital China and a new type of industrialization. A new round of scientific and technological revolution and industrial revolution developed further, and the process of digitalization and intelligence continued to accelerate. Based on the position of a “next-generation integrated smart service provider”, the Group takes scientific and technological innovation as the lead, deeply explores strategic emerging industries, builds core capabilities, enhances the quality of enterprise development, and achieves good business performance and development benefits.

1. Stable, moderate and positive business performance

The Group adheres to the general line of “value leadership, steady progress, and high-quality development”, giving full play to the advantages of “digital infrastructure builders”, “smart product and platform providers”, “industrial digital service providers”, and “smart operation guarantors” (hereinafter referred to as “the four”) to accelerate the expansion of strategic emerging industries, and continue to improve business performance, operating income and net profit^[1]Steady growth. For the whole year, the Group achieved operating revenue of RMB 148,615 million, an increase of 5.6% over the previous year. Of which, revenue from services^[2]RMB 143,437 million, up 6.1% year over year. Operating profit was RMB 17,257 million, up 8.0% year on year. The gross profit margin was 11.6%, up 0.2 percentage points year on year, for two consecutive years. Net profit was RMB 3,584 million, up 6.7% year on year, and the growth rate continued to be higher than revenue growth. The net profit margin was 2.4%, rising steadily. Free cash flow remained steady at RMB 4,333 million. Return on owners' equity (ROE) was 8.6%, up 0.1 percentage points year over year. Basic earnings per share were RMB 0.518, up 6.7% year over year. In line with the Group's good operating performance and cash flow levels throughout the year, in order to further improve shareholder returns, the board of directors proposed increasing the dividend ratio for the fiscal year ending December 31, 2023 from 40% in 2022 to 42%, and pay a final dividend of RMB 0.2174 per share, an increase of 12.1% over the previous year.

(1) Driven by advantageous businesses, the three major business segments have maintained a good growth trend

For the whole year, the Group's telecom infrastructure service revenue reached RMB 76,137 million, an increase of 4.4% over the previous year, accounting for 51.2% of operating revenue. Among them, the high-value consulting and design business is developing well, which has led to an effective increase in the profitability of this sector. Business process outsourcing service revenue reached RMB 43,551 million, an increase of 1.1% year over year, accounting for 29.3% of operating revenue. Thanks to the Group's software and digital service capabilities, revenue from applications, content and other services maintained a relatively rapid growth rate, reaching RMB 28,927 million, an increase of 16.8% over the previous year, accounting for 19.5% of operating revenue, making the primary contribution to driving revenue growth. Among them, the software development and system support business maintained rapid growth, with a year-on-year increase of 25.1%.

(II) Keeping up with the upgrading of digital demand, the three major customer markets are rising steadily

1. Consolidate the quality of development, and the domestic non-operator customer attraction market is leading to revenue growth.The Group focuses on the digital, intelligent and green development needs of society, and leverages its “consultant+employee+steward”^[3] Service advantages and “platform+software+service”^[4]Capability advantages provide customized and scenario-based solutions for customers in government, energy and electricity, construction, transportation and other industries. The service level and delivery quality are constantly improving, and the customer's market business value is steadily increasing. The annual market revenue from domestic non-telecom operator group customers (“domestic non-operator attraction”) reached RMB 63,433 million, an increase of 6.3% over the previous year, becoming the main engine leading the overall revenue growth.
2. Seizing transformation opportunities, the domestic telecom operator market is growing steadily.The Group insists on “CAPEX+OPEX+ Smart Application”^[5]The development strategy, while improving the operating efficiency of traditional business, focuses on the new needs of domestic telecom operators' computing power construction, industrial digital business and technological innovation transformation, gives full play to the turnkey capabilities and integrated advantages, continues to strengthen service capabilities such as delivery, operation guarantee, and software development, fully supports the transformation and upgrading of operator customers, and creates multiple benchmark projects in cloud, intelligent computing centers, and “double carbon” to achieve win-win cooperation. Annual revenue from this market reached RMB 81,726 million, an increase of 4.7% over the previous year.
3. Focus on key regions and improve the quality and scale of overseas markets.The Group has responded positively to the needs of the digital economy along the “Belt and Road”, strengthened collaborative expansion and ecological cooperation with “going global” Chinese enterprises, replicated domestic advantages and capabilities, provided digital infrastructure construction, new energy construction and intelligent services to key overseas regions and customers, and obtained a number of high-value and high-quality projects. Overseas markets achieved rapid growth throughout the year, with revenue reaching RMB 3,456 million, an increase of 15.3% over the previous year.

2. Strengthen and improve strategic emerging businesses, and achieve new results in transformation and upgrading

In 2023, the construction of digital China entered a new stage of overall layout and comprehensive promotion. The Group continued to cultivate new momentum and advantages in strategic emerging industries such as digital infrastructure, smart cities, green and low-carbon, emergency safety, etc. The total annual contract amount increased by more than 30% year-on-year, accounting for nearly 30% of the total amount of new contracts signed, an increase of about 5 percentage points over the previous year, effectively driving overall business transformation and upgrading and promoting high-quality enterprise development.

In the field of digital infrastructure, the Group actively participates in intelligent computing centers, supercomputing center construction and data center transformation and upgrading, strengthening a series of cloud services such as cloud consulting, cloud migration, cloud integration, cloud operation and maintenance. With deep industry experience, it integrates next-generation digital intelligence and green technology to form a unique “1+2” new digital infrastructure construction solution (that is, it provides full-process, full-professional integrated services, and has the two major technological features of green, low-carbon, and digital intelligence). Data center energy saving technology and full-process digital delivery capabilities lead the industry. It successfully undertook eight domestic “East Digital and Western Computing” hub nodes and multiple overseas data center projects. The annual growth rate of new contracts from this field was about 30%. The “White Paper on the Development of China's Data Center Industry (2023)” was released to contribute wisdom and strength to building a solid foundation for digital infrastructure.

In the smart city sector, with the development of social governance segments and the acceleration of the pace of digital transformation throughout the industry, the Group continues to develop digital government, smart parks, smart transportation, smart education, smart medical care, and digital enterprise digital transformation, etc., to continuously strengthen the marketing team, improve service quality, and give full play to the integrated advantages of consulting design leadership, software development support and general contract delivery, and rely on service capabilities covering the three levels of provinces, cities and counties across the country to achieve integrated development in key industries and key regions, and obtained a number of billion-yuan EPC general contracting projects throughout the year.

In the field of green and low carbon, the Group helps the comprehensive green transformation of economic and social development, seize the investment needs of new digital power systems, explore the layout of new carbon asset tracks, focus on key businesses such as power infrastructure and support, photovoltaic construction, energy use services, carbon management, etc., promote the development and implementation of low-carbon, zero-carbon and carbon-negative key technologies, and create “consulting leading+digital enability+product innovation+engineering construction+operation and maintenance” green and low-carbon solutions throughout the year, building core competitiveness and differentiation advantages in this field.

In the field of emergency safety, the Group is committed to promoting the construction of social and public safety systems, keeping up with customer safety operation and data security requirements, and using artificial intelligence, big data, 5G, Internet of Things and other technologies to build comprehensive emergency management application platforms, production safety risk monitoring and early warning systems, emergency command information systems, cyberspace surveying and mapping, data security monitoring and other products to achieve sensitive awareness, accurate prediction, timely response and scientific decision-making of major risks, and provide high-quality industrial planning and top-level design services to protect urban public safety, industrial production safety, and natural ecological safety throughout the year. The amount of new contracts signed in the field has increased steadily. The Group has leading smart application services and platform construction capabilities in this field, and was successfully selected in the “Smart Safety Emergency Industry Map”^[6].

3. Enhance the core advantages of enterprises and comprehensively promote high-quality development

(1) Strengthen innovation capabilities and build strategic core products

The Group insists on using scientific and technological innovation to drive “inclusive” growth, increase R&D investment around strategic emerging businesses, closely follow customer needs, carry out applied technology innovation, and accelerate the development and implementation of core products. The Group strengthened overall planning for scientific and technological innovation, and laid out cutting-edge technology fields such as 6G, data centers, computing power, blockchain, and artificial intelligence in advance. A total of 16 national standards were prepared throughout the year, and more than 3,000 patents were authorized. The Group has been ranked fourth in the “Top 100 Software and Information Technology Service Competitiveness Companies” for three consecutive years. It has received 49 important scientific and technological awards throughout the year, and its innovation ability and technological strength have been widely recognized by the public.

(II) Adhere to consulting leadership and enhance the value of smart services

The Group has always been customer-centered, continuously building up a team of industry experts and scientific and technological talents, giving full play to the leading effect of “consulting+technology”. With the advantages of “consulting design+general package+integration+operation and maintenance”, the group meets the new needs of customers for scenario-based, intelligent, secure and sustainable digital services. The Group has established a number of industry research institutes to build an “industry center+regional platform” matrix, continuously enhance “industry insight, marketing delivery, solution development, and ecological aggregation” systematization capabilities to provide customers in various fields and industries with higher value and first-class intelligent services.

(3) Relying on deep industry cultivation to strengthen corporate brand strength

The Group serves the national digital China overall plan, continuously deepens the connotation of the “Four”, and strives to create a differentiated and high-quality brand advantage. Through the layout of forward-looking strategic emerging industries, with value creation as the main line, we will strengthen core products and key capabilities, and enhance the leadership and influence of corporate brands in the industry and society. The “China Telecom & China Unicom 5G Joint Construction and Shared SA Construction Project” constructed by the group won the National Quality Project Gold Award. Relying on rich industry experience and digital technology advantages, the Group has built benchmark projects such as digital twins and industrial Internet, which have been reported by mainstream media such as CCTV many times.

(4) Promote reform and digital transformation, and fully unleash development vitality

The Group relies on deepening reforms to enhance endogenous motivation for development and continuously modernize its corporate governance system and governance capacity. Continue to improve the supply chain, property business integration and value enhancement, and strengthen and excel through professional operation. Formulate digital transformation master plans and implementation plans to improve the level of digital management in key areas. Implement a strong talent enterprise strategy, optimize the selection and employment and incentive mechanism, cultivate and expand the team of highly skilled leading talents, technological talents, delivery marketing talents, and craftsman talents, and provide strong support for the stable and healthy development of the enterprise.

Looking to the future

Mr. Luan Xiaowei, Chairman of China Communications Services, said, “Currently, new quality productivity integrating digital technologies such as cloud computing, big data, and artificial intelligence is being formed at an accelerated pace. The digital economy has become an important support for constructing a new development pattern, and the digital transformation of the whole society has brought broad market space. Facing the new situation and new opportunities, the Group strives to build “the main force in digital infrastructure construction, smart city service leader, smart operation and reliable expert”, adhere to value leadership and innovation transformation drive, strengthen the quality and efficiency of traditional businesses, deepen new segmentation scenarios, service forms and trend hotspots of strategic emerging businesses, strengthen technological innovation capabilities, market expansion capabilities, turnkey delivery capabilities, risk control capabilities, capital operation capabilities, continuously improve the core competitiveness of the enterprise and build a “first-class intelligent service and innovative enterprise” to work hand in hand with shareholders, customers and society Write high quality A new chapter in development.”

About China Communications Services

As a next-generation integrated intelligent service provider, China Communications Services provides comprehensive integrated smart solutions for the field of informatization and digitalization, providing telecommunications infrastructure services including design, construction and project supervision; business process outsourcing services including information technology infrastructure management (network maintenance), general facility management (property management), supply chain and product distribution; and applications, content and other services including system integration, software development and system support, and value-added services. The company's main customers include domestic telecom operators and domestic telecom operator customers including China Tower Co., Ltd., domestic non-telecom operator group customers including domestic government agencies, industry customers, and small and medium-sized enterprises, as well as overseas customers. The controlling shareholder of the company is China Telecom Group Co., Ltd. In addition, the company's shareholders include China Mobile Communications Group Co., Ltd., China United Network Communications Group Co., Ltd., State Grid Information and Communications Industry Group Co., Ltd., and China Post and Electrical Equipment Group Co., Ltd.

In 2023, the Group ranked 98th in the “2023 Fortune 500 Listed Companies in China”. It ranked 1,499 in the “2023 Forbes 2000 Global Companies” and was selected as the “2023 Forbes China ESG Innovation Enterprise”. It won honors such as “Most Admired Company”, “Best CEO”, “Best Chief Financial Officer”, and “Best Environmental, Social and Governance” in the “2023 Asia Best Management Team” selection organized by “Institutional Investors”. It won honors such as “Asia's Best CEO”, “Asia's Best CFO”, “Best Investor Relations Company”, and “Best Environmental Responsibility” in the “13th Asian Outstanding Business Awards” organized by the Asian corporate governance magazine “Corporate Governance Asia”. It won the “Gold Award” in the “2023 Treasury ESG Enterprise Award” selection hosted by the financial magazine “The Asset” (“Treasury”).

For further information, please visit China Communications Service's corporate website:

Predictive statements:

The press release contains forward-looking statements and information about the company, its business and prospects, compiled based on the company's beliefs and assumptions and available data. In press releases, some words such as “anticipate,” “believe,” “estimate,” “anticipation,” “plan,” “future,” and other similar words refer to forward-looking statements if they relate to the company or its business. These statements reflect the company's current views on future events and are subject to risks, uncertainties, and assumptions. If one or more of these risk factors become true, or if any related assumptions are later found to be incorrect, actual results may differ from the forward-looking statements in the press release. The Company does not intend to update these forward-looking statements other than in accordance with its continuing disclosure obligations under the listing rules or other requirements of the Stock Exchange.