ChinaSoft International (00354) 2024 Annual Performance Announcement: Continuous Investment in Cloud Edge Full-stack AI Full-stack AI Business Revenue is Beginning to Take Shape.

On March 28th, 2024, Chinasoft International Limited (00354) announced its annual performance report for the year. During the reporting period, the company achieved a revenue of 16.951 billion yuan, with the full-stack AI products and services showing strong growth, contributing revenue of 957 million yuan, accounting for 5.65% of total revenue. During the reporting period, the company achieved an adjusted profit of 650 million yuan, with an annual profit of 511 million yuan, proposing a dividend of 0.533 Hong Kong cents per share. The company disclosed its full-stack AI products and services business for the first time, which includes a complete AI technology stack ranging from computing power infrastructure operation, data governance, model training, inference deployment, edge intelligence, cloud intelligence to AI native ERP and agent industry applications. After years of continuous strategic layout and firm investment in the full-stack AI field at the cloud-edge-end, the company's full-stack AI business has begun to take shape, forming benchmark demonstration cases among top clients in industries such as finance, energy and manufacturing, showing a vigorous growth trend with synergistic gains. The company will firmly promote the transformation of full-stack AI at the cloud-edge-end, continuously disclosing the latest progress. Since launching the SP301 strategic plan in 2020, targeting cutting-edge fields such as cloud intelligence, edge intelligence, and application intelligence, the company has intensively invested in building core capabilities and introducing external high-quality resources, seeking a second growth curve, promoting the company's medium and long-term strategic layout. By 2024, the plan has been executed to SP304, with the company's accumulated investment in full-stack AI products and services exceeding 1.5 billion yuan, achieving the preset strategic goals in the cloud-edge-end full-stack AI layout and preliminary success. The company is actively deploying the "1+3" strategy, including cloud intelligence, Hongmeng intelligent IoT and digital twins/enterprise digital transformation and ERP consulting implementation/AIGC business, which has formed an organic business entity around the full-stack AI core. Since 2017, the company has signed a strategic cooperation agreement with Huawei, becoming the first "Huawei Cloud Strategic Cooperation Partner" and establishing the CIG Cloud Intelligent Business Group, building a strong foundation for full-stack AI on the cloud; In 2021-2022, the company signed a cooperation agreement on the Hongmeng ecosystem with Huawei and Deep Capital, establishing AIG intelligent IoT legion, ABG intelligent IoT group successively, forming a product R&D "sharp knife" + industry solution "legion" + professional delivery "stronghold" lineup; In 2023-2024, the company established the AIGC research institute, the model factory business unit, the industry digitalization solution legion, the digital power technology innovation center, the financial AIGC legion, the financial AI laboratory, Chinasoft International Consulting, GBU International Business Department, accelerating the industry's AI application and internationalization with specialized teams, achieving success in the power industry and expanding achievements continuously, further breakthroughs in fields such as digital government and intelligent transportation. The company invested in Lightboat Intelligent Technology Co., Ltd., strengthening financial AI products and large model-driven Agent intelligent system platform capabilities; investing in Hangzhou Shuopan Intelligent Technology Co., Ltd., relying on its leading 4A architecture and digital platform driven by large data models (EIMOS), to more efficiently carry out AI-assisted domestic ERP implementation development and intelligent software factory services. At the same time, cooperating with Huawei and local governments to build a domestic computing power "new triangle" model. Cloud-edge-end full-stack AI synergistically promotes each other, benefiting each other. The comprehensive access of Digital Power Technology Innovation Center to DeepSeek promotes cloud business; the cloud business has maintained the first position in the Huawei Cloud ecosystem partner for a long time, also providing a significant potential customer space and access channel for DeepSeek and other AI native applications, the comprehensive CTSP cloud services, model factories, and next-generation intelligent software factory services provide comprehensive support for customers' full-stack deployment of AI systems. The market hotspots of the unique HarmonyOS platform and the coordinated achievements of the cloud-edge, the crucial strategic layout of industry value chains, such as the cloud-edge AI and enterprise digital transformation, are key strategic positions for the industry value chain. Continue to maintain the first share of the Huawei Cloud business ecosystem, closely reaching AI value customers through cloud intelligence business. Cloud serves as the crucial foundation for AI computing power and model access. The reporting period is the seventh year of strategic cooperation partnership between the company and Huawei Cloud. The company has consistently implemented the strategy of binding Huawei with 10%. In the reporting period, the revenue from public cloud reached 1.848 billion yuan, with the Core public cloud performance increasing by 25% year-on-year, of which the Medium and Long Tail performance increased by 31% year-on-year, maintaining the first place in the ecosystem for seven consecutive years; the cloud integration performance and the number of projects both lead the Huawei Cloud ecosystem market. The company was awarded the only heavyweight award "Huawei Cloud Ecological Rock Award" at the Huawei Cloud Ecological Conference. Using the Huawei Cloud business as a bridge for direct expansion, distribution, and continuous operation, the company has extensively reached potential high-value DeepSeek customers, linking AI-related products and services comprehensively. As a core partner of Huawei Cloud CTSP, the company has provided services to over 300 customers through 10 CTSP professional services, launched 3 cloud baseline solutions, and cooperated with Huawei Cloud to release solutions such as "Enterprise Cloud Migration Service" and "Data Governance Professional Services", landing over 200 CTSP projects in industries such as energy, steel, and pharmaceuticals, collaborating with top clients to co-create scenarios for large model applications. Leveraging the unique leading advantages of the open-source HarmonyOS platform and the integrated hardware and software products, mastering the core root technology of edge intelligence. The company established the HarmonyOS ecosystem team in 2019, signed a HarmonyOS ecosystem cooperation agreement with Huawei in 2021, invested in and established Shenzhen Kaihong Digital Industry Development Co., Ltd., the AIG team, and the ABG group in the same year, rapidly forming a "sharp knife-legion-stronghold" formation. The company is a platinum donor of the Open Atom open-source foundation and a Class A donor of the OpenHarmony open-source project. The company, together with Deep KaiHong, has 2 PMC members and 14 Committers in the community, with a cumulative total of 404 intellectual property rights, contributing over 4.25 million lines of code to the open-source HarmonyOS community, ranking first in open-source community code contributions apart from Huawei. In the southward direction, the company has completed the adaptation of 80 chipsets, serving over 500 categories and 400+ brand customers, with the quantity of connected devices reaching millions; it is the only HarmonyOS ecosystem partner except Huawei in China. These were the first snippets of a detailed financial results report from a company. Let me know if you need more information.The member unit with the highest commitment, strongest technology and greatest contribution.During the reporting period, the company, in cooperation with Shenzhen Kaihong, continued to make breakthroughs in the open source Hongmeng technology. KaihongOS became the first open-source Hongmeng security operating system distribution certified by the Ministry of Public Security. The company's independently controllable enhanced LiteOS-M security kernel, which underwent formal verification, was the first in China's IoT operating system kernel field to receive the EAL5+ security certification from the China Network Security Review Technology and Certification Center (CCRC), becoming the first product in the industry to receive national-level authoritative certification. KaihongOS made breakthrough progress in hard real-time, supporting single-core multiple-core hybrid deployment, and was the first to achieve an interrupt response + task switch delay 3 microseconds in the operating system, making KaihongOS applicable in industrial scenarios with extremely low latency jitter. It was the first to launch cameras, drones, Siasun Robot&Automation, and AI PC products based on open-source Hongmeng, the first to achieve full ecosystem integration with HarmonyOS Next, and the first to achieve kernel-level support for star-mesh connectivity, continuously proving the industry-leading position of open-source Hongmeng operating system. During the reporting period, the company collaborated with Shenzhen Kaihong to create "national key tools," deeply participating in the construction of Hongmeng standards and basic platforms in the military, defense industry, power, and low-altitude economy sectors. It has created a secure and trustworthy digital foundation in key national areas and has become a nationally-promoted, independently controllable distributed operating system in related fields. The company, in collaboration with Shenzhen Kaihong, is shaping the "city's pioneers," actively promoting innovation in urban renewal, smart transportation, smart emergency response, environmental protection, and water management through "Hongmeng+AI" scene innovation and smart terminal ecosystem construction. The world's first open-source Hongmeng water terminal has achieved closed-loop water and rain monitoring; "Fire Hong, Construction Hong, and Ji Hong" have made breakthroughs in industry scenarios; and "City Hong" has successively created benchmark cases in Tianjin, Xi'an, Jinhuapujiang, and Baoan, Shenzhen. During the reporting period, the company deeply integrated into Huawei's pure-blooded Hongmeng ecosystem in native Hongmeng applications and meta-services, closely collaborating with Huawei's terminal and cloud teams to serve more than 400 companies and provide Hongmeng migration for more than 500 applications. It has launched more than 7,000 meta-services, ranking first among Huawei service partners. The company integrates Hongmeng OS, Ascend AI computing power, and AI agents to create a smart IoT base for "end-edge-cloud" collaboration, promoting the transition of bottom-layer data from "perception" to "generation" stage to provide massive high-quality data for AI model training. It has formed a software and hardware integrated solution covering "end-edge-cloud-network-use." The company has launched more than 20 Hongmeng-based smart terminal devices, achieving real-time data feedback of millions, and Saiming Zhilian Sensing Platform has accumulated industry knowledge assets, serving as the "data fuel" for large-scale model training in the industry. In more than 30 scenarios such as highways and urban lifelines, the efficiency of device interconnection has increased by 40%, providing high-quality data sources for AI applications and connecting the "perception-decision-execution" full-stack AI loop. In the rich device field, the company has successively launched solutions based on the open-source Hongmeng operating system for cameras, drones, Siasun Robot&Automation, and Hongmeng AI PC products. Among them, the new Hongmeng AI PC based on domestic chips has entered the market trial phase. Accelerating AIGC innovation and Agent Factory layout to promote the integration of advantages in AI computing power, models, data, and applications Since 2022, the company has established the AIGC Research Institute, built the Digital Power Innovation Center, Intelligent Computing Center, and Financial AI Laboratory, rapidly developing core capabilities in basic computing operation, data modeling, and industry Agent application. During the reporting period, the company, together with Huawei and Beijing Changping Future Science City, invested in the construction of the Digital Power Innovation Center to explore a new model of collaborative innovation where Zhong Ruan International acts as an ecological organizer, Huawei provides advanced productivity, and the government supports policies, establishing a new benchmark in domestic computing power. The innovation center deeply integrates DeepSeek large models, relying on 50P Ascend computing power, building core components of Huawei Cloud and enterprise IT applications, providing customers with three innovation environments: AILab, Enterprise Core Lab, and IDSLab to develop AI scenarios, localize innovation in enterprise core business systems, integrate innovative power applications, and facilitate the conversion and utilization of more cutting-edge technologies, helping the company gain a competitive advantage in the field of AI applications for electric power energy and becoming a global benchmark for the Huawei Electric Power Digitalization Legion's Power Intelligence Computing Center and the Huawei Computing Product Line Industry Intelligent Computing Center. At the model level, Model Factory has been upgraded to version 2.0 based on the Ascend architecture. Following the business model of "model service + Agent product," it provides full lifecycle services from data governance, model training to deployment verification, helping customers quickly build and continuously optimize AI models. The company independently developed a large model operation management system, providing computing operation and scheduling services, already implemented in Guian and Nanjing, successfully connected to Beijing and Shenzhen's smart city computing platforms. At the product and application level, the company continuously upgrades JointPilot (Lingxi) Artificial Intelligence Application Platform, launches AI application construction tools deeply integrated with DeepSeek, and cooperates with Guangzhi Zhou to introduce multiple Agent products in the financial sector. During the reporting period, several products from the "Wen" series successfully entered Huawei's cloud store and product catalog, with the "People's Affairs and Data Assistant" included in Huawei's network solution catalog. The company successfully won the bid for the Huawei Cloud AI native application engine procurement project, implementing more than 90 large model application projects, covering over 200 enterprises in finance, energy, steel, and other fields. Leveraging its close ties and long-term capabilities with Huawei computing and cloud, Ascend + large model breakthroughs have completed over 50 customer Ascend adaptions and verified practical applications in over 40 large model projects. During the reporting period, the company has created more than 30 benchmark cases in industries such as finance, energy, government, manufacturing, audit, and healthcare, deploying more than 80 intelligent products, covering over 50 cities nationwide and overseas markets such as Hong Kong and South Africa. Additionally, the company has deep cooperation in AI lighthouse projects with top clients in sectors such as energy and power, government affairs, finance, audit, and healthcare.Provide services in the financial sector to state-owned banks and top-tier city commercial banks for the AIGC project; in the government affairs field, collaborate with Huawei's unified network legion to achieve breakthroughs in hotline citizen sentiment analysis and intelligent medical insurance solutions in cities such as Shenzhen and Yancheng; in intelligent manufacturing, launch solutions for mine integrated management and theft prevention and mining; in the audit field, win bids for projects from CNOOC Limited, Hua Xia Bank, and receive the highest rating from the Information and Communication Academy; in the medical field, implement the Medical Research Assistant in a top-tier hospital in Chengdu. The company jointly releases solutions for urban governance and intelligent electricity demand management with Huawei, and has received awards such as the second prize in the Ministry of Industry and Information Technology's Innovation and Entrepreneurship Competition and the "Dingxin Cup" from the Information and Communication Academy.Strengthen AI native ERP consulting implementation and self-developed service capabilities, achieve breakthroughs in high-value areas of digital transformation The company continues to build a high-end talent pool of enterprise digital transformation, ERP development and delivery, as well as localization self-development/migration consulting implementation and project management talents, continuously building AI native ERP consulting implementation and self-developed service capabilities. During the reporting period, the company increased investment in developing industry-specific versions of core enterprise operating systems, combining industry high-value application scenarios. Based on standardized product functionality modules, the company developed industry-specific solution plugins, tools, pre-fabricated blueprint libraries, template libraries, configuration lists, etc., to shorten implementation cycles. Tailored functional modules and business processes for industries such as power and energy, incorporating industry best practices to ensure consistency between operations and finance. Integrated cutting-edge technologies such as AI and big data to provide intelligent analysis, forecasting, and decision support functions, supporting automated business processes and intelligent operations. Fully adapted to the localization of domestic hardware and software environments. Through modular design, open architecture, and microservices technologies, the company supports functional extensions and system integration to meet the needs of future business expansion and technological upgrades. The company has engaged in joint innovation with outstanding customers, not only helping enterprises solve technical challenges in replacing ERP systems with domestic alternatives, but also providing strong support for their digital transformation, becoming an important partner for enterprises to achieve digital transformation in the era of AI. During the reporting period, the company successfully delivered a self-developed ERP prototype system development project for a major power central enterprise, becoming the first service provider to provide consulting and implementation services for core enterprise operating systems from partners to customers. The company participated in the core module of an ERP implementation project for a major energy central enterprise, supporting the customer to strengthen strategic control. Based on unified data standards, process norms, and technical architecture, the project promoted the optimization of enterprise resource planning systems, integration of business and finance, coordination of operations and production, and upstream and downstream collaboration, achieving overall optimization of the value chain. The company provided supply chain data governance services for a major oil and gas central enterprise, establishing a data warehouse for the management of overseas investment enterprises, providing planning, design, and implementation services for management reporting systems. The company continued to deepen cooperation with leading energy and power industry central enterprises such as PetroChina, State Grid Corporation, China Energy Investment Corporation, and Southern Power Grid, and initiated projects such as the integrated planning and scheduling of China Petroleum Planning Institute and the ERP management platform of China Coal Technology and Engineering Group. Continuously landing benchmark projects in the fields of energy, power, logistics, manufacturing, and other areas. The company has also increased investment in the construction of a large-scale complex engineering project delivery method system based on generative AI technology, establishing an organization, method, and system to support core enterprise operating systems through ASE (Agentic Software Engineering). This was completed to ensure the efficiency and quality of delivery, improve ROI through collaboration between humans and intelligent agents. Agentic CDM (Agentic Chinasoft International Delivery Methods) is an intelligent delivery methodology that covers the entire project lifecycle, focusing on pain points such as data governance, requirement communication and training, document management/knowledge management/template generation. Through AI technology and automation tools, it achieves end-to-end efficient delivery from requirement analysis to system launch for high-value links. The method system combines software package-driven, platform customization-driven, and platform integration-driven modes, and through practical feedback and continuous iteration, it has formed a standardized, reusable delivery framework covering the entire value chain. Through the Agentic CDM delivery method system, Chinasoft International has not only improved the efficiency and quality of project delivery, but also provided an intelligent and standardized delivery framework for enterprises, thereby becoming an important support for them to achieve digital transformation in the era of AI. Deepening overseas layout, steady improvement in business expansion and delivery capabilities During the reporting period, as a strategic partner of Huawei Cloud overseas, the company deepened its expansion in the Middle East and Southeast Asian markets with Hong Kong as a bridgehead, establishing a systematic business expansion and delivery service capability in key regions such as Asia-Pacific. The company successfully completed the Kai Tak Sports Park project in Hong Kong, achieving full visual, controllable, and manageable scenarios in the sports park, enhancing venue intelligent operation and safety capabilities; and won the bid for the HK$410 million Hong Kong Police Strategic Information Project, setting a benchmark for government-owned controllable IT projects. The company, in cooperation with Saudi 3F Technology, established a joint venture company, Joint Advanced Technologies (JAT), which signed a contract with Huawei Cloud, marking the official launch of its business in the Middle East. Future Outlook: Foundational businesses have bottomed out and are rebounding, driving the company's transformation and development with high-growth full-stack AI business Looking ahead, the company will further consolidate its foundational business, applying AI tools to improve quality and efficiency. AI recruitment agents and AI operations agents have been launched internally, significantly improving operational efficiency in related areas to ensure the steady development of foundational businesses. The company has already achieved initial results in the full-stack AI product and service market, establishing a technological advantage and focusing on markets in industries such as power and energy, finance, government, manufacturing, and healthcare, leveraging the company's long-term industry advantages combined with cloud, AI, Hongmeng, and ERP capabilities to achieve breakthroughs and comprehensive layouts. The company focuses on key regions such as Beijing, Shenzhen, Chengdu-Chongqing, Hangzhou, and Xi'an, developing comprehensive service capabilities from basic perception networks, resilient city construction, government management services, local industry services to low-altitude economic development. The company will further consolidate its advantages in the full-stack AI field at the cloud edge, continuing to invest in cloud, AI native, Hongmeng smart IoT, and domestic ERP domain to ensure high-speed growth in revenue from full-stack AI products and services, further supporting foundational businesses and helping the company transition to a full-stack AI enterprise. The company has been ranked in the top 15 of the Top 100 Chinese Information Service Enterprises for 11 consecutive years and consistently ranks in the Gartner Global IT Services Top 100 list. In the future, the company will adhere to technological innovation and ecological coordination, continuously enhance global competitiveness, and strive to become a leading full-stack AI enterprise.Leading full-stack AI product and service provider, creating long-term value for shareholders."Bonjour, comment a va?" "Hello, how are you?"