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Chinasoft International Achieved 15% YoY Revenue Growth in 2019H1: Core Business Grew Despite Market Challenges, and the Smart Cloud Transformation Set Sail

August 19, 2019 10:51 PM

BEIJING and HONG KONG, Aug. 19, 2019 /PRNewswire/ -- Chinasoft International Co., Ltd. (HKEX: 0354) released its 2019 interim results today.

For the first half of 2019, the Group's business grew steadily. The Group achieved of revenue of RMB 5.538 billion (15% YoY growth) and net profit attributable to owners of the Company of RMB 363 million (1.1% YoY growth). The operating quality improved steadily, and the net operating profit improved by RMB 286 million.

During the first half of 2019, in the face of the slowdown in domestic economic growth and the back and forth trade war between China and the United States, the Group united its efforts, accepted the overcame the challenges, and realized a steady growth in its operating results. The Group's traditional business grew despite market conditions and the cloud intelligent transformation officially set sail. The Group's comprehensive capabilities continued to improve, and for the first time, it was selected as one of the top 100 global IT service providers by Gartner. Furthermore, it was ranked as the third largest constituents of the MSCI China Small Cap Index, demonstrating the value and responsibility of a leading Chinese company.

1. Helping Customers Achieve Digital Transformation – How the Core Business Grew Despite Market Challenges

During the reporting period, the Group continued to cooperate with Huawei, HSBC, China Ping An, Tencent, Alibaba, Baidu and other major customers. The Group relied on high-quality and efficient IT services to help customers realized digital transformation and upgrading, helping the core business grow despite market challenges.

The cooperation between the Group and Huawei at home and abroad continued to deepen. The Group became the first group of Huawei's "Kungpeng Cloud Partner" to jointly provide IT infrastructure and localized software applications based on Kunpeng processor for different industries. The Group improved its service quality and value with SD (Huawei Supplier Development Plan) and became the "IT Supplier of the Year" for the Huawei Consumer Business Group. The Group and Huawei's strategic cooperation with the "Co-sell" model was delivered in Malaysia, Budan, Myanmar, India and Hong Kong, and realized the whole process from business breakthrough to delivery.

The Group's competitive advantages in HSBC's digital transformation and delivery capabilities continue to expand, driving new businesses and contracts. The Group's digital transformation business delivery team achieved independent delivery and successfully landed nearly RMB 10 million worth of management service transformation projects, including personal mobile banking credit card customization system, Apollo, personal business banking system RBB, etc. Several new businesses of the Group have been implemented. The Group launched new online commercial banking platform services for hundreds of thousands of commercial bank customers. The bank realized customized development of Hong Kong commercial bank customer's foreign exchange trading system. Lastly, the Group completed the migration of the front-end UI interface and developed mobile banking for the French Commercial Bank.

The Ping An business deepened its business lay out in the fin-tech market, and increased transformation efforts in cloud computing, big data and AI related area. The Group won the bid for Ping An's data platform project and successfully delivered Ping An's retail banking's Openbank and AIbank projects. Furthermore, the Group successfully implemented smart mobile banking, smart anti-fraud, pocket banking AI manager and other key projects. In terms of smart city, the Group won the bid of smart education "zhiniaozhi" portal and smart searching projects.

The Ali business grew steadily. It covers e-commerce, consumer services, wholesale, digital and entertainment, innovative business, Cainiao, Ant Financial, Ali Cloud, etc. The Group's Alibaba Communications, IoT and other projects were also selected as the pilot for the Ali Independent Delivery Unit. The S2 BPO business won the first place as a supplier. Lastly, the Group achieved the first place in the performance evaluation among 15 suppliers for Gaode for three consecutive quarters.

During the reporting period, the Group's Tencent business expanded rapidly. The Group won bids for Tencent's WeChat test package, WeChat fun content review markup, Youku Cantonese review and many other projects. Furthermore, the Group's interactive customer service team won the title of the "Best Quality Supplier" of Tencent Interactive Entertainment Group (IEG) and expanded the IEG overseas customer service. The Southeast Asian country projects are currently being delivered. Lastly, the Group became one of the four major suppliers of Kugou Music.

During the reporting period, the Group used its advanced AI, big data and other technologies to empower its customers with capabilities, value added service, and information. The Group helped many large banks to realize artificial intelligence in the fields of credit financing, payment settlement, credit card, and risk management, focusing in financial cloud services, big data applications and other scenarios. In the field of collection robots, the Group migrated intelligent customer services using scenario training of big data, through speech recognition, semantic understanding and speech synthesis onto the cloud, realizing Intelligent call, auto answer, scene dialogue and other functions.

2. Smart Cloud Transformation Sets Sail

During the reporting period, the Group seized the opportunity of cloud transformation and created a "full stack cloud smart service". The Group will focus on the development of Jointforce and upgrade the core business with Jointforce ("Z Plan"). Furthermore, the Group will build cloud products based on cloud management platform and scenario cloud applications, and upgrade cloud services based on cloud management services and big data services.

During the first half of 2019, the smart cloud business realized revenue of RMB 969 million, a YoY increase of 30.7%. Gartner recognized the Group in the latest release of "Market Share Analysis: Global Implementation Services 2018," due to the Group's ability to adapt to the development trend of China's digital transformation and seize the development opportunities of cloud service demand.

1. Jointforce: Cloud Integrative Service Entered into Rapid Promotion Period and the Z Plan Will Upgrade the Traditional Outsourcing Model

During the reporting period, Jointforce's business model continued to evolve and formed a cloud ecosystem focused on software development. Currently, there are 430,000 engineers, 25,000 service providers, and 57,000 contractors (companies that are posting jobs) on the platform, accumulating RMB 5 billion worth of jobs posted.

Jointforce's "Cloud Integrative Market" service, which connects government software service needs to IT suppliers, is rapidly being recognized, applied and promoted. Operating results in Nanjing and Xi'an exceeded expectations. The platform has registered more than 2,000 government units, more than 300 service projects, and the project amount exceeds RMB 100 million. The business has started operations in Guangzhou Baiyun and Chongqing Yubei, and have reached cooperation intentions with Chengdu, Changsha and Guizhou.

The Jointforce Platform improved its traditional business offerings to launch its manpower outsourcing business, the "Z Plan". The Group leveraged its years of leading IT experiences (HR management, experiences, delivery quality, industry know-how) to solve the long-tail market's short term, fast response, fragmented IT outsourcing needs. Furthermore, this creates timely response, agile delivery, cost reduction and efficiency enhancement, solving the problem of suppliers' flexible employment and idle resources, creating a SaaS offering. The "Z Plan" already recruited more than 400 IT suppliers, serving nearly 100 customers and completing more than 100 tasks.

2. Cloud Products: Creating Benchmark Clients to The Disrupt Traditional Business Model

During the reporting period, the Group leveraged years of experience helping its customers with cloud migration to create a variety of cloud products, covering cloud management platforms and multiple scenario clouds (office clouds, park clouds, retail clouds, etc.). This created benchmark customers and bring sustainable income for the Group.

In terms of cloud management platform, the Group's "Changping Government Data Cloud" project relied leveraged Huawei Cloud to integrate, clean up and standardize the government information system of the whole district. The "system cloud", "data cloud" and "application cloud" were implemented in batches, and the Beijing Changping District Government big data cloud platform was successfully established. The first phase and second phase projects have been completed.

In terms Office cloud, with its mature products, the Group can provide large and medium-sized customers with Microsoft cloud-based employee lifecycle automatic management product, Launch, enterprise intranet collaborative office platform, Fuse, IT security and compliance process product, Spyglass, and Huawei cloud-based enterprise storage "JFun Box."

In terms of territory cloud and retail cloud, the Group completed the planning and design of the territory cloud, delivered and broke through TCL territory solution. The Group and Huawei reached strategic cooperation in the new retail field to jointly develop the market of wine, clothing, food, electronics and other industries. The Group designed new retail solutions for the general circulation market and platforms for new retail business. Furthermore, the Group deepened cooperation in AI technology fields such as face recognition, image recognition, model training, etc., providing new retail complete solutions for fast-distributing goods circulation enterprises. During the reporting period, the completion and the delivery of new retail projects in Guangdong and Shanxi was highly recognized by customers.

3. Cloud Service: The Cloud Management Service System Is Completed, and the Big Data Business Continued to Expand Its Blueprint

During the reporting period, the Group successfully built an end-to-end service system from cloud consultation, cloud migration, cloud implementation, cloud development to cloud management. It has already completed several cloud migration projects for industry leading clients in over ten provinces in China. The Group also achieves a breakthrough in Hong Kong and Singapore.

The big data business continued to expand its blueprint. The Group expanded its blueprints in major industries including finance, airports, one-card access, e-government, etc. The Group continued to maintain its position in high-tech and automobile industries, and started new businesses in tobacco, real estate, food, and other industries. The Beijing Daxing International Airport Intelligent Data Center project was completed and successfully accepted as scheduled, becoming a benchmark project for airport digitalization and data center construction. Lastly, the Group signed with Shougang Real Estate for its data governance project to provide project data standardization consultation and implemented and deployed intellectual property rights data management software.

Looking into the future, the Group will focus on cloud transformation and software localization opportunities, restructure its consulting-driven, platform-driven, eco-driven enterprise-level business, through internal transformation combined with outside capital support (dual-wheel), and help the Group achieve new strategic development. The Group will work hand-in-hand with customers, ecosystem partners and shareholders to build China's power in the world's digital economy.

About ChinaSoft International Limited (SEHK:354)

Founded in 2000, ChinaSoft International Limited is a listed company on the Hong Kong Stock Exchange with its code of 354.HK. It is a leading China based comprehensive software and information services provider, ranging from end-to-end services of consulting, solution, outsourcing and talent training. It serves clients in manufacturing, finance, telecommunication, high-tech, transportation, energy and also the government. The Company provides global services to over 100 multinational companies with over 60,000 employees located worldwide including mainland China, Hong Kong, Princeton, Seattle, London, Tokyo and etc. For more information, please visit www.chinasofti.com.

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