China Tower Corp Ltd H

At present, at today's event, we have Mr. Zhang Zhiyong, executive director and chairman of the company. Mr. Chen Li, executive director and general manager. Mr. Hu Shaofeng, the company's chief accountant. Today's presentation will be divided into two parts. Firstly, we're going to have the overall performance of the year by the management team, and then we're going to answer your questions. First of all, I'm going to give the floor to Mr. Zhang Zhiyong, chairman of the company, to give you a presentation on the overall performance of the company for the year 2024. Ladies and gentlemen, good afternoon. Welcome and thank you for joining us for China Tower's 2024 Annual Results Presentation. We would also like to express our gratitude for your ongoing support and interest in China Tower. Today's presentation is divided into three parts. Firstly, I will report on the overall performance of the company in the year 2024. Then the business performance and financial performance will be presented by Mr. Chen Li and Mr. Hu Shaofeng, respectively. Lastly, we'll be very happy to answer any questions you have. For the overall performance of the company, As you can see from the slide, it's a summary of our performance for the year as a whole. so as to give you a better idea. Firstly, the overall operating performance was sound with net profit increasing 10%. Secondly, sustained revenue growth supported by multiple pillars. Revenue contribution of two wings business to the total revenue increased to 13.7% as opposed to 12.2% the year before. The company deepened digital intelligence governance, upgraded 230,000 telecom towers to digital towers to serve thousands of industries. The number for the previous year was 210,000. Fourthly, the company empowered business development through application of research outcomes. The R&D expenses increased 40% year-on-year. Fifthly, the company steadily increased shareholder returns. Four-year dividend payout ratio increased to 76%. On the slide, we have six key indicators, as you can find in every year's presentation. Through our joint efforts, we have recorded improvements in all these different indicators. The company's operating revenue in 2024 was RMB 97.77, increasing 4% year on year. Net profit was RMB 10.73 billion, increasing 10% year on year. EBITDA was RMB 66.56 billion, increasing 4.7% year on year. As of the end of 2024, the number of tenants reached 3.785 million and the tower tenancy ratio was 1.81. The level of co-location was further enhanced and the tenant number increased 3.6%. In 2024, the company's cash flow level improved significantly. Net cash flow generated from operating activity for the year was close to 50 billion. In fact, it was RMB 59.47 billion, an increase of RMB 16.63 billion a year. Free cash flow was RMB 17.53 billion, increasing RMB 16.41 billion year-on-year. In 2024, the company seized the opportunities brought by the cyber-powered digital China and dual carbon goals. The development of the various business met expectations. Revenue from the TSP business reached RMB $84.12 billion, accounting for 86% of total revenue. Revenue from the two winds business was RMB 14 billion, with its contribution to total revenue increasing to 13.7%. The business development of one core and two winds has therefore been further fortified. Regarding our TSP business, the company has actively seized the development opportunities brought about by 5G network penetration and coverage. It also continued to improve resource coordination and sharing and enhance professional operational capabilities, allowing the TSP business to sustain steady growth. For TAR business, it continued to deepen sharing and consolidate the foundation for 5G construction. 412,000 5G base stations were built during the year, bringing the total number of 5G base stations to 2.759 million. More than 95 percent of the 5G projects were delivered through site co-location. TSP tenancy ratio increased 2.4 percent year on year. The company also assisted operators in constructing 5G networks intensively and effectively. For DAS business, The company grasped the opportunities brought by 5G network coverage in depth to expand the DS market and gave full play to the advantages of coordinated site entry construction and co-build and co-share, promoting the expansion of the DS market. During the year, 2.53 billion square meters of areas of buildings was added with total coverage reaching 12.69 billion square meters. The newly added coverage for subways and high-speed railway tunnels was 5,243 kilometers with total coverage reaching 29,312 kilometers. Regarding the smart tower business, the company leveraged its vast metro high point resource endowment and its professional operation and iterative development capabilities to further enhance the business, fully serving the Digital China and Beautiful China strategies. Firstly, the company focused on key industries such as emergency response, water conservation, and agriculture, as you can see from the slide, and maintained a leading position in new market shares in key scenarios such as disaster alert and farmland protection. Secondly, the company conducted in-depth research on product innovation, strengthened the construction and deployment of distributed platform, as well as the algorithm research and development for mid- to high-point scenarios. Mr. Chen is going to focus on this point shortly. Thirdly, the company continued. upgrades, strengthen localized technical support teams, and continuously improve its professional maintenance capabilities. Fourthly, the company promoted in-depth industry integration and strengthened cooperation among industries, universities, and research institutes. Revenue from the Smart Tower business totaled RMB 8.91 billion for the year, an increase of 22.4 percent in a year, with overall business achieving rapid growth. As for the energy business, the company centered around its core business such as battery exchange and power backup and focused on key industries and deepened the refinement and optimization of business operations. Firstly, the company continued to build strong advantages with optimized products. expected the promotion of next generation battery exchange products. Secondly, the company upgraded the platform to strengthen support. The company continued to iterate the battery exchange business and power backup platform. Thirdly, the company refined operations to uncover value, deepen full lifecycle asset management, and implement user operations with categorized management to enhance loyalty. Fourthly, the company provided quality services to enhance capabilities, optimize its intelligent customer service, and build a butler service system to improve customer satisfaction. The energy business generated revenue of RMB 4.48 billion for the year, an year-on-year increase of 6.2 percent, and continuously built development momentum. In 2024, the company continued to deepen reform to inject new impetus to high-quality development. Firstly, the company deepened the reform of systems and mechanisms, attached great importance to the introduction and training of talent, and optimized the incentive mechanism for talent allocation. regional reform to stimulate the vitality of the smallest production and operation units at grassroots level. The company also accelerates deployment in strategic emerging industries. increased the revenue contribution of emerging business and actively expanded emerging areas such as DAS plus Baidu and edge computing. Thirdly, the company accelerated the development of digital transformation, implemented digital transformation upgrading in key areas such as one code for assets, intelligent operation and maintenance, and energy and carbon link management while accelerating the construction of digital enterprises. The company continued to improve its technological innovation system and speed up the building of technological strengths. Firstly, the company focused on providing technological support for key areas such as AI green and low carbon DS and edge computing network. The company accelerated the application of innovative achievements. Secondly, the company focused on the transformation of research outcomes. The number of granted patents for the year increased by 68 percent compared with 2023, with five international standards attained and the outcome volume of scale promotion rising by 113 percent year on year. Thirdly, the company focused on innovation mechanisms and further promoted the four-list management mechanism. In 2024, the R&D investment and the number of R&D staff grew by 40 percent and 60 percent, respectively. compared against 2023. Fourthly, the company focused on collaborative and innovative synergies, established a science and technology association and six science and technology innovation centers, and cooperated with integration and innovation with scientific research institutions, renowned higher education institutions, and leading enterprises to establish a quality innovation ecosystem. As you can see from the slide, the companies always attach great importance to returns to our shareholders and has adopted a proactive dividend policy that insists on sharing the fruits of our business development with all shareholders. One thing I'd like to note here, The company recently has the share consolidation which came into effect on February the 20th with every 10 shares being consolidated into one share. So the number of shares showed here is the result of consolidation. So upon this, the final dividend for the year 2024 is RMB 0.30796 per share. Together with the interim dividend already paid, the total dividend for the year is RMB 0.41696 per share, an increase of 11.5 percent from 2023. The dividend payout ratio for the year rose to 76 percent. Looking ahead, we will continue to accumulate development momentum, improve profitability, and create greater value for shareholders. The harmonious coexistence of the economy, society, and the environment is of great concern to the company, and the company has integrated the concepts of social responsibility into development. Firstly, the company actively promoted green transformation and development, sought to reduce investment carbon emissions through the policy of co-build and co-share of base stations. It promoted the upgrading of communication towers to digital towers and used the integration of digital intelligent technologies to empower prevention pollution prevention, ecological protection, and other fields. Secondly, the company enhanced social welfare, carried out emergency rescue work for extreme weather conditions, ensured the prompt establishment of the communication lifelines, improved the construction of communication infrastructure in villages and remote areas, and contributed to rural revitalization through digital empowerment. Thirdly, the company built a solid foundation for integrity and co-governance. Based on a governance system with clear rights and responsibilities, the company continuously improved risk and internal control mechanisms, disclosed information in a true, accurate, and complete manner, and protected the rights to information for all investors. The company will continue to adhere to the philosophy of shared development, deepen the implementation of the one-core and two-win strategy, and strengthen its core competitiveness. In terms of the TSP business, the company will closely follow the progress of digital infrastructure construction and coordinate resources to promote the continuous and stable development of the TSP business. such as a signal upgrade and broadband border. And we'll also take advantage of the initiative of the continuous development of 5G. and also the commercial deployment of 5G and its application industries. At the same time, we are also going to focus on the Two Wings business. The company will actively implement digital intelligence governance and green and low carbon transformation development to scale up the business rapidly and create greater value for our shareholders, customers, and society. That wraps up my part. Now I'd like to invite Mr. Chen Li to present the details of the company's business performance. Thank you. Thank you, Mr. Chairman. I will now present the company's business performance in 2024. This table shows the revenue and changes in our business segments as well as key operating data which will be explained in further detail shortly. In 2024, the overall development of various businesses was sound, and the revenue growth pattern supported by multiple PIDAs continued to consolidate. Operating revenue reached RMB 97.77 billion, increasing 4% year-on-year. In terms of revenue structure, the TSP business contributed 52% of revenue, of which the tower business continued to develop stably with an incremental contribution of 17.7%, achieving revenue growth by 0.7 percentage points. The DAS business developed rapidly with an incremental contribution of 34.3%, representing a growth of 1.4 percentage points. The incremental revenue contribution of the two-way business was 50.3 percent, of which the smart tower business contributed 53.3 percent, driving revenue growth by 1.7 percentage points. The incremental revenue contribution of the energy business was 7 percent, a boost of 0.3 percentage points. Next, I will explain the developments of our key business segments in detail. Regarding the tower business, the company focused on addressing customer needs. Firstly, we strengthened the collaboration mechanism with customers and discussed solutions and delivery and rental plans with customers. Secondly, the company adopted innovative digital approaches to develop and deploy a 3D indoor and outdoor co-simulation system, enabling the price implementation of the operator's network plan. And thirdly, based on the characteristics of customer needs, the company commenced special projects for high-speed rail implemented broadband coverage in border areas, and provided services, as well as conducted special projects to cover rural areas to create incremental demands for construction. Revenue from the tower business for the year reached RMB 75.69 billion, an increase of 0.9 percent. As of the end of 2024, the number of TSP tenants reached 3.544 million, an increase of 3.5 percent year on year. The TSP tower tenancy ratio increased from 1.68 to 1.72 year-on-year as a result of further improvements achieved through co-location. As for the DAS business, we seized opportunities from the introduction of national policies and focused on key business scenarios, as well as leveraged the advantages of coordinated site entry and construction and the co-build and co-share to provide better services to support the DAS market segment. Besides, we continue to strengthen product innovation capabilities and actively promoted new solutions and new products such as active plus passive combined solutions and shared micropower repeater to further explore the potential in the market and expand the business scale. At the same time, aligning with customer network construction strategies, we rolled out special projects such as coverage in lifts and underground car parts and high-speed rail 5G upgrade to continuously improve the level of professional services. Revenue from the DA's business for the year totaled RMB 8.43 billion, a year-on-year increase of 18.1 percent, showing strong growth momentum. Concerning the smart tower business, we fully capitalized on our resource endowment and core capabilities to continuously strengthen product innovation and enhancement capabilities and deepen development focus on key industries. we have upgraded 230,000 telecommunication towers to digital towers, tapped key industries such as land, environmental protection, agriculture, emergency response, water conservation, and transportation, as well as stepped-up development in the spatial digital governance sector to further consolidate its leading position in niche market. In 2024, The smart tower business maintained rapid growth, of which revenue from the tower monitoring business reached RMB 5.54 billion, a year-on-year increase of 17.2%, accounting for 62% of the total revenue of the smart tower business. Revenue from the tower sharing business reached RMB 3.37 billion, a year-on-year increase of 31.9%. In 2024, the company continued to improve the core capabilities of the smart tower business in terms of platform, algorithm, product, service, cooperative innovation, etc. Developed momentum continued to strengthen. Firstly, the company continued to build the foundational capabilities of the platform, constructed a national tower monitoring distributed platform, and enhanced the service capabilities of the platform. Secondly, the company leveraged 360 million unique sample library with mid to high point capabilities to effectively serve algorithm training and optimization, provided over 350 plus distinctive algorithms with mid to high end point characteristics catering for various AI analysis scenarios and further improving the accuracy of the algorithm. Thirdly, the company continuously enriched and improved product capabilities launched a batch of solutions that leverage the company's advantages and establish a headquarter province two-level R&D system to address customer needs in a timely and efficient manner. Fourthly, the company continued to improve the companion service capability and leverage the large operation maintenance system to build a professional network management platform to strengthen the ability to accurately diagnose incidents, dispatch tasks in real time, and handle incidents promptly. Fifthly, the company continued to strengthen our innovation capability, released our matrix large model, and worked with universities and research institutes to develop core technologies in areas of spatial digital intelligence, governance, et cetera. Regarding the battery exchange business, the company continued to deepen its operational focus on courier and delivery industries, accelerate the product upgrades and iterations, deepen user operations, enhance service capabilities, and steadily expand the user base. As of 31st December 2024, the company had approximately 1.304 million battery exchange users, an increase of 159,000. year on year, and continue to maintain its leading position in the battery exchange market for low-speed electric vehicles. At the same time, the company actively seized opportunities presented by national policy on safe charging. It leveraged its capabilities to accelerate the deployment of community charging facilities economically and efficiently, provided charging services for lower-speed electric vehicles for residents, and continued to expand the battery exchange user base. The battery exchange business achieved revenue of RMB 2.5 billion for the year, increasing 20.9% year-on-year and continue to maintain its market leading position. With respect to the power backup business, the company focused on key industries, such as telecommunications and finance, and typical scenarios to expand to more high-quality clients. Taking the power backup business as an entry point, the company explored needs related to monitoring and management, energy consumption management, and maintenance services, and provided customers with comprehensive solutions for the power backup-plus industry, such as to build an energy battery service brand. The revenue from the power backup business totaled RMB 1.66 billion for the year, a year-on-year decline of 4.6 percent. Excluding a one-off impact on revenue from the FISU World University Games in 2023, it actually delivered an increase of 5.4 percent year-on-year. Now, Mr. Hu Shaofeng will introduce the company's financial performance in 2024.

Thank you, Mr. Chen.

Now, let me walk you through the company's financial performance in 2024. This table shows our key financial indicators in 2024. In 2024, the company's overall performance was sound, with revenue growing steadily, profitability continuing to improve, cash flow significantly improved, and capital structure remaining sound. 2024, the company carried out a special project to reduce cost and increase efficiency and strengthen benchmarking evaluations and lean management of individual sites and projects. Operating expenses for the year totaled RMB 81.44 billion, increasing 2.4% year-on-year, with the operating expenses-to-revenue ratio at 83.3%. down by 1.3 percentage points year-on-year. In terms of depreciation and amortization, the company actively met customer needs aligned with business development and capability building needs to efficiently manage and control investment and continues to strengthen the life extension and reusing of existing assets. Total depreciation and amortization for the year was RMB 15.23 billion, increasing 2.4 percent year-on-year. In terms of repairs and maintenance expenses, the company continued to carry out safety hazard inspection and rectification for assets while promoting the upgrade and skilled application of intelligent operation and maintenance and functions, which further improved the robustness of assets and efficiency of assets maintenance. The repairs and maintenance expenses amounted to RMB 6.99 billion for the year. Employee benefits and expenses, the amount was RMB 9.57 billion for the year. increasing 8.2 percent year-on-year. This was mainly due to the introduction of middle and high-end scientific and technological talents, as well as regional managerial personnel for business development. In terms of site operations support expenses, a total of $5.5 billion was incurred for the year, increasing 2.1% year-on-year because the company has been actively advancing and cultivating digitalization capability infrastructure of sites. IT support expenses related to site operation were incurred over last year. Other operating expenses for the year, a total of RMB $9.14 billion was incurred, a year-on-year increase of 3.8% mainly due to this. support the development of the two-way business, business development expenses such as localized technical support, service, et cetera. Adhering to the efficiency-oriented principle, the company plays great effort in cost benchmarking, as well as in reducing costs, increasing efficiency, and improved lead management. Open profit reach RMB 16. in 2024, a year-on-year increase of 12.6 percent. The company net profit reached RMB 10.73 billion, a year-on-year increase of 10.1 percent. In 2024, the company adhered to the total CapEx plus project investment management model to align with the overall needs of business development and capacity building. It effectively applicates CapEx of RMB 31.94 billion for the year, a year-on-year increase of 0.4 percent. CapEx for new site construction and augmentation totaled RMB 17.97 billion, a year-on-year increase of 5.4 percent. As the company meet the new site construction needs from operators and 5G upgrade requirements for high-speed railways and subways, capital expenditure for site replacement improvement reached RMB 6.84 billion, decreasing 19.9% year-on-year, mainly attributable to the large-scale implementation of battery backup, power backup in key scenarios, as well as safety hazard inspection and rectification of assets. CapEx for smart tower energy business facilities amounted to RMB 4.78 billion, increasing 6.9 percent year-on-year. In 2024, as the new phase of commercial pricing agreements fully implemented, the company actively promoted the normalization of payment collection from TSP customers, and at the same time strengthened the credit rating and outstanding fees management of business customers. Consequently, cash flow was improved significantly. The net cash flow for operating activities for the year amounted to RMB 49.46 billion, an increase of RMB 16.63 billion year-on-year. Fair cash flow reached RMB 17.53 As of the end of 2024, the company's liability to asset ratio was 30.9 percent and its net gearing ratio was 31 percent. In 2024, the company will continue to deepen the one-core and two-win strategy, further build up our operating system that is professionally intensive, delicate, efficient, and digitized, enhance lean management capabilities. and drive continuous improvement in operation efficiency and effectiveness to push forward sustainable and healthy growth of the company, ultimately to create greater value for shareholders. Thank you.