China Communicationsrvi-h Stock

Good afternoon, ladies and gentlemen, I'm Terence from China Com Service. On behalf of the management, I would like to welcome you to our company's 2026 interim results presentation. The presentation will be conducted in Chinese with simultaneous interpretation and I will host a Q&A session later. [Operator Instructions]

Please allow me to introduce the management present here today. Mr. Luan Xiaowei, Executive Director and Chairman; Mr. Shen Aqiang, Executive Director, Executive Vice President and CFO; Mr. Zhang Hao, Executive Vice President; Mr. Gui Xiaoqing, Executive Vice President. Due to other important duties, Mr. Cui Zhanwei, President of the company is unable to attend the person-in-person in Hong Kong. We hereby apologize to everyone.

Now I would like to give the floor to our Chairman, Mr. Luan Xiaowei to present to you the 2026 interim results overview.

Good morning, good afternoon, ladies and gentlemen. The result presentation is divided into 3 parts. First, I will introduce the overall of our results. In the first half of 2026, innovation in AI technology has entered an unprecedented active phase. The company focused on deepening its presence and strategic deployment in high-value business and continue to advance modernization of our governance systems and capabilities and we have shown the following features.

First, taking active initiative and adapting to changes maintaining overall stabilities in fundamentals. Secondly, continuously strengthened quality and efficiency improvements, providing support for profitability. Third, forward-looking deployment delivering initial results of which growth engines driving transformation. Fourth, AI-driven dividends materializing with computing infrastructure business, achieving robust growth. Fifth is the strategic positioning of one positioning for roles, helping us to seize important opportunities in new markets.

First, about our financial performance. We were faced with a complex and challenging external environment. We focused on strengthening our operation, made forward strategic deployment, and we have maintained very stable fundamentals. Revenue amounted to RMB 74.5 billion. AI dividend gradually become the primary driver of deployment. AIDC revenue grew by 63% year-on-year accounting for nearly 10% of our revenue by market breakdown, revenue from domestic operator market stabilized and rebounded grew up by 1.9% year-on-year. For domestic nonoperating market, we have actively controlled the low-quality and high-risk projects, and we have been focusing on high-value businesses for sustainable development.

Overseas market maintained a compliant effective development, achieving 7.4% year-on-year growth. We have continued to drive quality and efficiency improvements. And for the first half of the year, the net profit amounted to RMB 1.97 billion, and we have controlled the key SG&A expenses, achieving steady growth in operating profits. We have followed closely the external environment and upgrades in the customer demand, and we have demonstrated results in transformation and development. We have focused on new tracks of 6 major growth areas to build the new growth drivers for high-quality development.

In the first half of this year, our total new contracts amounted to RMB 100.4 billion, of which new contracts from the 6 major growth areas business reached RMB 34.4 billion, representing 11% year-on-year growth. The proportion of new contracts of 6 major growth area business accounted for 34% of our total new contracts increased from 29% in the same period last year. Significant growth was achieved across key areas, including IDC applications, CCS smart maintenance and low-altitude economy. The new economy momentum has been released. We have seized the market opportunities brought by the booming development of AI in the first half of the year. New contracts in the AI plus sector amounted to RMB 12.3 billion, representing a year-on-year increase of 30% with revenue reaching RMB 7.4 billion, up by 62%, accounting for 10% of our company's revenue. Among which, the company accelerated the large-scale delivery of AIDC with new contracts in the AIDC business, growing by 33% year-on-year.

We have focused on our advantageous vertical industrial scenarios to develop standardized products with new contracts in AI applications growing by 109% year-on-year. The company adheres to tinological innovation is a key driver. We have deployed AI plus innovation capabilities to build a new digital intelligence foundation for the company. In terms of AIDC capability, we have strengthened our integrated planning, construction maintenance and operation service capabilities. We have a standard leadership delivery excellence and integrated construction maintenance approach with which we have leveraged our leading EPCO integrated services capabilities to our customers with full life cycle of professional services.

In terms of AI products and service offerings, we have focused on central state-owned companies and vertical industries, and we have responded to the AI initiative of 19 centrally owned enterprises, and we have achieved a replication of solutions across more than 10 industries including transportation and energy. And we have covered full chain AI data services through the development of city-level transit cloud platforms and regional data hubs that progressively transform data assets into a new engine for sustainable growth. In terms of AI talent development, we have set up our end-to-end training systems, including training basis, full-stack circular -- curricula and certification systems. We have strengthened our ability to attract talent and retain talent. We focus on building core capabilities that contribute to sustainable development.

We have driven the integration of technological innovation and industrial innovation in smart services sector, promoting to develop new quality productive process driven by technological innovation in the intelligent infrastructure sector. And we focus on the core technologies, strengthen market synergy and build an open system and innovate incentive mechanism. We drove continuous breakthroughs and value creation in our technological innovation. We strengthened the transformation and accumulation of our innovative capabilities. We have established a 3-tier new paradigm of scientific research, AI transformation with national level key initiatives and core technology breakthroughs plus localized innovation.

We have 5 innovation basis in low-altitude economy, dual carbon, data elements, cybersecurities and quantum. And for R&D investment, in the first half of the year, it amounted to RMB 2 billion and investment in AI and smart applications accounted for more than 45%. And our government allocated funding secured by the company has doubled the total amount for the -- compared to the whole year of 2025, and we have breakthroughs in major national level projects for the first time. We have accelerated our deepening of reforms and corporate government capabilities. First, we strengthened the advantageous business segments such as telecommunication infrastructure, driving the capability leap of EPC general contracting towards full cycle EPCO.

Second, we deepened reforms in specialized segments such as supply chain management achieving the expansion of value-added maintenance and operation services. Third, we comprehensively deepen our synergetic operations, increasing the centralization of resources in key areas such as procurement, finance and funding and audit as well as legal affairs. Fourth, we have strengthened risk preventions in key areas and enhance the management of people, finance and resources. And fifth, we enhanced governance efficiencies through AI empowerment, promoting the deployment of AI-powered digital employees focusing on high frequency and high-value scenarios to provide digital impetus for the modernization of our governance systems and capabilities.

This year marks the 20th anniversary of our company's listing. Since going public, we have advanced innovation and transformation with reform-driven development. And we have explored new sectors, new markets, and we have achieved high-quality sustainable growth. At present, the advancement of AI and the green transition has brought up point as vast opportunities. China is actively advancing the construction of 6 networks, creating significant market opportunities for new infrastructure and implementation construction and this aligns with our company's full chain service capabilities. We will further strengthen our competitiveness and empower the digital intelligence transformation of the society industries and the customers.

We will continue to deepen the connotation of one positioning and 4 roles and accelerate our development into a service provider to AI service providers. We will strengthen our new quality productive forces, build new relationships of production tailored to new, quality productive forces and drive our company towards new opportunities and excellence. We attach great importance to our shareholders' return in the past 10 years, our dividend payout ratios had remained quite stable with enhancement. To enhance the predictability of dividend, we have made the dividend return plan for the next 3 years. Dividend payout ratio for 2026 to 2028, will increase from 43% in 2025. By 2028, we expect the dividend payout to be no less than 46% creating long-term value for shareholders. This is the first part of our presentation.

Now I will invite Mr. Shen Aqiang to present the rest of the presentation.

Thank you, Chairman. I will present to you 2 parts of our presentation. First is the performance in the first half of 2026. And here, you can see the business revenue breakdown and the overall performance of our markets, which has shown the overall performance of our 3 business segments and 3 markets. And from the business and the market structure, so you can see that our revenue has become more diversified, and we have a showcase of resilience in our business. And now I would like to talk about the key developments in our 3 major markets.

First, about the domestic operator markets. We focus on the customers' demand in the new type of digital information infrastructure to respond to the impact of the decline in traditional business. In the second half of the year, revenue from domestic operating markets stabilized and rebounded reaching RMB 38.9 billion, representing 1.9% of year-on-year growth. We will seize the opportunities from operators demand and investment in new computing infrastructure and we'll cultivate business opportunities in traditional areas, such as energy saving, retrofit of existing data centers and operations as well as maintenance and we support operators in serving and integrating into new communication network and national integrated computing power network construction.

For the domestic nonoperator market, we have been impacted by the phased impact of some customers' investment pace. And we have focused our resources on the new areas. In the first half of the year, revenue from domestic nonoperator reached RMB 33.2 billion. We will keep track of the RMB 1 trillion market potential brought upon by the 6 networks and urban renewal as well as the accelerated growth in the emerging sectors, such as AI computing, electricity, coordination and CCS smart maintenance. And our aim is to strive to achieve a steady growth in domestic non-operator markets.

For the overseas market, we have responded actively to the "Belt and Road" Initiative. We focus on Asia Pacific, and communication fundamental businesses and infrastructure businesses. And we have secured several key projects in AIDC. In the first half of the year, revenue from the overseas market reached RMB 2.3 billion, representing 7.4% year-on-year. Asia Pacific grew by nearly 40% being the primary driver of our overseas business. And we will enhance our project development and operation capabilities, and we'll focus on the transformation and upgrading of AIDC, new energy and other areas and we will actively support a central state-owned companies in their compute power expansion overseas, accelerated their replication of domestic capabilities and empower digitalization of our overseas business.

And in the Chairman's introduction, the first one he mentioned about our focus on 6 major growth areas. So I would like to elaborate on that. In AIDC, we supported and serve the national level intelligent computing hub and the construction of nationwide integrated computing power network. Our footprint has covered 8 national computing hubs. And we have built a full-stack service model, featuring EPC or general contracting plus green liquid cooling plus intelligent computing power maintenance plus computing electricity coordination to provide customers with comprehensive infrastructure service support. And the value of the new contract signed in this sector amounted to RMB 10.9 billion, representing 33% of growth.

And here, you can see a benchmark case in AIDC and we have completed the delivery of 60-megawatt civil and M&E works for Ningxia Zhongwei Data Center project in just 167 days. And we have spent on only like half of the days compared to traditional schedules. This project also adopted Alibaba 5.0 liquid cooling standards with construction standard reaching the highest level in the industry. In CCS, smart maintenance sector, we are focused on 60 technologies, and we're focused on landmark buildings in central cities change operators, IDC operation and maintenance as well as data governance. And we have built standards and replicable capability systems. And in the first half of the year, new contracts from this sector recorded RMB 15.6 billion, 13% growth year-on-year.

Here, you can see another example in CCS smart maintenance, and we have focused on the smart maintenance capabilities in AIDC and our capabilities towards full stack smart maintenance for liquid cool intelligent computing. And in terms of compute electricity collaboration, we focus on source grade, low storage and coordinated dispatch of power. We have integrated service of compute electricity collaboration and full chain general contracting. And we have several key projects in the dual carbon and power distribution networks. And here, you can see the benchmark cases in the dual carbon and power distribution network sectors. And they represent our benchmark projects in energy storage, zero carbon buildings, compute electricity coordination and our green electricity plus compute power, green electricity direct connection models.

And in low-altitude economic sector, we have been partnering with key customers in transformation, transportation, government, energy management and other sectors. And we have played a leading role in consulting these businesses with consulting and design equipment procurement plus implementation delivery. In the first half of the year, value of new contracts grew by 66%. For the second half of the year, we have 5 levers, including transformation development reform and renewal technological innovation and talent, strengthening and safety enhancement. And we have the confidence to maintain stabilities for our whole year revenue and new signed contracts. And we are confident to achieve a rapid growth in the 6 major growth areas in AIDC. And in terms of quality improvements, we can expect growth for net profit and revenue and stable growth for gross profit margin as well as improved cash flow.

And here, you can see our financial performance in the first half of the year. And here, you can see the key financial indicators of the company. We have continued to deepen our quality and enhancement to drive improvement in our profitability. For the subcontracting charges and material costs, we have utilized AI to strengthen our penetrated project management. We enhanced our self-delivery rate and cost saving rate from centralized procurement. In terms of R&D expenses, we have focused on areas such as AI and digital infrastructure and the synergetic management of R&D and ensure R&D delivering results. And in SG&A, we have controlled quite tightly and we have seen a decline in SG&A.

In terms of direct personnel costs, we have optimized our resources allocation and enhance our operation efficiency. And the per capita wages have been quite stable. And in terms of the expenses management, we have effective control of SG&A expenses. Our operating profit margin has improved steadily. We will place greater emphasis on quality development and product quality as well as cash collection so that our gross profit margin can recover over the medium to long term. In the first half of the year, we have seen the impact on our net profit from the external environment. And after excluding the noncomparable factors of dividend income, the change in net profit on a comparable basis is in line with the trend in revenue growth and net profit margin remained quite stable.

We continue to drive our quality and efficiency enhancement and we will achieve a stabilization and recovery in full year net profit. We'll continue to manage our working capital and focus on the account receivables and cash flow. And we will continue to adhere to the philosophy of revenue with reasonable profit, profit with matched cash flow and enhance our management of project delivery, accounts receivable, cash collection and payment. And here, you can see the company's balance sheet. Our gearing ratio is very stable at a very low level. Our financial position is solid.

Going forward, we will adhere to the principle of value-driven, seeking steady yet progressive growth and high-quality development coordinate high-quality development with high-level security and strive to achieve effective improvement in quality and reasonable growth in quantity to create greater value for our shareholders. And now we are very pleased to answer any questions you may have.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Ladies and gentlemen, good afternoon. I am Terence from China Communication Services. On behalf of the company's management, welcome to our company's 2025 annual results announcement. This event will be conducted in English with English -- will be conducted in Chinese with simultaneous interpretation. I will host the Q&A session later. [Operator Instructions]

Let me introduce our management who are with us today. Executive Director and President, Mr. Cui Zhanwei; Executive Director, Executive Vice President and CFO, Mr. Shen Aqiang; Executive Vice President, Mr. Zhang Hao. Thank you for coming, and I hope you will find this presentation helpful.

First of all, I would like to invite Mr. Cui to present the 2025 annual results overview.

Good afternoon, ladies and gentlemen. As Mr. Luan Xiaowei, Chairman of the company, is unable to attend today's meeting in Hong Kong due to other important business commitments, we would like to express our apologies. Mr. Luan has entrusted me to host today's presentation on his behalf and looks forward to engaging in in-depth discussions with you at the next results presentation.

Today's results presentation is divided into 3 parts. First, I will introduce the overview of our results. And next, Mr. Zhang Hao and Mr. Shen Aqiang will present the business review and financial results, respectively.

During the Q&A session, we will answer the questions that you may concern. In 2025, a new round of technological revolution and industrial transformation was accelerating with artificial intelligence being widely integrated across various industries and sectors of the economy and society. The company kept close track of industry developments and customers' transformation needs, proactively integrating cutting-edge technologies, strive to expand into new areas and continuously advance modernization of its corporate governance system and capabilities.

The company's development is characterized by the following features: First, uniting efforts to navigate challenges, achieving steady yet improving operating results. Second, consistently implementing cost reduction and efficiency enhancement to firmly promote high-quality development. Third, deepening the connotation of one positioning 4 rows to empower transformation and development needs. Fourth, fully leveraging its core competencies to convert AI dividend into new growth drivers. Fifth, focusing on new areas and new businesses to optimize diversified business models. Sixth, charting the course for the 15th 5-year plan to seize broad market opportunities.

Now let's review our financial performance. In 2025, the company focused on strengthening and optimizing its operations and proactively responded to the impacts of customers' cautious investment and intensifying market competition. Overall performance remained steady with improving trends. In terms of reasonable growth in quantity, revenue amounted to RMB 150.1 billion and new contracts amounted to RMB 205.7 billion, of which new contracts from strategic emerging businesses reached RMB 94.9 billion, representing a year-on-year increase of 22% and accounting for over 46% of total new contracts. The proportion increased by 9 percentage points compared to last year and strategic emerging businesses became a strong driver for the company's high-quality development.

In terms of effective improvement in quality, net profit amounted to RMB 3.61 billion with net profit margin of 2.4%. Accounts receivables as a percentage of revenues remained largely stable.

The company seized development opportunities such as AI to proactively promote business expansion in areas, including the iterative upgrading of new infrastructure computing power network construction, green infrastructure retrofit, industrial digital intelligence empowerment and operation and maintenance.

On the market side, in the domestic operator market, the company proactively overcame the impact of changes in customer investment mix, maintaining a stable foundation.

In the domestic nonoperator market, the company focused on key sectors such as digital infrastructure, achieving a year-on-year revenue growth of 5.5% and the market remained as the primary driver of the company's development.

In the overseas market, we continuously enhanced project development capabilities and platform operation capabilities, maintaining safe compliance and effective development.

On the business side, the company solidly advanced business integration and upgrading, consistently improving customer service quality and project management standards.

Development of Telecommunications Infrastructure Services, TIS; Business Process Outsourcing Services, BPO and Application Content and Other services, ACO businesses remained steady.

Looking back at the 14th Five-Year Plan period, the company anchored in the goal of high-quality development, bringing operating performance to a new level. All of the compound annual growth rates of key indicators such as total new contracts, revenues and gross profit exceeded 4%, while the gross profit margin remained stable with improvement.

The company has always adhered to the principle that technological innovation being the primary productive force and continuously strengthened its core competitiveness. It actively advanced the dual optimization of customer mix and business mix with revenue proportion from the domestic nonoperator markets and ACO business continuing to increase, which effectively mitigated the impact of cyclical fluctuations in telecom operators' CapEx. This demonstrates the resilience of the company's high-quality development and lays a solid foundation for future high-quality development.

The company is at a critical transformation juncture for high-quality development. We continue to deepen the connotation of one positioning for roles and actively integrate new technologies such as AI.

Based on our positioning as a New Generation Integrated Smart Service Provider, we are committed to: First, becoming a pioneer in digital intelligence consulting, accurately identifying customers' digital intelligence transformation needs and providing high-quality solutions. Second, becoming a Navigator of Digital Intelligence Infrastructure, building general contracting and integrated service capabilities for new infrastructure. Third, becoming a Leader of Digital Intelligence Maintenance and Operation, providing high-quality smart service support services such as operations and maintenance, supply chain, property management and training. Fourth, becoming a Provider of Digital Intelligence Products, offering digital intelligence platforms and software development capabilities.

The company accurately grasped market development demands, focusing on core areas such as AI and smart applications to deepen technological innovation with full year R&D investment reaching RMB 5.47 billion. We strengthened AI technology integration, business empowerment and commercialization of achievements, successfully developed the Smart Series product matrix for external market expansion and the Wise Series product system to support internal quality and efficiency improvements while striving to cultivate high-level expert talent teams.

The company ranked third in the 100 most competitive software and IT service enterprises and received 18 provincial and ministerial level science and technology awards. With a solid technological strength and outstanding development achievements, the company has gained high recognition and extensive recognition from the government, the industry and customers.

Currently, AI has become the core engine driving the development of digital economy. The intelligent transformation across industries continues to accelerate, placing high requirements on infrastructure, computing power enhancement, operation and maintenance services and data governance.

In response to this trend, the company actively deploys in the AI sector, accelerating the enhancement of integrated planning, construction, maintenance and operation service capabilities, cultivating full stack maintenance capabilities and systems for AIDC, strengthening AI applications to form flagship products and solutions and proactively applying AI technologies to redesign internal operations and governance processes to build a data service system encompassing planning, governance, warehousing and maintenance to convert AI dividend into tangible productivity and core competitiveness.

In 2025, AI-driven new contracts amounted to over RMB 5 billion, representing a year-on-year increase of 25%. From a business composition perspective, AI infrastructure construction contracts accounted for 55%, demonstrating and reinforcing the company's leading position in new infrastructure markets such as intelligence computing centers. From an industry composition perspective, the domestic nonoperator market accounted for 60%, with Internet and IT and government customers as the main customers, indicating that the company's AI capabilities have deeply penetrated the main arena of the digital economy and gained recognition from customers in key sectors.

The company has built an integrated AI architecture encompassing computing power, data models and applications. We leverage full stack capabilities to solidify the computing power foundation, utilize industry models to create core competitiveness, activate value potential through data governance and expand growth potential through scenario-based applications. We are fully committed to forging benchmark applications and projects, both internally and externally, while establishing a 100,000 -- and 10,000 talent system to seize the great opportunities of the era and unleash significant development potential.

In response to new market opportunities, the company focused on expanding into new areas and developing new businesses. First, in the area of digital infrastructure, we deeply participated in the construction of digital new infrastructure with new contracts growing by over 40%. Second, in the area of smart city, we seized opportunities in urban renewal with new contracts growing by over 24%. Third, in the areas of new energy and power distribution networks, we focused on opportunities in green power construction, electricity reform and computing network and electricity collaboration, achieving in-depth development in these business markets. Fourth, in the area of CCS Smart Maintenance, we expanded the boundaries of traditional maintenance services through EPCO, promoting the upgrade of business types towards recurring businesses.

The company attaches great importance to shareholders' return and is committed to paying sustainable and relatively stable dividends. In the past 10 years, dividend payout ratio has generally remained stable with enhancements and dividend per share has continued to increase. In 2025, the Board of Directors has proposed a final dividend of RMB 0.2241 per share, representing a year-on-year increase of 2.5%. Dividend payout ratio increased to 43%. The company's dividend per share growth in 2025 and during the 14th Five-Year Plan Period, both exceeded the growth in earnings per share, effectively safeguarding the interest of all shareholders.

The company strengthened its sense of responsibility and continued to deepen its ESG governance standards. First, we tapped into the green and low-carbon sector, strengthening technological breakthroughs and product iterations to help customers achieve energy savings, emission reduction and low-carbon intelligent operations. Second, we fulfilled our social responsibilities by actively participating in emergency rescue and disaster relief as well as emergency support while leveraging technology to empower rural revitalization. Third, we adhere to compliant operations and optimize corporate governance and risk management. The company's strong governance capabilities have been widely recognized across various sectors, earning us numerous honors.

Looking ahead, the company will keep pace with the country's construction of a modern industrial system, which is intelligent, green and integrated, focusing on customers' comprehensive, integrated and diversified digital service needs. We'll continue to deepen the connotation of one positioning for roles and concentrate on advancing the AI+ initiatives and the 5 major projects, promoting the second growth curve as a new engine and realizing steady growth in operating efficiency and corporate value.

Going forward, the company will adopt measures such as optimizing strategic deployment, strengthening technological innovation, building robust core capabilities, seizing emerging tracks and deepening corporate reforms to continuously solidify the corporate foundation, enhance resilience, highlight advantages and accelerate the unlocking of potential. This will align the company's intrinsic value with its market value, creating long-term value for shareholders. The above is the first part of the presentation.

Now I would like to invite Mr. Zhang to present the business review. Thank you.

Thank you, President, Cui. Good afternoon, ladies and gentlemen. Let me present the company's business performance in 2025. The above table of business revenue breakdown and the overall performance by business and market in the next slide show the overall performance of the company's 3 business segments and 3 markets.

From the perspective of business and market structure, revenue sources have become more diversified, demonstrating stronger development resilience. On the business side, the revenue proportion of TIS business fell below 50% indicating that the company's reliance on infrastructure investment-driven growth has gradually decreased. On the market side, the revenue proportion from the domestic nonoperator market and overseas market continued to rise, mitigating the impact of changes in the domestic operator market on the company's overall development.

In the domestic overall operator market, the company focused on customers' needs to accelerate construction of new digital information infrastructure and their transformation needs, providing integrated comprehensive solutions that are green, intelligent, integrated and efficient. We promoted business expansion in sectors, including the iterative upgrading of new infrastructure, computing power network construction, green infrastructure retrofit, industrial digital intelligence empowerment and operation and maintenance. Revenue from domestic operator market amounted to RMB 80.2 billion with new contracts reaching RMB 109.5 billion, maintaining overall stability in fundamentals.

In the domestic nonoperator market, the company sees opportunities arising from AI-driven intelligent computing and data center construction as well as urban renewal on green transformation. We continue to focus on key sectors such as AI plus, data centers, urban renewal and new energy and undertook multiple benchmark projects across industries. Revenue from the domestic nonoperator market reached RMB 65.6 billion, up 5.5% year-on-year. New contracts amounted to RMB 89.7 billion, of which new contracts from both Internet and IT and energy sectors exceeded RMB 10 billion, while the Internet and IT, government and financial sectors all achieved double-digit growth.

In the overseas market, the company actively responded to the Belt and Road initiative, focusing on key areas such as Asia Pacific, Middle East, Africa and Latin America. We continuously enhanced our overseas project development capabilities and overseas platform operating capabilities, promoting the transformation and upgrading of overseas businesses towards EPC general contracting, projects with financing support, industrial digitalization and new energy. We actively deepened collaboration with central SOEs and continue to build an overseas ecosystem. Revenue from overseas market reached RMB 4.27 billion, maintaining steady growth.

In President Cui's introduction in the first part, he mentioned that the company focused on expanding into 4 major new areas and new businesses. Here, I would like to elaborate on these. First, Digital Infrastructure business. The company fully integrated itself into the National East Data, West Computing strategic project, seized the strategic window of AI+ and the wave of customers' AI upgrades and leverage full-cycle EPCO project capabilities to drive enterprise digital transformation. New contracts from digital infrastructure business reached RMB 29.5 billion, up 40% year-on-year with notable contributions from the Internet and IT and finance sectors.

Second, in the Smart City business, the company fully implemented the guiding principles of the Central Urban Work Conference, leveraging high-end consulting to tap into areas involving government bonds and special purpose bonds. We proactively served the construction of smart cities in small- and medium-sized cities and counties, integrating AI applications into urban development. New contracts from the Smart City business reached RMB 43.2 billion, up 24% year-on-year.

Third, in the New Energy and Power Distribution Network business, the company kept close tracks of power market reforms, promoted digitalization of new power systems, deeply cultivated the source grid load storage sectors and advanced integrated infrastructure for computing and power collaboration. New contracts from the energy and distribution network business reached RMB 19.5 billion, maintaining steady growth.

Fourth, CCS Smart Maintenance. Unlike traditional maintenance services, this business focuses on 6 major areas: CT, IT, DT, OT, AT and QT. We are reforming the 3 systems of marketing, delivery and products, expanding the boundaries of traditional maintenance services and driving transformation of business models from project-centric operations to customer-centric operations and from project-based to recurring business model. New contracts from CTS Smart Maintenance reached RMB 25.6 billion, achieving solid growth.

Pages 29 and 30 present the company's benchmark cases in new areas and AI+ applications for your reference. Going forward, the company will deepen the connotation of one positioning for roles and ensure the effective implementation of its strategic plans. We'll systematically carry out the 5 major projects and AI+ initiatives, striving to achieve a solid start for the 15th Five-Year Plan. The above is business review session.

Next, let's invite CFO, Mr. Shen Aqiang, to present the financial results. Thank you.

Thank you, Mr. Zhang. Good afternoon, ladies and gentlemen. I will now present the company's financial performance in 2025. The above table shows the company's key financial indicators for your reference. In 2025, the company deepened quality and efficiency enhancement to drive improvement in profitability. In terms of direct personnel costs, the company rationally optimized resource allocation and enhanced operational efficiency, steadily increasing both per capita wages and labor productivity.

In terms of SG&A expenses, the company strictly controlled administrative expenses, focusing on precise R&D investments in capability building for various areas such as AI and digital infrastructure to ensure R&D efforts deliver results.

In terms of materials costs and subcontracting charges, the company further applied AI digital technologies, strengthens end-to-end project management and enhances centralized supplier management and centralized procurement management to effectively manage costs while improving efficiency.

Through various measures, the company achieved a positive trend in gross profit margin in the second half of 2025 to narrow the decline.

The company will place greater emphasis on quality of development, focusing on project quality and cash collection, strengthen technological innovation-driven development, enhance business value and optimize business structure, enhance whole process project management, strengthen the application of AI digital means, driving improvement in profitability, quality enhancement and efficiency improvements.

We insist and continue to strengthen working capital management and emphasized full process business control, although proactive optimization of supply chain settlement methods led to periodic fluctuations in cash flow in the first half of the year. Thanks to the continuous deepening of management and control measures, cash flow recovered and improved in the second half of the year.

The proportion of accounts receivables to revenue remained largely stable, while the proportion of long-term accounts receivables remained at a relatively low level, adhering to the operating philosophy of revenue with reasonable profit, profit with matched cash flow. We will continue to enhance management of project delivery, long-term accounts receivables and cash collection and payment, striving to ensure cash flow is maintained at a reasonable and healthy level.

The above table lists out the key indicators of the company's balance sheet for your reference. As of 31st December 2025, the company's gearing ratio remained at a relatively low level and the liabilities to assets ratio decreased for the first time in recent years. The overall financial position remained solid.

Now we are pleased to answer any questions you may have. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]