On the evening of August 30th, Digital China Group (000034.SZ) released its mid-year performance report for the fiscal year 2024.

During the reporting period, Digital China achieved a revenue of 62.56 billion yuan, a year-on-year increase of 12.5%; net profit attributable to the parent company reached 510 million yuan, up 17.5% year-on-year; basic earnings per share were 0.79 yuan, marking a 19% increase compared to the same period last year; the acceleration of the AI-driven cloud integration strategy, continuous enhancement of local technological innovation capabilities, further optimization of business structure, and overall steady growth in performance were highlighted.

AI Driving
Growth of 62.7% in Cloud Services and Software Business

Focusing on high-value businesses, Digital China for the first time disclosed the operational status of cloud services and software business aimed directly at customers, centered around MSP (Managed Service Provider) and ISV (Independent Software Vendor), as an independent segment. This fully demonstrates Digital China's determination and confidence in pushing forward the cloud integration strategy.

During the reporting period, the cloud services and software business achieved a revenue of 1.44 billion yuan, a year-on-year increase of 62.7%, with the gross profit margin improving to 19.1%, and total profits reaching 32.65 million yuan. The increasing proportion of high-value businesses and strengthened profitability are driving the rapid enhancement of Digital China's overall value.

In the first half of 2024, Digital China deepened its AI capability building, aiding the application and development of AI industries, and was listed for the first time in IDC's Generative AI Ecosystem Map; multiple industry projects under Digital China's Smart Vision entered the contract signing phase; the Shenzhen Artificial Intelligence Computing Center project was officially completed and put into operation; the AI Ecosystem Innovation Center was launched; and Digital China's data asset pledge financing transaction case was published as the first-ever benchmark case in Shenzhen and among large and medium-sized enterprises nationwide, continuously enhancing its full-stack technology and service capabilities centered around AI and data.

Meanwhile, the "Customer Success Program" yielded fruitful results, continuously strengthening its leading advantages in key industries. Taking the automotive industry as an example, in the first half of 2024, focusing on the automotive BG, Digital China developed solutions covering IT and digitalization, automotive big data, and software definition, providing multi-dimensional digital services to several car manufacturers including FAW-Volkswagen, GAC Trumpchi, Dongfeng Motor, and BYD, gaining widespread recognition.

In terms of international business, following the announcement of going global at the beginning of the year and signing an MOU with Thailand's Ministry of Digital Economy and Society, Digital China, supported by GoPomelo, achieved a breakthrough in orders from overseas markets, with a 42% increase in overseas market revenue, becoming a new engine for the expansion of Digital China's cloud integration strategy and performance growth.

Robust Growth in Its Own Brand Business
Maintaining Top Industry Advantages

During the reporting period, its own brand hardware business, centered around Digital China's Kunpeng general servers and AI servers, DCN network products, and enterprise-level security products from Hillstone Networks under Digital China, achieved a revenue of 2.66 billion yuan, a year-on-year increase of 45.5%, with total profits of 44.03 million yuan.

Among them, the information and technology innovation business increased efforts in key industries such as finance and telecommunications operators, persisted in expanding business opportunities in key regions, achieving a revenue of 2.19 billion yuan, up 73.3% year-on-year, with the gross profit margin rising to 12.1%. Benefiting from the explosive growth in domestic AI computing power demand, Digital China's Kunpeng AI servers achieved a revenue of 560 million yuan, a significant year-on-year increase of 273.3%. Currently, Kunpeng self-developed AI servers have been adapted to various domestic GPU technology routes, which can be delivered in batches, further strengthening market competitiveness, and continuously maintaining top industry advantages.

IT Distribution and Value-Added Services Business Grows in Both Volume and Quality
Solidifying the Foundation for Performance Growth

In the first half of 2024, Digital China fully unleashed its leading advantages in the IT distribution field, maintaining a growth trend in its IT distribution and value-added services. It accelerated upgrades in fields, models and products, achieving a business income of 59.83 billion yuan, an increase of 9.8% year-on-year, with a total profit of 720 million yuan, continuously building a solid foundation for the overall performance growth and strategic transformation of Digital China.

Among them, the microelectronics business successfully introduced several domestic semiconductor brands such as Huawei's Hi-Silicon, continuously improving the semiconductor business layout and achieving strong growth, with a business income of 9.76 billion yuan and an increase of 39.7% year-on-year.

Persisting in R&D Investments
Driving Technological Innovation and Product Upgrades

Amidst a slow global economic recovery and an external environment still filled with complexity and uncertainty, Digital China continues to insist on investing in R&D in key areas, sharpening its foundation in digitalization, constantly enhancing product competitiveness, and maintaining a leading position in the fields of cloud services and software as well as proprietary products. During the reporting period, the number of R&D technical personnel at Digital China increased by 40%, with total R&D expenditures reaching 190 million yuan, up 25% year-on-year.

Digital China's management said, in searching for breakthroughs in AI application, Digital China, based on more than 20 years of devotion to China's informatization, embraces the power of digitalization, embarking on a unique path of digital transformation. Under the framework of the "AI-driven cloud integration" strategic system, it promotes the deep integration of AI infrastructure and applications with various industries, accelerating its journey to become a leading partner for digital transformation.