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Neusoft Announces 1H 2020 Results: Net Profit Up 152.6%
COVID-19 and China
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The technology company Neusoft Corporation (600718:SH) released its semi-annual results on August 29. Its sales revenue reduced from CNY 2.9 billion in 1H 2019 to CNY 2.5 billion in the first six months this year, which is equivalent to a 15.3% decrease. However, Neusoft’s profit in 1H 2020 surged by 152.6% on a year-on-year basis, reaching CNY 65 million in number. This resulted mainly from a decrease in investment losses. Besides, both total assets and operating cash flow improved in the first half of 2020.

Combining software, manufacturing, technology and management, Neusoft Corporation provides software engineering services, information technology services, product engineering services, IT education and medical services. The solutions offered by the company cover telecommunication, energy, finance, manufacturing, education, healthcare, transportation, internet and media industries.

On May 12, Neusoft announced that it planned to transfer all its shares over Tianjin Neusoft Hanhai Industry Development Company (Chinese:天津东软瀚海实业发展有限公司) to Hanhai (Tianjin) Industry Development Company (Chinese:瀚海(天津)置业发展有限公司) at CNY 60 million, which may boost the company’s net income by CNY 54 million. Neusoft Corporation has expressed that divestiture is beneficial for it to concentrate useful resources and focus on core business and thereby is coordinated with the company’s development strategy.    

The Chinese enterprise application software market rises significantly in the last decade. The market size is estimated to further increase from CNY 210.7 billion in 2019 to CNY 272.2 billion in 2021. Enterprise SaaS is becoming a larger portion in the software sector, increasing from 4% in 2014 to 13.3% in 2018. According to a report published by iResearch Consulting Group, enterprise SaaS is forecast to reach CNY 65.4 billion in 2021, accounting for 8.4% of the global enterprise SaaS market.  

After the financial results were released to the market, Neusoft’s stock price went up by 3.35% in one day.

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