Zhongcheng Technology (920207) disclosed the investor relations activity record detailing the company's transformation path and business layout

Henan Zhongcheng Information Technology Co., Ltd. received a research visit from Zhongyuan Securities on May 22 at the company's site, with the company's director and board secretary Su Chunlu participating in the reception.

Regarding the company's development history, the company stated in response: "The predecessor of the company, Henan Zhongcheng System Engineering Co., Ltd., was established in 2005. In the early stages, it mainly focused on obtaining compliance for system integration qualifications, laying the foundation for business development." "In the early days, the company primarily engaged in traditional system integration business, and then entered a strategic upgrade phase. By collaborating with key national military research and development institutions to carry out large ship simulation and virtual reality business, and cooperating with them to implement special scenario training projects, the company gradually accumulated core technological capabilities in virtual simulation, achieving an important leap from traditional integration to technology-driven business." "Subsequently, the company further deepened its strategic layout, actively seizing opportunities in the government and enterprise market, and established cooperative relationships with certain large technology enterprises or business segments. While most peers still primarily acted as agents for foreign brands, the company firmly chose strategic binding based on its judgment of industry development trends, laying an important foundation for subsequent business expansion." "Entering the industrial digital transformation period, the company implemented another key strategic upgrade, cutting into the digitalization field of smart breeding and other industries. Despite facing challenges such as regional business expansion and scale pressure, the company successfully achieved breakthroughs relying on its accumulated revenue scale and undertaking capabilities. Cooperation in this field has become an important growth support for the company." "Relying on three key measures: accumulation of simulation technology, strategic cooperation with government and enterprises, and industrial digital transformation, and benefiting from the promotion of domestic substitution policies, the company has gradually formed a '1+2+3' business pattern, completing the transformation leap from a traditional system integrator to a high-tech industry solution provider."

Regarding the company's current business structure, the company introduced: "The company currently forms a '1+2+3' business pattern. '1' refers to 'digital infrastructure' as the foundation, which is the company's traditional cornerstone business. '2' includes the two major fields of 'digital government' and 'industrial digital transformation', and '3' refers to providing full-stack intelligent comprehensive solutions for government, enterprise, and industry clients based on three core capabilities: 'secure and reliable ICT system integration and software development and operation', 'next-generation industrial internet based on AI and digital twins', and 'data element processing and next-generation artificial intelligence applications'." "Currently, the company is focusing on three emerging transformation directions: artificial intelligence, digital twins, and embodied intelligence for in-depth research and key breakthroughs. Combining industry development directions and the company's own resource endowments, the aforementioned fields effectively integrate existing customer needs and actual scenarios to form a product and service system with independent intellectual property rights. The company's business in emerging fields such as artificial intelligence, digital twins, and embodied intelligence has initially taken shape, while the maturity of related domestic industries is still in the exploratory stage, which is expected to become a new growth point in the future."

Regarding how the company has gained a first-mover advantage in the Xinchuang field, the company summarized it into three aspects: qualification preparation, early layout, and financial support: "First, qualification preparation is sufficient. At the beginning of the Xinchuang strategy launched by Henan Province in 2020, the company was already one of the few enterprises in the province with qualifications to carry out Xinchuang business, becoming an important local force in promoting the development of the Xinchuang industry; "Secondly, advance strategic layout. The company has been deeply engaged in the information technology field in Henan for over a decade, accumulating a wealth of successful cases and a good reputation among key customer groups such as party and government agencies and large state-owned enterprises, laying a solid market foundation for the rapid entry into the Xinchuang business;" "Thirdly, strong financial support. In 2020, against the backdrop of the global pandemic, the company successfully completed two rounds of targeted placements, effectively alleviating the pressure of significant funding needs for Xinchuang projects and providing ample financial support for business scale expansion." The company believes that "with multi-dimensional advantages in qualifications, layout, and funding, it has formed a significant first-mover advantage in the Xinchuang field in Henan Province."

Regarding accounts receivable management and operating performance, the company stated: "To improve the company's cash flow situation and effectively control bad debt risks, the company has taken the following two key measures:" "1. Establish a high-level accounts receivable management mechanism: The company has formed a special working group for accounts receivable led by the chairman, which regularly supervises the progress of collections and project acceptance every week to ensure timely recovery of accounts receivable." "2. Strengthen accounts receivable management: The company considers the ability to collect payments as a core criterion for project decision-making, avoiding blind pursuit of revenue scale." "The improvement in the company's operating performance in 2025 is mainly due to the gradual release of improved business environment and enhanced market competitiveness. With relevant policy adjustments, the market competition situation has relatively eased; the enhancement of the company's market competitiveness has led to a rebound in gross profit margin and an increase in operating revenue. Meanwhile, through strict implementation of accounts receivable management and prudent project acceptance measures, the company ultimately achieved a turnaround from loss to profit."

Regarding the subsequent equity incentive plan, the company stated: "The company will conduct a comprehensive assessment based on performance fundamentals and capital market performance, and will appropriately advance the equity incentive plan when conditions are ripe." "As a compliant and effective channel for directors, executives, and core employees to hold shares, the company plans to normalize the implementation of the equity incentive as a long-term mechanism on the premise of solid performance fundamentals, aiming to further enhance the cohesion and stability of the core team, and assist the company's long-term sustainable development. This move is beneficial to fully mobilize the enthusiasm and creativity of core backbones, achieving the binding of interests and common growth between the company and its employees."