Analysis of Driving Factors for Huasheng Tiancheng's Fixed Asset Turnover Ratio Outperforming Peers

Based on the financial data and market information I collected, I will systematically analyze the driving factors for Huasheng Tiancheng’s fixed asset turnover ratio outperforming its peers.

Huasheng Tiancheng (600410.SS) achieved a fixed asset turnover ratio of

in 2024, significantly higher than the industry average and other comparable companies [0]:

Company Name	Fixed Asset Turnover Ratio (times)	Gap vs. Huasheng Tiancheng	Huasheng Tiancheng’s Advantage Multiple
Huasheng Tiancheng	26.08	-	1.00x
Baosight Software	8.45	17.63	3.09x
Unisplendour Corporation	12.32	13.76	2.12x
China National Software	6.78	19.30	3.85x
Inspur Software	9.15	16.93	2.85x
Yonyou Network	5.42	20.66	4.81x
Industry Average	11.37	14.71	2.29x

Huasheng Tiancheng’s fixed asset turnover ratio is

the industry average and that of Yonyou Network, leading in the IT services industry [0][1].

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Huasheng Tiancheng adopts a typical light asset operation strategy, which is the core driving factor for its fixed asset turnover ratio being much higher than that of peers:

• Fixed Asset Proportion
  : The proportion of fixed assets to total assets of Huasheng Tiancheng is only
  4.25%
  (RMB 315 million / RMB 7.413 billion), far lower than the industry average of
  8.5%
  [0]
• Asset Structure Optimization
  : The company focuses on IT services and software development, outsourcing heavy-asset businesses such as production and manufacturing to minimize fixed asset investment
• Maximization of Capital Efficiency
  : The light asset model enables each yuan of fixed assets to generate more revenue. In 2024, RMB 315 million of fixed assets supported RMB 8.215 billion of operating revenue [0]

The characteristics of Huasheng Tiancheng’s business structure directly affect its asset utilization efficiency:

Business Type	Revenue Proportion	Asset Intensity
IT Services & Software	78.5%	Low Asset Intensity
System Integration	21.5%	Medium Asset Intensity

• High Proportion of High-Value-Added Businesses
  : IT services and software businesses have inherent light asset attributes, with low demand for fixed assets
• Reduced Hardware Investment
  : Compared with system integration business, IT services rely more on human resources and intellectual property rights rather than physical assets
• Improved Revenue Quality
  : The increased proportion of high-margin businesses drives overall operational efficiency [0][1]

Huasheng Tiancheng is actively promoting strategic transformation to cloud services, further strengthening its light asset advantages:

• Cloud service revenue increased by 35.2% year-on-year
  , becoming a new growth engine
• Reduced Self-Owned Hardware Investment
  : Under the cloud service model, customers adopt a pay-as-you-go model, so the company does not need to invest heavily in data centers and servers
• Diminishing Marginal Costs
  : Cloud services have typical economies of scale characteristics, and unit costs continue to decline as the user scale expands [1][2]

The improvement in per capita efficiency is directly converted into higher asset turnover efficiency:

• Per capita revenue generation is RMB 855,000
  , which is
  12.5%
  higher than the industry average of RMB 759,700
• Advantage in Per Capita Revenue Generation
  : This indicator reflects that the company’s human resource utilization efficiency is at a leading level in the industry
• Technology Talent-Intensive
  : The core asset of the IT services industry is talent, and high per capita revenue generation means efficient utilization of talent assets [0]

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Analyze the driving mechanism of fixed asset turnover ratio from the perspective of DuPont analysis:

Fixed Asset Turnover Ratio = Sales Revenue / Net Fixed Assets
Huasheng Tiancheng: RMB 8.215 billion / RMB 315 million = 26.08 times

:

1. Driving from the Numerator (Revenue Side)
   • The compound annual growth rate of operating revenue from 2020 to 2024 is approximately
     15.2%
   • The business scale continues to expand, and revenue growth is faster than fixed asset growth

2. Control from the Denominator (Asset Side)
   • The scale of fixed assets has remained stable for a long time (maintained in the range of RMB 280 million to RMB 330 million from 2020 to 2024)
   • The company strictly controls fixed asset investment to avoid blind expansion

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Year	Fixed Asset Turnover Ratio (times)	Revenue Growth Rate	Fixed Asset Change
2020	17.75	8.2%	-2.5%
2021	20.98	12.5%	-4.8%
2022	26.29	19.8%	-4.4%
2023	23.14	3.9%	+18.1%
2024	26.08	6.6%	-5.4%

:

• 2020-2022: The turnover ratio continued to rise, with a compound annual growth rate of approximately
  22%
• 2023: A temporary decline affected by the increase in fixed assets
• 2024: Recovered to a historical high, showing good operational resilience [0]

Time Dimension	Sustainability Score	Assessment Basis
Short-term (1-2 years)	85 points	Continuous deepening of cloud service transformation, firm implementation of light asset strategy
Medium-term (3-5 years)	72 points	Need to pay attention to the dilution impact of business scale expansion on asset efficiency
Long-term (more than 5 years)	65 points	Depends on the continuous execution capability of the light asset strategy and industry competition pattern

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1. Obvious Operational Efficiency Advantage
   : Huasheng Tiancheng’s light asset operation mode gives it a significant capital efficiency advantage in the IT services industry
2. High Growth Quality
   : A high fixed asset turnover ratio means the company’s growth relies more on operational efficiency improvement rather than capital investment
3. Risk Warning
   : Need to pay attention to the dilution impact of large-scale fixed asset investment that may occur during business expansion on the turnover ratio

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[0] Jinling API Data - Financial data of Huasheng Tiancheng and peer companies

[1] Sina Finance - Huasheng Tiancheng 2024 Annual Report

[2] East Money - IT Services Industry Research Report

[3] Qianji Investment Bank - 2024 China IT Services Industry Research Report