Investment Rating - The report initiates coverage with a "Buy" rating for the company [2][8] Core Insights - The company is positioned as a core partner of Huawei, benefiting from the dual drivers of HarmonyOS and AI for performance recovery. Huawei accounted for 41% of the company's revenue in 2024, anchoring its business in the Harmony ecosystem and AI computing operations [5][8] - The company is expected to see revenue growth from 2025 onwards, driven by the commercial launch of HarmonyOS PCs and the maturation of AI computing networks [5][8] Summary by Sections 1. Huawei Chain Core Positioning and Business Diversification - The company has established a deep partnership with Huawei, which is its largest customer, contributing approximately 41% of its revenue in 2024 [19] - The business structure is clear, with the Technology Professional Group (TPG) dominating revenue, accounting for 87% in 2024 [28] - The company is expected to recover from a revenue low in 2023, with a projected revenue of 169.5 billion RMB in 2024, showing a significant improvement from a -14% decline in 2023 [29] 2. Innovation in Trustworthy Computing: Huawei as a Pioneer - The HarmonyOS has undergone significant evolution, with the release of the fully autonomous version expected in October 2024, marking a key milestone in the ecosystem's development [39] - The company has contributed over 485 million lines of code to the open-source HarmonyOS, positioning itself as a leading player in the ecosystem [62] 3. AI: Dual Drivers of Computing Operations and Agent Implementation - The company is positioned as a "computing operator + agent implementer," operating multiple AI computing centers to enhance utilization rates [5][8] - The AI business is expected to become a new growth engine, with projected revenue from AI-related value-added services anticipated to increase significantly by 2025 [5][8] 4. Financial Forecast and Valuation - Revenue projections for 2025-2027 are estimated at 178 billion, 194.6 billion, and 221.4 billion RMB, with net profits of 6.1 billion, 7.3 billion, and 8.9 billion RMB respectively [6][8] - The report employs a relative valuation method, comparing the company to peers in the Huawei chain, with an average PE of 50x for 2025E, applying a 56% discount for its Hong Kong listing, resulting in a target market value of 170 billion RMB [8]

Investment Rating - The report maintains a "Buy" rating for China Software International (0354.HK) [3][5] Core Viewpoints - The recent product launch event highlights the technological advancements of China Software International and Shen Kaihong in the open-source HarmonyOS and robotics sectors, which is expected to attract more developers and accelerate the construction of the open-source Harmony ecosystem [3] - The company forecasts net profits of 644 million RMB, 754 million RMB, and 871 million RMB for the years 2025, 2026, and 2027 respectively, indicating a positive growth trajectory [3] Summary by Sections Product Launch - Shen Kaihong launched the Kaihong Bot series products, including the Kaihong "1+1" security digital base 5.0 and various products based on M-Robots OS, aimed at enhancing the open-source Harmony ecosystem [1][3] Kaihong Bot Series - The Kaihong Bot series is designed as an open-source Harmony learning platform for developers, featuring tools for application development, device development, and system secondary development [2] - The series includes two main products, Kaihong BotBook and Kaihong BotMini, with a starting price of 6,999 RMB, and plans for future expansions [2] Financial Forecast - The report provides a financial forecast with expected revenues of 18,263 million RMB in 2025, 19,770 million RMB in 2026, and 20,942 million RMB in 2027, showing a recovery from a decline in 2023 and 2024 [5][10] - Net profit is projected to increase from 644 million RMB in 2025 to 871 million RMB in 2027, reflecting a compound annual growth rate [5][10]

Group 1 - The Hong Kong stock market opened with mixed performance in the Hang Seng Index and Hang Seng Tech Index, with energy, finance, and consumer sectors showing gains [1] - The Hong Kong Tech 30 ETF (513160) declined by 0.80%, with a turnover rate exceeding 7% and a transaction volume over 800 million yuan [1] - The ETF market has seen significant inflows this year, with a net inflow of over 249.3 billion yuan as of May 7, and stock ETFs accounting for over 50% of this inflow [1] Group 2 - Haitong International's report suggests investors should wait for a second bottoming opportunity in May, particularly focusing on internet and AI applications [2] - The internet sector has lagged in the recent market rebound but has caught up after a significant rise last week, indicating potential future opportunities [2] - The report highlights the ongoing benefits in foreign trade and cross-border payment sectors due to deepening trade relations between China and ASEAN, as well as Japan and South Korea [2]

Group 1 - The Hang Seng Index rose by 1.10%, gaining 250 points to reach 22,941 points, while the Hang Seng Tech Index increased by 1.56% [1] - The stock of Hu Shang A Yi (02589) surged over 52% on its first trading day, with a transaction volume of HKD 493 million [1] - Domestic insurance stocks saw broad gains, with China Pacific Insurance (02601) up 3.69%, China Life (02628) up 2.70%, New China Life (01336) up 3%, China Property & Casualty Insurance (02328) up 1.95%, and Ping An Insurance (02318) up 1.39% [1] Group 2 - Goodbaby International (01086) rose over 15% as reports indicated the U.S. is considering tariff exemptions for imports of Chinese baby strollers [1] - Yunfeng Financial (00376) increased over 14%, with a cumulative rise of 150% over the past week, as Ant Group is expected to achieve business synergies internally [1] - Changfei Optical Fiber (06869) rose over 8% as its subsidiary Bochuang Technology plans to invest in the third phase expansion project of Changxin Sheng in Indonesia [1] Group 3 - Meituan-W (03690) increased by 3% due to a surge in tourism activity, reaching a three-year high, which boosted OTA platforms [2] - Trip.com Group-S (09961) rose by 2% after signing a memorandum of understanding with Visit Oman, indicating strong overseas market development prospects [2] - China Software International (00354) increased by 2.6% as Huawei's first HarmonyOS computer was officially launched, benefiting the core of the Harmony ecosystem [2] Group 4 - Guoquan (02517) surged over 17% as shareholders committed to a six-month lock-up period after converting to H-shares, with expectations for improved store efficiency and opening speed this year [3] Group 5 - Tehai International (09658) rose by 7% due to strong overseas market demand, with institutions optimistic about the company's stable operations [4] - SMIC (00981) fell over 2% ahead of its quarterly report, amid reports that Trump plans to lift AI chip restrictions [5]

Group 1 - Cloud computing stocks have collectively risen, with notable increases in companies such as Inspur Digital Enterprise (+3.76%), China Software International (+3.53%), and Tencent Holdings (+2.18%) [1] - North American cloud service providers (CSPs) reported earnings that exceeded market expectations, with Microsoft, Meta, and Amazon highlighting the significant role of AI in their revenue growth [1] - Despite concerns over tariff policies affecting the macro outlook, the demand for AI remains unchanged, contributing to a positive cycle of capital expenditure expansion, commercialization, and performance realization [1] Group 2 - Domestic demand for computing power is expected to be boosted by accelerated local infrastructure development amid global geopolitical and trade uncertainties [2] - The cloud computing market is undergoing an irreversible trend as IT workloads shift to the cloud, with artificial intelligence identified as a key driver for renewed growth [2] - The development of large language models (LLM) and generative AI (GenAI) is still in its early stages, which will play a crucial role in accelerating growth for global and Chinese CSPs [2]

Financial Performance - The company achieved a revenue of RMB 16.951 billion and an adjusted profit of RMB 650 million during the reporting period, with an investment of RMB 906 million in product and solution R&D[8]. - The company's revenue for 2024 was RMB 16,950,733 thousand, a decrease of 1.0% compared to RMB 17,116,894 thousand in 2023[92]. - Service revenue declined by 1.9% to RMB 16,314,168 thousand from RMB 16,631,560 thousand year-over-year[92]. - Annual profit decreased by 28.3% to RMB 511,145 thousand from RMB 712,667 thousand year-over-year[91]. - Basic earnings per share fell by 22.7% to RMB 20.01 from RMB 25.88 in the previous year[92]. - The adjusted profit for 2024 was RMB 650,240 thousand, an increase of 3.8% from RMB 626,350 thousand in 2023, with an adjusted profit margin of 3.8% compared to 3.7% in 2023[129]. - The company's annual profit attributable to owners was RMB 512,925 thousand in 2024, down 28.1% from RMB 713,394 thousand in 2023, resulting in basic earnings per share of RMB 20.01, a decrease of 22.7%[128]. - The company achieved a compound annual growth rate (CAGR) of 24.6% in total revenue and 30.8% in service revenue since its listing in 2003[102]. Research and Development - The company invested RMB 906 million in product and solution R&D[8]. - R&D expenses for 2024 were RMB 906,274 thousand, a decrease of 16.0% from RMB 1,078,296 thousand in 2023, with a focus on AI and ERP solutions[119]. - The company has developed over 50 general AI algorithms and launched 6 industry-specific smart terminal products, successfully implementing real-time monitoring in various scenarios across cities[16]. - The company has established a technology innovation center to enhance AI service capabilities, integrating AI computing services and engineering[94]. - The company has developed a self-research AI financial analysis tool that automates report generation and provides interactive decision support[22]. AI and Technology Integration - The company launched the Agentic AI platform suite Lumi and Lumi ONE, along with the training and inference integrated platform ARK Foundry, significantly shortening the innovation cycle for AI applications[12]. - The AI data analyst Agent, based on the AI native application engine, enhances data analysis efficiency and supports enterprise management and business decision-making[13]. - The company has established a digital power innovation center in collaboration with Huawei and Beijing Changping Future Science City, integrating DeepSeek models to provide comprehensive AI services[10]. - The model factory has been upgraded to 2.0, offering full lifecycle services from data governance to model training and deployment verification[9]. - The company aims to drive the intelligent upgrade of SMEs by integrating AI Agent service scenarios into their operations[12]. Market Expansion and Partnerships - The company has established a joint venture in Saudi Arabia as a strategic center for the Middle East market, signing a memorandum of cooperation with Huawei to promote regional digital development[21]. - The company is expanding its global market presence, using Hong Kong as a hub to reach Asia-Pacific and Middle Eastern regions[26]. - The company has partnered with state-owned banks and leading city commercial banks for AIGC projects, demonstrating its capabilities in the financial sector[20]. - The company has secured contracts worth HKD 410 million for the Hong Kong Police Central Digital Imaging Platform project, establishing a benchmark for government-controlled IT[21]. - The company has established cloud excellence centers (CCOEs) in key cities to enhance localized service capabilities and support AI cloud transformation for enterprises[71]. Operational Efficiency and Innovations - The company has achieved a 10x efficiency improvement in core services such as project review and acceptance through AI upgrades, utilizing a knowledge base covering over 100,000 project rules and experiences[39]. - The company has launched an intelligent risk control solution for bills, which automates compliance checks and risk detection, showcasing significant potential for cost reduction and risk management in the financial sector[40]. - The company has successfully implemented AI solutions in multiple sectors, including smart power, government, finance, and healthcare, showcasing the extensive application value of Agentic AI[20]. - The company has launched various AI applications in traditional manufacturing, focusing on enhancing production efficiency and market competitiveness[76]. - The company has established a layered defense architecture for AI applications, ensuring security through fine-grained access control and enhanced isolation mechanisms[33]. Corporate Governance and Compliance - The board of directors includes a mix of executive, non-executive, and independent directors, ensuring diverse expertise[140]. - The company emphasizes the importance of board diversity, considering various factors such as gender, age, and professional background in the selection of candidates[150]. - The audit committee reviewed the group's financial reporting procedures and internal control systems, ensuring compliance with applicable accounting standards[161]. - The company has established a clear delegation of authority to the executive directors and management for daily operations and business strategy[145]. - The company is committed to continuously optimizing its risk management system to enhance its risk management capabilities and ensure long-term growth and sustainability[172]. Social Responsibility and Sustainability - The company is committed to fulfilling corporate social responsibility (CSR) by aligning with SA8000 standards and promoting green innovation[181]. - The company is facing challenges in talent acquisition and retention due to intensified market competition for skilled personnel[181]. - The company is enhancing information security management and has achieved ISO27001 certification while introducing ISO27701 for personal privacy protection[182]. - The company aims to maintain its competitive edge by accelerating the transition from traditional IT services to high-value AI solutions[184]. - The company is committed to building a "healthy win-win" ecosystem with partners to enhance supply chain management and cost control[179].

Investment Rating - Industry rating: Recommended [5] Core Viewpoints - The ongoing tariff war between the US and China has intensified, with the US imposing a 34% tariff on Chinese imports, prompting China to respond with similar tariffs, which accelerates the domestic innovation and localization process in the technology sector [1][3][14] - The Chinese government emphasizes "technological self-reliance" as a core agenda, with policies aimed at enhancing key technology breakthroughs and increasing investment in basic research, which supports the growth of the domestic technology industry [2][26] - The tariff situation has led to significant market volatility, with the Chinese stock market experiencing a drop of over 7% in a single day, but state-owned enterprises have stepped in to stabilize the market through share buybacks and acquisitions [3][32] Summary by Sections 1. Changes in Foreign Tariff Policies - The US has implemented a "reciprocal tariff" policy, raising tariffs on Chinese goods, which has increased the cost of imported high-end components for the Chinese tech industry, particularly in hardware sectors like chips and servers [1][14][19] - The tariff war has created short-term challenges for the domestic innovation industry, but it also accelerates the push for domestic alternatives and self-sufficiency in technology [19][35] 2. Policy Promotion of Self-Reliance - The Chinese government has introduced measures to strengthen key technology research and optimize the layout of scientific research resources, aiming to create a trillion-level domestic innovation industry cluster by 2027 [2][28] - Local governments are also implementing supportive policies to promote domestic technology development, focusing on areas such as artificial intelligence and software ecosystems [28][30] 3. Corporate Actions and Domestic Tariff Responses - In response to the tariff war, state-owned enterprises have increased share buybacks to bolster market confidence, with 18 central enterprises taking action to stabilize the market [3][32] - The domestic chip market is benefiting from the increased prices of imported chips, highlighting the competitive advantage of domestic alternatives [3][31] 4. Investment Recommendations - Beneficial targets include core domestic innovation companies such as China Software, China Great Wall, and Dongfang Tong, as well as domestic computing and chip firms like Tuwei Information and Haiguang Information [4][39]

Group 1 - The core viewpoint of the report indicates steady revenue growth in the main business of the company, with a focus on flexible sensors to create a second growth curve [4][5][6] - The company achieved a revenue of 2.54 billion yuan in 2024, a year-on-year increase of 19.23%, and a net profit of 139 million yuan, up 98.42% year-on-year [4][5] - The company is transitioning from a single coating material provider to an integrated solution provider, enhancing revenue across various business segments [5][6] Group 2 - The report highlights that Lululemon's North American market growth is weak, with a revenue of 3.6 billion USD in FY2024Q4, a year-on-year increase of 13% [9][10] - The company expects a low to mid-single-digit revenue growth in North America for FY2025, with challenges from economic concerns affecting consumer traffic [11][12] - In contrast, the Chinese market showed strong growth, with a revenue increase of 48% year-on-year, indicating a robust performance in that region [11][12] Group 3 - The report on Tongyi Zhong indicates that the company achieved a revenue of 649 million yuan in 2024, a year-on-year increase of 1.4%, but net profit decreased by 15.2% [15][16] - The company reported a significant increase in production and sales volumes, with historical highs in major product categories [17][18] - The company is expanding into the aramid fiber sector, aiming to create dual growth drivers [15][21] Group 4 - Xiamen International Trade's report emphasizes its focus on supply chain management, with a strategy to navigate through commodity cycles [28][29] - The company has divested from real estate and financial services to concentrate on its core supply chain business, which includes metals, energy, and agriculture [29][30] - The report projects revenue for 2024 to 2026 at 389.05 billion yuan, 404.61 billion yuan, and 418.84 billion yuan, respectively, with a focus on maintaining a high dividend yield [32] Group 5 - The report on Bawang Tea indicates that it leads the high-end tea beverage market with 6,440 stores, achieving a GMV of 10.8 billion yuan in 2023 [33][34] - The company is benefiting from a growing market for high-end tea beverages, with a projected market size increase from 4.748 trillion yuan in 2019 to 8.189 trillion yuan in 2024 [34][35] - Bawang Tea's strategy focuses on a limited number of new products while optimizing supply chain efficiency, resulting in a gross margin of 51.5% [35] Group 6 - Aikodi's report shows a revenue of 6.746 billion yuan in 2024, a year-on-year increase of 13.24%, with a net profit of 940 million yuan [36][37] - The company is expanding its global footprint with new production bases in Malaysia and Mexico, enhancing its supply chain stability [39][40] - The report anticipates continued revenue growth driven by new product lines and market expansion, projecting revenues of 7.9 billion yuan in 2025 [40] Group 7 - Longxing Technology's report indicates a revenue of 4.355 billion yuan in 2024, with a net profit increase of 28.7% [41][42] - The company is expanding its production capacity with new projects and acquisitions, aiming to increase its market share in the carbon black industry [46] - The report highlights a significant improvement in gross margin, reaching 13.01% in Q4 2024, driven by operational efficiencies [45][46]

Investment Rating - The report maintains a "Recommendation" rating for the industry [5] Core Viewpoints - The emphasis on "technology domestic demand" is highlighted, with a focus on self-reliance and control as a core theme in the context of major power competition [3][10][22] - The report suggests that the domestic computing demand and self-reliance will be the main drivers for investment opportunities in the technology sector [3][22] - The report identifies key areas of focus including domestic AI computing, national software innovation (信创), military information technology, and the Harmony OS ecosystem [3][22] Summary by Sections Market Review - The Shanghai Composite Index fell by 1.37%, the SME Index by 2.93%, and the ChiNext Index by 2.95% during the week of March 31 to April 3 [30] Industry News - The report discusses the release of the national measurement list which is expected to accelerate the domestic innovation industry [14] - It notes the importance of the Harmony OS as a significant new player in the domestic operating system market, particularly in PCs [15] Company Dynamics - Highwei Technology plans to reduce its shareholding by up to 4,400,000 shares, accounting for 1% of the total share capital [27] - The report mentions that Lai Si Information has completed the registration and filing procedures for changing its legal representative [27] Investment Suggestions - The report recommends focusing on companies involved in domestic AI computing, national software innovation, military information technology, and key players in the Harmony OS ecosystem [22] - Specific companies highlighted include Haiguang Information, Cambrian, Inspur Information, China Software, and others across various segments [22][21]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for future performance [6]. Core Insights - The company reported a slight revenue decline of 1.0% year-on-year for 2024, with total revenue reaching 16.951 billion RMB. However, there was a significant recovery in the second half of 2024, with a 13.86% increase in revenue compared to the first half, driven by a rebound in workforce size and accelerated growth in cloud intelligence and full-stack AI businesses [1]. - The company achieved a gross margin of 22.1% for 2024, a decrease of 1.3 percentage points year-on-year, while adjusted profit increased by 3.8% to 650 million RMB. A dividend of 0.0533 HKD per share was proposed, reflecting a commitment to shareholder returns [1]. Summary by Sections Cloud Intelligence - The company is a leading player in the Huawei cloud ecosystem, generating 1.848 billion RMB in public cloud revenue, with a core business growth of 25% year-on-year. It has maintained the top market share for seven consecutive years and has implemented over 200 CTSP projects across various industries [2]. - Internationally, the company has made strides with projects like the Kai Tak Sports Park and the police CDIP project in Hong Kong, valued at 410 million HKD, establishing benchmarks for smart city initiatives [2]. Full-Stack AI Transformation - Since initiating the SP301 strategy in 2020, the company has invested over 1.5 billion RMB in developing a comprehensive "cloud-edge-end full-stack AI" framework, achieving initial success by 2024 [3]. - The company has established a digital power innovation center and a computing power scheduling platform, winning over 90 major model projects. It has also deployed over 30 lighthouse projects in sectors such as finance and energy [3]. - A proprietary ERP system has been developed and successfully delivered to a state-owned power enterprise [3]. HarmonyOS Ecosystem - The KaihongOS has received national EAL5+ security certification, with a response time of less than 3 microseconds, and has adapted to 80 chip models, contributing over 4.25 million lines of open-source code [4]. - The company leads the market in HarmonyOS PC and application migration services, with over 7,000 services launched in 2024, covering more than 500 application migrations [4]. Profit Forecast, Valuation, and Rating - The company is expected to see a recovery in its core business and efficiency improvements from AI initiatives, with a projected revenue rebound in 2025 [5]. - The focus will remain on high-value sectors such as power, finance, and government, with increased investments in cloud, HarmonyOS, and ERP areas [5]. - The net profit forecasts for 2025 and 2026 have been adjusted downwards to 644 million RMB and 754 million RMB, respectively, while a new forecast for 2027 is set at 870 million RMB [5].