Summary of Conference Call Notes Industry Overview - The macroeconomic environment is influenced by multiple factors including national economic development, new productivity advancements, and national security concerns, with the ongoing US-China rivalry being a significant theme for the foreseeable future [1] - The focus on domestic autonomy and control is expected to create new opportunities in both software and hardware sectors, driven by national policies [1] Key Points on Software Sector - The software sector includes major areas such as large AI models, basic software (operating systems, databases), and industrial software (ERP, EDA, CAD) which have potential for domestic replacement [2][3] - Current domestic production of CPUs and GPUs is heavily reliant on foreign suppliers, with estimates indicating that 70-80% of server CPUs are sourced from Intel and AMD [2][3] - The domestic AI chip market is led by companies like Shenwei and Haiguang, with significant contributions from domestic models in the AI sector [3][4] Key Points on Hardware Sector - The hardware sector is primarily focused on core components like CPUs and GPUs, with a strong emphasis on domestic production capabilities [2][3] - The domestic CPU market is projected to have a substantial replacement space, with a market size exceeding 100 billion RMB [27] - The GPU market is also seeing potential for domestic alternatives, especially in light of US export controls affecting companies like NVIDIA and AMD [28][30] Policy and Market Dynamics - The US has intensified sanctions against China, particularly in advanced technology sectors, which has led to a tightening of export controls and tariffs [6][7][8] - The Chinese government is pushing for self-sufficiency in technology, with policies aimed at achieving autonomy in core technologies, including software and hardware [9][10] - The domestic market for AI servers is expected to grow significantly, with projections indicating that over 60% of AI server purchases will come from domestic sources by 2024 [10][11] Emerging Trends - The development of domestic operating systems, such as HarmonyOS, has gained traction, becoming the second-largest mobile OS in China, with a growing ecosystem of applications [12][18] - The shift towards distributed databases and cloud-based solutions is evident, with domestic companies like Alibaba and Tencent leading the market [21] - The industrial software sector is also evolving, with domestic firms capturing significant market shares in ERP and EDA solutions [23][24] Risks and Challenges - Potential risks include macroeconomic impacts on business demand, slower-than-expected development of large models and industries, and escalating US-China tensions [34] - The ongoing tariff and sanction environment poses uncertainties for the domestic technology sector, particularly in the CPU and GPU markets [15][16] Conclusion - The drive for self-sufficiency in technology is a critical aspect of the ongoing US-China rivalry, with significant implications for the software and hardware industries in China [33]

[Performance Forecast Summary](index=1&type=section&id=I.%20Current%20Period%20Performance%20Forecast) The company anticipates a net loss for the first half of 2025, with net profit attributable to shareholders ranging from -87 million to -72.5 million RMB, and non-recurring adjusted net profit from -90 million to -75 million RMB 2025 Semi-Annual Performance Forecast | Metric | Estimated Amount (Million RMB) | | :--- | :--- | | Net Profit Attributable to Parent Company Shareholders | -87 to -72.5 | | Net Profit Attributable to Parent Company Shareholders (Excluding Non-Recurring Items) | -90 to -75 | [Comparison with Prior Period Performance](index=1&type=section&id=II.%20Prior%20Period%20Operating%20Performance%20and%20Financial%20Position) The company expects a significant reduction in net loss for the first half of 2025 compared to the prior year, with an anticipated decrease in loss of approximately 186 million to 200 million RMB from the previous year's 273 million RMB net loss 2025 Semi-Annual Performance vs. Prior Period (Unit: Million RMB) | Metric | 2025 Semi-Annual (Estimated) | 2024 Semi-Annual (Actual) | | :--- | :--- | :--- | | Net Profit Attributable to Parent Company Shareholders | -87 to -72.5 | -272.6472 | | Net Profit Attributable to Parent Company Shareholders (Excluding Non-Recurring Items) | -90 to -75 | -285.8222 | - Compared to the prior year, the net loss attributable to parent company shareholders is expected to decrease by **185.6472 million to 200.1472 million RMB**[6](index=6&type=chunk) [Analysis of Performance Change](index=1&type=section&id=III.%20Primary%20Reasons%20for%20Current%20Period%20Performance%20Change) The company's continued loss is primarily due to the seasonal concentration of project settlements in the second half, though the significant year-over-year reduction in loss is attributed to core business focus, improved contract quality, enhanced delivery efficiency, strengthened internal controls, and ongoing cost reduction initiatives - The primary reason for the current period's loss is the concentration of most project settlements and acceptances in the second half of the year[5](index=5&type=chunk) - The significant reduction in loss is primarily due to: - Focusing on core responsibilities and main business - Increasing market development efforts and improving the quality of new contracts - Intensifying project delivery efforts - Strengthening integrated business, financial, and human resource management to enhance digital control capabilities - Continuously promoting cost reduction and efficiency improvement[6](index=6&type=chunk) [Risk Warning and Other Matters](index=2&type=section&id=IV.%20Risk%20Warning) The company confirms no material uncertainties affecting the accuracy of this performance forecast, while reminding investors that the preliminary, unaudited data will be superseded by the final audited figures in the 2025 annual report - The company declares that there are no material uncertainties affecting the accuracy of this performance forecast[7](index=7&type=chunk) - Investors are advised that the forecast data provided is preliminary and unaudited, with final accurate figures subject to the company's officially disclosed audited 2025 annual report[8](index=8&type=chunk)

Core Viewpoint - The company, China Software (600536), anticipates a net loss attributable to shareholders of the parent company ranging from -87 million to -72.5 million yuan for the first half of 2025, primarily due to project settlements concentrated in the second half of the year [1] Financial Performance - The expected net profit attributable to shareholders, excluding non-recurring gains and losses, is projected to be between -90 million and -75 million yuan for the first half of 2025 [1] - The company expects to reduce its net loss by 186 million to 200 million yuan compared to the same period last year [1] Strategic Initiatives - The reduction in loss is attributed to the company's focus on its core business, increased market development efforts, improved quality of new contracts, and enhanced project delivery [1] - The company is strengthening integrated management of finance and operations, improving digital management capabilities, and continuously promoting cost reduction and efficiency enhancement [1]

Group 1 - The article presents the market capitalization rankings of the top 50 Chinese technology and internet companies as of July 14, 2025 [1] - The leading company by market capitalization is 台棋电 (Taiwan Semiconductor Manufacturing Company) with a valuation of 11,949.75 million [3] - Tencent Holdings ranks second with a market cap of 5,815.18 million, followed by Alibaba at 2,546.4 million [3][4] Group 2 - Xiaomi Group is ranked fourth with a market capitalization of 1,889.61 million, while Pinduoduo follows in fifth place with 1,489.35 million [3][4] - Meituan and NetEase are positioned sixth and seventh, with market caps of 929.41 million and 812.27 million respectively [3][4] - Other notable companies in the top 10 include 东方财富 (East Money) at 523.39 million and 中芯国际 (SMIC) at 476.15 million [4][5] Group 3 - The rankings continue with companies like 京东 (JD.com) at 448.31 million and 快手 (Kuaishou) at 356.11 million [4][5] - Baidu, 理想汽车 (Li Auto), and 贝壳 (Beike) are also included in the top 15, with market caps of 298.84 million, 296.08 million, and 221.89 million respectively [4][5] - The list concludes with 云费智联 (Yunfei Zhili) at 41.76 million, marking the 50th position [6]

Group 1 - The stock price of China Software (600536) closed at 46.1 yuan on July 11, 2025, an increase of 1.63% from the previous week [1] - The company achieved a market capitalization of 43.338 billion yuan, ranking 4th out of 118 in the IT services sector and 324th out of 5149 in the A-share market [1] - The company completed a private placement of A-shares, issuing 90,130,689 shares at a price of 22.19 yuan per share, raising a total of approximately 2 billion yuan [1] Group 2 - China Software's subsidiary, Kirin Software Co., Ltd., opened three new special accounts for raised funds at major banks, with specific amounts allocated for various product development projects [2] - The total amounts stored in the new accounts are approximately 993 million yuan for terminal operating system R&D, 800 million yuan for cloud server operating system R&D, and 200 million yuan for embedded operating system platform construction [2] - A four-party supervision agreement was signed between the company, Kirin Software, and the banks, detailing the management and usage of the raised funds [2]

Core Viewpoint - The China Securities Central Enterprise New Momentum Theme Index has shown a mixed performance, with a recent increase in value but a year-to-date decline, reflecting the overall market dynamics and the performance of selected central enterprise stocks [1][2]. Group 1: Index Performance - The China Securities Central Enterprise New Momentum Theme Index opened high and fluctuated, rising by 0.5% to 1629.68 points, with a trading volume of 19.58 billion yuan [1]. - Over the past month, the index has increased by 3.32%, while it has risen by 4.02% over the last three months, but has decreased by 0.88% year-to-date [1]. Group 2: Index Composition - The index comprises 45 representative listed companies from central enterprises under the State-owned Assets Supervision and Administration Commission, focusing on manufacturing, technology, and modern service industries [1]. - The top ten weighted stocks in the index include Hikvision (9.61%), Changan Automobile (8.91%), AVIC Optoelectronics (7.0%), and others, indicating a concentration in specific companies [1]. Group 3: Market Segmentation - The index's holdings are primarily concentrated in the Shenzhen Stock Exchange (62.23%), followed by the Shanghai Stock Exchange (37.40%) and a minimal presence in the Beijing Stock Exchange (0.37%) [1]. - In terms of industry distribution, the index shows a significant allocation to industrials (45.87%) and information technology (37.72%), with smaller allocations to consumer discretionary (9.36%), communication services (4.62%), financials (1.60%), and materials (0.84%) [2]. Group 4: Index Adjustment Mechanism - The index samples are adjusted semi-annually, with changes implemented on the next trading day following the second Friday of June and December [2]. - Weight factors are generally fixed until the next scheduled adjustment, with provisions for temporary adjustments in special circumstances, such as delisting or corporate restructuring [2].

Core Insights - The article presents the market capitalization rankings of the top 50 Chinese technology and internet companies as of July 11, 2025, highlighting significant players in the industry [1]. Group 1: Top Companies by Market Capitalization - TSMC leads the list with a market capitalization of approximately $11,916.56 million [3]. - Tencent Holdings ranks second with a market capitalization of about $5,885.24 million [3]. - Alibaba is in third place with a market capitalization of around $2,544.49 million [3]. - Pinduoduo follows in fourth place with a market capitalization of $1,490.20 million [3]. - Meituan and NetEase are also notable, with market capitalizations of $947.31 million and $807.83 million, respectively [3][4]. Group 2: Additional Notable Companies - Semiconductor Manufacturing International Corporation (SMIC) has a market capitalization of $472.08 million, ranking eighth [4]. - JD.com and Tencent Music are positioned ninth and tenth, with market capitalizations of $450.04 million and $309.78 million, respectively [4]. - Baidu and Li Auto are also significant players, with market capitalizations of $304.03 million and $291.16 million [4]. Group 3: Emerging and Smaller Companies - Companies like Xpeng Motors and ZTO Express have market capitalizations of $166.15 million and $154.59 million, respectively [4]. - Other companies in the list include iFlytek with $149.34 million and Baosight Software with $95.10 million [4][5]. - The list also features companies like Kingdee International and Wancloud Data, with market capitalizations of $70.72 million and $67.09 million, respectively [5].

Group 1 - The core growth engines of the Chinese software industry are identified as AI Agents, multimodal AI models, and model deployment [1] - AI agents are evolving from concepts discussed in enterprise settings to commercially viable products, serving as a new user interface for businesses and knowledge workers [1] - Software vendors are accelerating the integration of AI agents into their professional platforms [1] Group 2 - Analysis of enterprise application project bids from late April to present indicates a robust momentum for projects in Q2 2025 [3] - The release of foundational models like DeepSeek R1 has significantly stimulated demand for privatized AI model deployment among state-owned enterprises, schools, and government clients [3] - AI model deployment projects generally have larger overall scales compared to other ERP or system upgrade projects, often including integrated solutions like computing hardware, which increases contract values [3] Group 3 - Despite solid demand for AI applications on the enterprise side, challenges remain on the consumer side, including low payment conversion rates for consumer-facing AI tools [3] - The revenue contribution from AI functionalities remains small relative to total revenue [3] - AI vendors are continuously pushing multimodal models towards lower costs, higher quality, and longer context, while the acceleration of EDA software localization is seen as a certain growth avenue for AI vendors [3]

Investment Rating - The report assigns a "Buy" rating to Kingsoft Office, Kingdee, and Empyrean [5][31]. Core Insights - The momentum of AI-native applications and software with AI features remains strong, particularly in the areas of agentic AI and multi-modal AI models [1][4]. - AI agents are expected to become the new user interface for enterprises, enhancing productivity through proactive responses to environmental changes [4][12]. - The release of upgraded multi-modal AI models focuses on generating and editing various content types with improved quality and lower costs [4][13]. - There is a solid project pipeline for enterprise application wins, particularly in AI model deployment, indicating a larger scale of AI projects compared to traditional ERP or system upgrades [21][4]. Summary by Sections AI Agents and Applications - AI agents are being adopted by enterprises to complete tasks independently, with companies like Manus launching general AI agents and Kingdee introducing multiple specialized AI agents [4][12]. - The report highlights the potential of AI agents to improve user experiences in various sectors, including finance and travel [4][12]. Multi-modal AI Models - Recent upgrades in multi-modal AI models have been made by vendors, focusing on high-quality content generation across different media types [4][13]. - Companies like Stepfun and Wondershare are developing advanced tools for image and video editing, enhancing user capabilities [4][13]. Software Project Wins - The report reviews enterprise application project wins, noting a solid momentum in AI model deployments from late April to the present [21][4]. - The scale of AI projects is generally larger due to the inclusion of integrated solutions, which often require higher computing hardware costs [21][4]. EDA and IP Software Expansion - Local EDA suppliers are accelerating product launches to capture localization opportunities, with new tools being introduced for mixed-signal SoC and digital simulation [4][21].

Core Viewpoint - The article presents the market capitalization rankings of the top 50 Chinese technology and internet companies as of July 8, 2025, highlighting significant players in the industry and their respective valuations [1]. Group 1: Top Companies by Market Capitalization - TSMC leads the list with a market capitalization of approximately $11,885.95 million [3]. - Tencent Holdings follows with a valuation of about $5,867.71 million [3]. - Alibaba ranks third with a market cap of $2,535.66 million [3]. - Xiaomi Group is positioned fourth with a market capitalization of $1,935.90 million [3]. Group 2: Additional Notable Companies - JD.com is ranked eighth with a market cap of $461.57 million [4]. - SMIC (Semiconductor Manufacturing International Corporation) is close behind at $456.82 million, ranking ninth [4]. - Kuaishou is in the tenth position with a valuation of $356.39 million [4]. - Tencent Music and Baidu are also notable, with market caps of $310.40 million and $308.67 million, respectively [4]. Group 3: Emerging Players - Li Auto and Beike are valued at $286.24 million and $216.73 million, respectively, indicating their growing presence in the market [4]. - Xpeng Motors and iFlytek have market caps of $170.73 million and $149.98 million, showcasing their potential in the automotive and AI sectors [4]. - Other companies like Zhongtong Express and Baoson Software are also making strides with valuations of $143.32 million and $94.87 million [4]. Group 4: Market Trends - The rankings reflect the competitive landscape of the Chinese technology sector, with significant fluctuations in market capitalizations among various companies [1]. - The data is calculated based on the daily market values, indicating the dynamic nature of the industry [6].