Core Viewpoint - The company, China Software (600536), announced a donation of 8 million yuan to the OpenAtom Open Source Foundation, reflecting its commitment to social responsibility and support for open-source and public welfare initiatives [1] Group 1: Company Actions - The company's subsidiary, Kylin Software, holds a 47.23% stake and is actively involved in governance work for national-level open-source foundations and projects [1] - The donation will enable Kylin Software to maintain its status as a platinum donor to the foundation, as well as strategic donor for openKylin and platinum donor for openEuler [1] Group 2: Industry Impact - The donation supports the development of open-source and public welfare in China, aligning with the broader industry trend of increasing corporate social responsibility [1]

Core Viewpoint - The company plans to reduce its investment in the joint venture logistics company and exit, which will result in both the company and its controlling shareholder no longer holding equity in the logistics company [1] Summary by Relevant Sections - **Investment Reduction**: The company and its controlling shareholder, China Electronics, intend to reduce their investment in the jointly invested logistics company, Logistics Digital Science [1] - **Financial Recovery**: The company expects to recover approximately 86.04 million yuan from the reduction, while China Electronics anticipates recovering about 19.12 million yuan [1] - **Approval Requirement**: The transaction is subject to approval from the company's shareholders' meeting, indicating a level of uncertainty regarding the completion of the deal [1]

Core Insights - The server operating system market in China is experiencing significant growth, driven by the expansion of the digital economy and the acceleration of digital transformation across enterprises [1][6][8] - The total installed capacity of server operating systems in China is projected to increase from 2.987 million units in 2019 to 5.135 million units by 2024, with a compound annual growth rate (CAGR) of 11.45% [1][8] - The market is dominated by Linux, which holds a 79.6% share, while Windows Server accounts for 19.9% and other systems like Unix only 0.5% [8][10] Industry Overview - Server operating systems are critical for managing and coordinating hardware and software in enterprise IT systems, with major types including Windows Server, Linux, and Unix [1][3] - The industry is supported by a robust ecosystem of companies, including major players like China Software, Kirin Software, and Huawei, focusing on open-source technologies and self-developed capabilities [2][11] Market Growth - The market size of the server operating system industry in China is expected to grow from 4.59 billion yuan in 2019 to 9.4 billion yuan by 2024, reflecting a CAGR of 15.42% [8][9] - The demand for server operating systems is primarily concentrated in sectors such as finance, government, internet, energy, and telecommunications, with finance leading at 21.5% market share [10] Development Trends - The industry is moving towards cloud-native and intelligent architectures, integrating cloud computing and microservices to enhance operational efficiency [14] - There is a growing emphasis on ecosystem development, focusing on full-stack collaboration and open-source innovation to create a sustainable industrial ecosystem [15] - Customization for vertical industries is becoming a key trend, with server operating systems being tailored to meet specific needs in finance, government, and industrial sectors [16]

Major Events - Shandong Xinhua Pharmaceutical Co., Ltd. received the approval notice for the listing application of fumaric acid vonoprazan chemical raw materials [1] - HeYue Pharmaceutical showcased long-term efficacy and safety data from the clinical III MANEUVER study of pitmiprazole at the CTOS 2025 conference [1] - China Software International partnered with Deep Open Hong and Yiswei Computing to build a new ecosystem for "open-source HarmonyOS + RISC-V" digital infrastructure [1] - China General Nuclear Power Corporation's Zhaoyuan Unit 1 is set to begin full construction [1] - Hengrui Medicine's fumaric acid teglutide injection received approval for clinical trials [1] - China National Nuclear Corporation signed an intention procurement agreement for cobalt-60 irradiation sources with the Brazilian National Nuclear Energy Commission [1] Operating Performance - China Railway Construction Corporation recently won several major projects with a total investment of 49.629 billion yuan [1] - Geely Automobile reported a net profit of 3.82 billion yuan for the third quarter, a year-on-year increase of 59% [1] - China Resources Power's subsidiary power plants achieved a cumulative electricity sales volume of 185 million megawatt-hours in the first ten months, a year-on-year increase of 6.5% [1] - Leap Motor reported a net profit of 150 million yuan for the third quarter, maintaining the top sales position among new force brands in China for eight consecutive months [1] - Huazhu Group's net profit attributable to shareholders for the third quarter was 1.5 billion yuan, a year-on-year growth of 15.4% [1] - Air China saw a year-on-year increase of 8.7% in passenger turnover in October [1] - China Eastern Airlines reported a year-on-year increase of 10.58% in passenger turnover in October [1]

Core Viewpoint - China Software International (00354) has signed a strategic cooperation agreement with Shenzhen Kaihong Digital Industry Development Co., Ltd. and Beijing Yiswei Computing Technology Co., Ltd. to build a dual open-source ecosystem centered on "Open Source Harmony + RISC-V" [1][2] Group 1: Technical Aspects - The three parties will establish a joint technical team focusing on deep adaptation and collaborative development of "RISC-V chips + KaihongOS," addressing key technical areas such as operating system kernel adaptation, driver development, performance optimization, security reinforcement, and AI empowerment [1] - The collaboration aims to create a stable and efficient software-hardware collaborative foundation [1] Group 2: Product Development - The partnership will leverage each company's strengths to jointly develop edge computing products and industry solutions, including traffic MEC, education IWB, and industrial quality inspection AOI, as well as chip products and solutions in smart home, robotics, and industrial sectors [1] - The initiative will gradually expand to smart terminals based on "RISC-V + KaihongOS" [1] Group 3: Market and Ecosystem Expansion - The market strategy will initially focus on smart transportation and gradually extend to public services and various industry sectors, while also exploring overseas market opportunities to enhance the international competitiveness of the domestic dual open-source ecosystem [2] - The collaboration will participate in open-source community building and technical standard formulation, promoting interface recognition and resource sharing [2] - The dual open-source ecosystem aims to construct a self-sufficient technology system encompassing "chip architecture - operating system - applications," breaking the global monopoly of X86 and ARM [2] - The initiative is driven by market demand, promoting deep collaboration among chips, software, and terminal entities to create new scenarios, applications, and models in the era of intelligent connectivity [2]

Core Viewpoint - China Software International (00354) has signed a strategic cooperation agreement with Shenzhen Kaihong Digital Industry Development Co., Ltd. and Beijing Yiswei Computing Technology Co., Ltd. to build a dual open-source ecosystem centered on "Open Source Hongmeng + RISC-V" [1][2] Group 1: Technical Aspects - The three parties will establish a joint technical team focusing on deep adaptation and collaborative development of "RISC-V chips + KaihongOS," referencing the "Wintel model" [1] - Key technical directions include operating system kernel adaptation, driver development, performance optimization, security reinforcement, and AI empowerment [1] Group 2: Product Development - The collaboration aims to create edge computing products and industry solutions, including traffic MEC, education IWB, and industrial quality inspection AOI, as well as chip products and solutions in smart home, robotics, and industrial sectors [1] - The initiative will gradually expand to smart terminals based on "RISC-V + KaihongOS" [1] Group 3: Market and Ecosystem Development - The market strategy will initially focus on smart transportation and gradually extend to government, public welfare, and industrial sectors, while exploring overseas market opportunities to enhance the international competitiveness of the domestic dual open-source ecosystem [2] - The collaboration will participate in open-source community building and technical standard formulation, promoting interface recognition and resource sharing [2] - The core of the "Open Source Hongmeng + RISC-V" ecosystem is to establish a self-sufficient technology system across the "chip architecture - operating system - application" chain, breaking the global monopoly of X86 and ARM [2] Group 4: Strategic Goals - The three parties aim to replicate the successful logic of Wintel and AA combinations to create a globally competitive third-generation mainstream software and hardware ecosystem, providing core support for digital economic development [2] - The collaboration is expected to leverage complementary resources to accelerate the industrialization of the "Open Source Hongmeng + RISC-V" ecosystem, solidifying the company's core position in the domestic basic software and hardware ecosystem and creating long-term value for shareholders [2]

Core Viewpoint - China Software International has signed a strategic cooperation agreement with Shenzhen Kaihong Digital Industry Development Co., Ltd. and Beijing Yiswei Computing Technology Co., Ltd. to build a dual open-source autonomous ecosystem centered on "Open Source Harmony + RISC-V" [1] Group 1 - The collaboration aims to leverage complementary resources among the three companies [1] - China Software International will utilize its software application, system integration, and industry implementation capabilities [1] - Shenzhen Kaihong will contribute its expertise in the Open Source Harmony operating system and distributed technology [1] - Yiswei Computing will support the initiative with RISC-V chips and customized solutions [1] Group 2 - The partnership focuses on promoting the large-scale implementation of new products and technologies related to "Open Source Harmony + RISC-V" in digital economy scenarios [1] - The initiative aims to empower various industries in their digital transformation [1]

Core Viewpoint - The strategic cooperation agreement signed between China Software International, Shenzhen Kaihong Digital Industry Development Co., Ltd., and Beijing Yiswei Computing Technology Co., Ltd. aims to build a dual open-source ecosystem centered on "Open Source Hongmeng + RISC-V" to promote digital transformation across various industries [1][2][3] Technical Aspects - The three parties will form a joint technical team focusing on key technology areas such as operating system kernel adaptation, driver development, performance optimization, security enhancement, and AI empowerment [1][2] - The collaboration will reference the "Wintel model" to achieve deep adaptation and coordinated development of "RISC-V chips + KaihongOS" [1][2] Product Development - The partnership will leverage each company's strengths to jointly develop edge computing products and industry solutions, including applications in transportation, education, and industrial quality inspection [2] - There will be a gradual expansion into smart terminals based on "RISC-V + KaihongOS" [2] Market Strategy - The initial focus will be on smart transportation, with plans to expand into public services and various industry sectors, while also exploring overseas market opportunities [2] - The collaboration aims to enhance the international competitiveness of the domestic dual open-source ecosystem [2] Ecosystem Development - The three companies will participate in open-source community building and technical standard formulation to promote interface recognition and resource sharing [2] - Activities such as technology forums and developer conferences will be organized to cultivate the "Open Source Hongmeng + RISC-V" industrial ecosystem and lower innovation barriers [2] Strategic Importance - The dual open-source ecosystem aims to establish a comprehensive independent technology system encompassing "chip architecture - operating system - applications," breaking the global monopoly of X86 and ARM architectures [2] - The collaboration is expected to replicate the successful logic of Wintel and AA combinations, creating a globally competitive third-generation mainstream software and hardware ecosystem [2][3]

Core Viewpoint - China Software's stock price has shown a slight increase of 2.01% on November 17, reaching 49.15 CNY per share, with a total market capitalization of 45.896 billion CNY [1] Financial Performance - For the period from January to September 2025, China Software achieved a revenue of 3.198 billion CNY, reflecting a year-on-year growth of 9.50% [2] - The company reported a net profit attributable to shareholders of -104 million CNY, which is a significant improvement with a year-on-year increase of 69.18% [2] Shareholder Information - As of September 30, 2025, the number of shareholders for China Software reached 160,200, an increase of 2.59% compared to the previous period [2] - The average number of tradable shares per shareholder decreased by 2.52% to 5,265 shares [2] Stock Trading Activity - On November 17, the trading volume was 2.49 million CNY, with a turnover rate of 0.61% [1] - The stock has experienced a year-to-date increase of 5.27%, but has seen a decline of 0.51% over the last five trading days and a 3.57% drop over the last 20 days [1] Dividend Distribution - Since its A-share listing, China Software has distributed a total of 415 million CNY in dividends, with 13.8956 million CNY distributed over the past three years [3] Institutional Holdings - As of September 30, 2025, Hong Kong Central Clearing Limited is the third-largest shareholder, holding 14.6729 million shares, an increase of 2.1198 million shares from the previous period [3] - The Southern CSI 500 ETF and E Fund CSI Artificial Intelligence Theme ETF have seen changes in their holdings, with the former decreasing by 611,500 shares and the latter decreasing by 502,700 shares [3]

Summary of Key Points from the Equity Research Report on China Software Sector Industry Overview - The report focuses on the China software industry, particularly highlighting the performance of 18 covered software companies in the third quarter of 2025 (3Q25) [3][11]. - There is a noted recovery in earnings, with total net profit rising by 92% year-on-year (y-o-y) for the covered companies [10][11]. Core Insights - **Earnings Recovery**: The significant recovery in earnings is attributed to limited downside from tighter IT budgets, as the base is low, and ongoing cost control measures are expected to continue driving earnings recovery [3][4]. - **Market Dynamics**: The competitive landscape is improving, with smaller players exiting the market, which may benefit larger firms [3]. - **Revenue Drivers**: AI and localization are identified as key revenue drivers, with specific companies like Yonyou and Kingdee expected to benefit from AI monetization [4][9]. Company-Specific Highlights - **Sangfor**: - Rated "Buy" with a target price of RMB 144.00, implying an 18% upside. The company is expected to benefit from improved demand for HCI and software-defined storage amid AI adoption [24]. - **Yonyou**: - Rated "Buy" with a target price of RMB 21.00, indicating a 43% upside. The company is projected to grow at a CAGR of 12% from 2025 to 2027 [24]. - **Kingdee**: - Rated "Buy" with a target price of HKD 18.20, suggesting a 24% upside. Expected revenue growth at a CAGR of 12.5% over 2024-2027 [24]. - **Kingsoft Office**: - Rated "Buy" with a target price of RMB 353.00, indicating a 7% upside. The company is well-positioned in software localization and AI function optimization [24]. - **ThunderSoft**: - Rated "Buy" with a target price of RMB 82.00, suggesting a 25% upside. The company is expected to see robust demand for on-device AI [24]. Investor Sentiment - Investors are showing strong interest in AI applications and their monetization potential, particularly in ERP systems [4][9]. - There is a focus on high-quality AI A-share software names seeking H-share listings, such as Yonyou and Intsig, due to their valuation discounts [4]. Risks and Challenges - **Sector Risks**: Potential risks include a weak macroeconomic environment leading to tighter IT budgets, intense competition, and policy support falling short of expectations [6][24]. - **Valuation Concerns**: Some investors express concerns regarding high valuations, particularly for companies like Kingsoft Office, although others believe the valuations are reasonable given the earnings visibility [5]. Conclusion - The China software sector is experiencing a notable recovery, driven by AI and localization trends. Key players are positioned to benefit from these trends, although risks related to macroeconomic conditions and competition remain pertinent. Investors are advised to consider these dynamics when evaluating opportunities in the sector.