Group 1 - The company, China Software, announced an expected net loss attributable to shareholders of the parent company for the year 2025, ranging from -49 million to -41 million yuan [2] - The company also projected a net loss attributable to shareholders after deducting non-recurring gains and losses for 2025, estimated between -61 million and -51 million yuan [2]

Core Viewpoint - China Software (600536.SH) is expected to report a net loss attributable to shareholders of the parent company ranging from -49 million yuan to -41 million yuan for the fiscal year 2025, indicating a significant loss [1] - The company anticipates a net profit, excluding non-recurring gains and losses, between -61 million yuan and -51 million yuan for the same period, suggesting a substantial reduction in losses [1] Summary by Category - **Financial Performance** - Expected net loss for 2025 is projected between -49 million yuan and -41 million yuan [1] - Anticipated net profit, excluding non-recurring items, is forecasted to be between -61 million yuan and -51 million yuan [1] - **Business Transformation** - The company expects to significantly reduce its losses due to the initial results of its business transformation and upgrade [1] - Improvement in profitability is noted in the core application solutions for government and party sectors [1]

Core Viewpoint - China Software (600536.SH) forecasts a net loss attributable to shareholders of the parent company for the fiscal year 2025, estimated between -49 million to -41 million yuan, compared to a loss of -412.64 million yuan in the same period last year, indicating a significant reduction in losses due to the progress in business transformation and upgrades [1] Group 1 - The company expects to incur losses primarily due to ongoing business transformation and upgrades, which are still in progress [1] - The anticipated loss has narrowed significantly, attributed to the positive results from the business transformation efforts [1] - The profitability of the core application solutions for government and party sectors has improved, contributing to the reduced loss [1]

Core Viewpoint - China Software (600536.SH) is expected to report a net loss attributable to shareholders of the parent company ranging from -49 million to -41 million yuan for the fiscal year 2025, with a net loss excluding non-recurring gains and losses estimated between -61 million and -51 million yuan [1] Group 1: Financial Projections - The company anticipates a significant reduction in losses for 2025 compared to the previous year, primarily due to the initial results of its business transformation and upgrades [1] - The projected losses are attributed to the company's focus on its core business and the ongoing transition period, which still incurs phase losses [1] - The company plans to recognize impairment on equity assets, contributing to the expected losses [1] Group 2: Business Transformation - The improvement in profitability is linked to enhanced capabilities in the core application solutions for government and party sectors [1] - The ongoing business transformation is expected to yield positive results, indicating a shift towards more profitable operations [1]

Core Viewpoint - China Software (600536.SH) is expected to report a net loss attributable to shareholders of the parent company ranging from -49 million to -41 million yuan for the fiscal year 2025, indicating a significant reduction in losses compared to the previous year [1] Financial Performance - The projected net profit excluding non-recurring gains and losses for 2025 is estimated to be between -61 million and -51 million yuan [1] - The anticipated loss for 2025 is primarily attributed to the company's focus on its core business and ongoing transformation, which is still in the upgrading phase [1] Business Transformation - The company is experiencing a phase of transformation and upgrading, which is expected to lead to a gradual improvement in profitability [1] - The profitability of the core application solutions for government and party sectors is showing signs of improvement, contributing to the reduced loss forecast for 2025 [1]

Financial Performance Expectations - The company expects a net profit attributable to shareholders of the parent company for 2025 to be between -49 million and -41 million RMB, indicating a loss [2]. - The projected net profit attributable to shareholders after deducting non-recurring gains and losses is expected to be between -61 million and -51 million RMB [2]. - The previous year's net profit attributable to shareholders was -412.64 million RMB, and the net profit after deducting non-recurring gains and losses was -576.84 million RMB [4]. Business Transformation and Challenges - The company anticipates a significant reduction in losses compared to the previous year, primarily due to improvements in the profitability of its core application solutions for government and party sectors [6]. - The company is currently undergoing a business transformation, which is still in progress, leading to ongoing phase losses [6]. - The company has made provisions for impairment of equity assets, which is a contributing factor to the expected losses [6]. Forecast Accuracy and Audit Status - There are no significant uncertainties affecting the accuracy of this earnings forecast [7]. - The forecast data is preliminary and has not been audited by registered accountants; the final figures will be disclosed in the audited annual report for 2025 [8].

Group 1 - The core point of the article highlights that southbound funds have increased their holdings in China Software International (00354.HK) by 9.304 million shares on January 15, 2026, with a total net increase of 19.77 million shares over the past five trading days [1][2] - Over the last 20 trading days, southbound funds have increased their holdings on 9 days, resulting in a cumulative net increase of 8.768 million shares [1][2] - As of now, southbound funds hold 847 million shares of China Software International, accounting for 31.01% of the company's total issued ordinary shares [1][2] Group 2 - China Software International is an investment holding company that provides global technology software and information technology services [2] - The company operates through two main divisions: Technical Professional Services and Internet Information Technology Services [2] - Its primary business includes the development of generative artificial intelligence (AIGC), sales of large model software and hardware, and digital transformation consulting services for enterprise resource planning (ERP) models [2] - The company's main products include the "Question Series" solutions, large model application integrated machines, and Lingxi AI application platforms, serving sectors such as water conservancy, transportation, government platforms, military, energy, education, and finance [2]

Market Overview - The Shanghai Composite Index fell by 0.33% on January 15, with 11 sectors rising, led by the electronics and basic chemicals sectors, which increased by 1.67% and 1.40% respectively. The sectors with the largest declines were comprehensive and defense industries, down by 3.35% and 2.80% respectively. The computer industry dropped by 2.40% [1] Fund Flow Analysis - The main funds in the two markets experienced a net outflow of 62.864 billion yuan, with six sectors seeing net inflows. The electronics sector led with a net inflow of 12.083 billion yuan, while the non-ferrous metals sector saw a 1.37% increase and a net inflow of 1.936 billion yuan [1] - A total of 25 sectors experienced net outflows, with the computer industry leading at a net outflow of 18.556 billion yuan, followed by the media sector with a net outflow of 10.642 billion yuan. Other sectors with significant outflows included defense, pharmaceuticals, and non-bank financials [1] Computer Industry Performance - The computer industry saw a decline of 2.40%, with a total of 336 stocks in the sector. Out of these, 56 stocks rose, including 2 that hit the daily limit, while 277 stocks fell, with 9 hitting the daily limit. There were 69 stocks with net inflows, with 13 stocks having inflows exceeding 50 million yuan. The top stock for net inflow was Huasheng Tiancheng, with an inflow of 594 million yuan, followed by Guanglian Da and Aerospace Information with inflows of 467 million yuan and 102 million yuan respectively [2] - The outflow list for the computer industry included 54 stocks with outflows exceeding 100 million yuan. The top three stocks for net outflow were Yanshan Technology, Weining Health, and Guiding Compass, with outflows of 1.784 billion yuan, 832 million yuan, and 774 million yuan respectively [3]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Software and IT Services - **Growth Forecast**: The sector is expected to achieve a revenue growth of **12% YoY in 2026E**, slightly down from **13% YoY in 2025E** due to macroeconomic factors and soft demand in various verticals [18][20]. Core Insights - **AI Monetization**: Accelerated AI monetization is anticipated to drive growth, alongside trends in software import substitution [18][20]. - **Employee Count**: A **5% YoY decline** in employee numbers was observed in 2025, with expectations for a **1% YoY increase** in 2026, leading to an average **4.6 percentage points (ppts)** improvement in operating profit margin (OPM) [2]. - **Valuation**: Current average trading at **5.4x 12-month forward P/S**, which is **1 standard deviation (SD) below historical averages**, indicating an undemanding sector valuation despite solid share price performance [13][14]. Company-Specific Insights - **Top Picks**: - **Kingdee**: Expected to benefit from resilient top-line growth and improved profitability [3][8]. - **Meitu**: Strong earnings growth anticipated due to rising subscription revenue and productivity tools expansion [3][8]. - **Kingsoft Office**: Upgraded to Buy due to better growth outlook driven by WPS 365 and import substitution trends [3][8]. - **Downgrades**: - **Kingsoft Corp** downgraded to Neutral due to weaker game business growth [3]. Financial Performance - **2025 Recap**: Share prices of covered software companies rose by **16% on average** in 2025, underperforming the MSCI China Index which rose by **23%** [11][12]. - **Revenue Estimates**: Revenue forecasts for 2025-2027 have been revised down by **2% on average** for 16 companies under coverage [10]. Sector Spending Breakdown - **Major Sectors**: Software spending is concentrated in manufacturing & natural resources (28%), financials (25%), government (14%), and communications/media/services (12%), collectively accounting for **75% of total software spending in 2026E** [20][21]. Risks and Cautions - **Cybersecurity and Property Software**: Cautious outlook on cybersecurity and property software due to muted demand and declining property sales [1][48]. - **SOE Revenue Growth**: SOE revenue growth was **1.0% YoY** in 11M25, indicating stable demand for software despite slight declines in growth rates [24][25]. Conclusion - The China software and IT services sector is poised for solid growth driven by AI and import substitution, but faces challenges from macroeconomic volatility and sector-specific demand issues. Key companies like Kingdee, Meitu, and Kingsoft Office are highlighted as strong investment opportunities, while caution is advised in areas like cybersecurity and property software.

Group 1 - The core point of the article is that China Software International (00354) has seen its stock price increase by over 4%, currently trading at 5.45 HKD with a transaction volume of 141 million HKD [1] - On January 12, China Software International announced that its investment platform JointForce Fund I LP has invested in MiniMax Group Inc., which is set to be listed on the Hong Kong Stock Exchange on January 9, 2026, under the stock code 0100 [1] - The company holds 403,000 shares of MiniMax indirectly through JointForce, with an estimated value change of approximately 89.92 million RMB based on MiniMax's closing price of 345 HKD per share on January 9, 2026 [1] Group 2 - The value of the shares held by the company in MiniMax may fluctuate due to secondary market price changes, leading to uncertainty in the company's performance [1] - Looking ahead, China Software International plans to deepen its strategic layout in full-stack and full-scenario AI products and services, aiming to enhance its independent innovation capabilities with next-generation AI technology [1] - The company is progressing towards becoming a core software service provider in the technology-driven innovation sector [1]