Core Insights - The securities IT industry is experiencing revenue pressure and profit differentiation as companies transition into a critical transformation phase [1][2] - The competitive landscape shows a trend of increasing concentration among leading firms, with traditional B-end leaders like Hengsheng Electronics dominating the market [1][2] - The decline in asset management IT business revenue since Q2 2025 indicates a significant impact from tightened budgets of financial institutions [1] Revenue and Profitability - In the first three quarters of 2025, Hengsheng Electronics reported the highest revenue at 3.49 billion yuan, followed by Jinzhen Co. at 1.77 billion yuan, and Yingshisheng at 937 million yuan [2] - Jinzhen Co. experienced the largest revenue decline of 49.08% year-on-year, while Hengsheng Electronics saw a 16.66% decrease [2] - In terms of net profit, Hengsheng Electronics achieved 455 million yuan, a year-on-year increase of 2.16%, while other companies like Lingzhi Software and Yingshisheng reported significant losses [3] Gross Margin and R&D Expenses - Top companies maintain stable gross margins, with Top Point Software at 71.1% and Hengsheng Electronics at 69% [3] - R&D expenses remain high across the industry, with Hengsheng Electronics allocating 43.51% of its revenue to R&D, impacting overall profitability [3] Market Trends and Demand - The industry is shifting from a "universal growth" phase to a "differentiation" phase, with companies that have mature product capabilities and advantages in AI technology gaining market attention [4] - Recent policies are driving the upgrade of brokerage systems and accelerating the integration of technology into business models [5][6] - The demand for system upgrades is fueled by the need for domestic system transformation and the ongoing evolution of core systems among leading brokerages [7][8] AI and Domestic Upgrades - The application of AI models is reshaping the demand structure for financial institutions, with companies like Dongwu Securities leveraging AI to enhance services [8] - Despite the push for domestic upgrades, the investment in other business areas by brokerage firms remains inconsistent [8]

Group 1 - The core point of the article is that Hengsheng Electronics Co., Ltd. has won the bid for the construction project of the trust sales system for Jinhua Bank Co., Ltd. [1] - The bid amount for the project is 320 million [3] - The announcement was made on November 2, 2025, and the project is categorized as a non-government procurement project [3] Group 2 - Jinhua Bank Co., Ltd. is the purchaser of the project [3] - Hengsheng Electronics Co., Ltd. has made investments in 132 companies and participated in 6,756 bidding projects [1] - The company holds 910 trademark registrations, 532 patents, and 1,131 copyrights, along with 243 administrative licenses [1]

Investment Rating - The report maintains a "Buy" rating for the company [1]. Core Views - The industry is still at the bottom, but pre-receipts have shown marginal improvement. The company has demonstrated cautious cost control, and its profitability is expected to remain stable despite the industry's challenges. The report anticipates that the company's revenue and profit performance for the year will still meet initial expectations [6][5]. Financial Data and Earnings Forecast - Total revenue for 2025 is projected to be 69.57 billion yuan, with a year-on-year growth rate of 5.7%. The net profit attributable to the parent company is expected to be 11.43 billion yuan, reflecting a 9.5% increase year-on-year. The earnings per share (EPS) is forecasted at 0.60 yuan [5][6]. - The company reported a total revenue of 34.90 billion yuan for the first three quarters of 2025, down 17% year-on-year, with a net profit of 4.55 billion yuan, which is a 2% increase year-on-year [6]. - The gross profit margin for Q3 2025 was 67.74%, showing an improvement compared to 65.10% in Q3 2024 [6]. Business Segment Performance - The data service business is experiencing positive growth with a revenue increase of 6%. However, other business segments are declining, with revenue growth rates of -10%, -6%, and -8% for wealth technology, operations and institutions, and innovation businesses, respectively. The asset management technology and risk management segments have seen significant declines, with growth rates of -28% and -37% [6]. Pre-receipt Trends - The report indicates a positive trend in broad pre-receipts, which includes prepayments and contract liabilities. In Q3 2025, broad pre-receipts increased by 161 million yuan quarter-on-quarter, marking a 6% year-on-year growth, the first positive growth since Q2 2022 [6].

Group 1: Software ETF Performance - The Software ETF has a turnover rate of 2.14% during trading, with a transaction volume of 1.26 billion yuan. Over the past week, the average daily transaction volume reached 600 million yuan, ranking first among comparable funds [2] - The latest scale of the Software ETF has reached 5.936 billion yuan, marking a new high since its inception and also ranking first among comparable funds. In the past week, the ETF's shares increased by 80 million, achieving significant growth and leading among comparable funds [2] - The Software ETF has recorded a net inflow of 136 million yuan recently. Over the past 18 trading days, it has attracted a total of 963 million yuan [2] - As of November 3, the net value of the Software ETF has increased by 12.40% over the past three years. The highest monthly return since inception was 39.35%, with the longest consecutive monthly increase being three months and a maximum increase of 69.40%. The average return during the rising months was 10.06% [2] Group 2: Computer Sector Insights - According to Open Source Securities, the computer sector has seen improvements in revenue and profit in the first three quarters of 2025, with a year-on-year revenue growth of 3.10% and a net profit growth of 3.93%. The non-recurring net profit increased by 0.42%. This indicates a recovery in revenue growth while many companies in the sector have initiated cost-cutting and efficiency-enhancing strategies, leading to significant profit recovery [3] - Longjiang Securities highlights that in the context of intensified technological competition, achieving complete autonomy and control in key areas is essential for China's technological development. The domestic software systems have gradually developed the capability for domestic substitution [3] - As of October 31, 2025, the top ten weighted stocks in the CSI Software Service Index include iFLYTEK, Kingsoft Office, Tonghuashun, and others, collectively accounting for 63.09% of the index [3]

Core Viewpoint - Hengsheng Electronics experienced a decline of 2.02% in stock price on November 4, trading at 30.61 CNY per share with a market capitalization of 57.979 billion CNY, indicating a challenging market environment for the company [1]. Financial Performance - For the period from January to September 2025, Hengsheng Electronics reported a revenue of 3.49 billion CNY, a year-on-year decrease of 16.66%, while the net profit attributable to shareholders was 455 million CNY, reflecting a growth of 2.16% [2]. - The company has cumulatively distributed dividends amounting to 2.444 billion CNY since its A-share listing, with 682 million CNY distributed over the past three years [3]. Stock Market Activity - The stock has seen a year-to-date increase of 9.75%, but has declined by 5.29% over the last five trading days, 10.58% over the last 20 days, and 12.17% over the last 60 days [1]. - As of September 30, 2025, the number of shareholders increased to 213,800, with an average of 8,863 shares held per shareholder, a decrease of 5.59% from the previous period [2]. Shareholder Composition - The second-largest shareholder, Hong Kong Central Clearing Limited, reduced its holdings by 40.78 million shares to 92.127 million shares [3]. - New entrants among the top ten shareholders include Huabao Zhongzheng Financial Technology Theme ETF, holding 24.944 million shares [3].

Core Insights - Huatai Asset Management has successfully launched the Hang Seng Electronic Valuation System 6.0, enhancing both business capabilities and technical architecture for more efficient and accurate valuation services [1][4] - The asset management scale of Huatai Asset is projected to exceed 900 billion yuan by the end of 2024, with nearly 1,000 entrusted accounts, indicating significant growth in recent years [1][2] Business Capability Enhancements - The new valuation system features a comprehensive management of product parameters, significantly reducing the maintenance time for single product parameters from 1 hour to 10 minutes, thus improving operational efficiency and reducing error risks [2] - The performance of the valuation system has been upgraded to handle the rapid growth of accounts, achieving full product processing in just 5 minutes, which meets the future growth demands of Huatai Asset's business scale [2] Technical Architecture Improvements - The Hang Seng Valuation System 6.0 is built on a microservices framework, enhancing system stability and scalability through dynamic load balancing and distributed clustering capabilities [3] - The system integrates automated processes throughout the valuation workflow, improving accuracy and reliability by embedding monitoring and data verification at all stages of the accounting process [3] Digital Transformation Response - The upgrade of the valuation system aligns with national calls for accelerating digital transformation in financial institutions, addressing common operational pain points in the insurance asset management industry [4] - The new system aims to reduce manual intervention costs and error risks through automation, facilitating business expansion without the need for proportional increases in manpower [4]

Group 1: Liquidity and Scale of Software ETF - The software ETF had an intraday turnover of 6.26% and a transaction volume of 366 million yuan [1] - Over the past month, the software ETF's average daily transaction volume reached 569 million yuan, ranking first among comparable funds [1] - In the past week, the software ETF's scale increased by 19.89 million yuan, also ranking first among comparable funds [1] - Over the last 17 trading days, the software ETF attracted a total of 827 million yuan in inflows [1] Group 2: Performance and Returns - As of October 31, the software ETF's net value has increased by 10.46% over the past three years [1] - The highest monthly return since inception was 39.35%, with the longest consecutive monthly gains being three months and the longest cumulative gain reaching 69.40% [1] - The average return during the months of increase was 10.06% [1] Group 3: Policy and Industry Outlook - The 20th Central Committee's Fourth Plenary Session emphasized high-level technological self-reliance as a key development goal [1] - In the context of major power technology competition, the trend towards domestic core software and hardware is expected to accelerate [1] - The "Suggestions" highlight the need for "extraordinary measures" to promote breakthroughs in key areas such as integrated circuits and foundational software [1] - Collaborative innovation between emerging technologies and foundational software is anticipated to be a significant driver of high-quality technological development during the 14th Five-Year Plan period [1] Group 4: Major Stocks in Software Service Index - As of October 31, 2025, the top ten weighted stocks in the CSI Software Service Index include iFlytek, Kingsoft Office, and Tonghuashun, collectively accounting for 63.09% of the index [2] - The weightings of the top stocks are as follows: iFlytek (13.80%), Tonghuashun (8.49%), Kingsoft Office (7.78%), and others [4] - Investors can also access AI software investment opportunities through the software ETF linked fund (012620) [4]

Summary of Hundsun (600570.SS) Earnings Call Company Overview - **Company**: Hundsun Technologies Inc. (600570.SS) - **Industry**: IT services for financial institutions in China Key Financial Metrics - **3Q25 Results**: - Core Revenue: Rmb 1.1 billion, down 21% YoY - Gross Profit: Rmb 0.7 billion, down 18% YoY - Net Profit: Rmb 0.2 billion, down 53% YoY - Gross Profit Margin (GPM): Improved by 2.6 percentage points YoY to 67.7% [1][3][22] Core Insights 1. **Revenue Decline**: The decline in core revenue is attributed to tighter IT budgets among financial institutions and extended project cycles, affecting almost all business lines [1][3][22] 2. **Cost Control**: Despite revenue decline, GPM improved due to effective cost control measures, with Cost of Goods Sold (COGS) decreasing by 27% YoY [1][3][22] 3. **Non-Operating Income**: Non-operating income fell by 46% YoY, primarily due to a significant drop in fair value gains, which decreased by 86% YoY [1][2][18] 4. **Investment Income Growth**: Investment income, mainly from Ant Fund Sales and YSS Tech, showed strong growth of 115% YoY, providing a cushion for overall earnings [1][2][18] Future Outlook - **Investor Focus Areas**: - Potential increase in IT budgets by financial institutions due to a strong capital market [2] - Sustainability of GPM improvement [2] - Progress on Xinchuang projects and revenue outlook for 2026-27 [2] - **Revenue Forecasts**: Core revenue forecasts for 2025-27 have been revised down by an average of 5% due to slower-than-expected recovery in IT budgets [19][25] - **Target Price**: New target price set at Rmb 35.79, reflecting a 4% decrease from prior estimates [19] Risks - **Downside Risks**: - Capital market recovery may fall short of expectations - Client IT spending may not meet expectations - Potential decline in GPM due to competitive pressures - Risks associated with investment losses [20] Additional Insights - **R&D Investment**: R&D expenses accounted for 45% of total revenue, an increase of 7 percentage points YoY, indicating a commitment to long-term competitiveness [18] - **Operating Expenses**: Operating expenses totaled Rmb 0.7 billion, down 16% YoY, reflecting effective cost optimization [3][22] Conclusion Hundsun Technologies is facing challenges with declining core revenue due to external budget constraints but is managing to improve its gross profit margin through cost control. The company is focusing on future growth through strategic investments and monitoring market conditions closely. The revised forecasts and target price reflect a cautious but optimistic outlook for the coming years.

Investment Rating - The report maintains a "Recommended" rating for the company, indicating a positive outlook for its stock performance relative to the benchmark index [4][3]. Core Insights - The company reported a revenue of 3.49 billion yuan for the first three quarters of 2025, a year-on-year decline of 16.66%, while the net profit attributable to shareholders was 455 million yuan, an increase of 2.16% [1]. - In Q3 2025, the company faced short-term pressure with a revenue of 1.063 billion yuan, down 21.33% year-on-year, and a net profit of 195 million yuan, down 53.17% year-on-year [1]. - The company has maintained a stable gross margin of 69.0% for the first three quarters of 2025, reflecting strong profitability despite revenue pressures [2]. - The company is actively exploring business boundaries in the Xinchuang (信创) industry, successfully launching its UF3.0 core business system at multiple securities firms, enhancing operational efficiency [2]. Financial Performance Summary - For 2025, the company is projected to achieve net profits of 1.2 billion yuan, 1.34 billion yuan, and 1.61 billion yuan for the years 2025, 2026, and 2027 respectively, with corresponding PE ratios of 50, 44, and 37 [3][8]. - The company has effectively controlled expenses, with sales, management, and R&D costs decreasing by 24.99%, 25.69%, and 9.90% respectively in the first three quarters of 2025 [2]. - The forecasted revenue for 2025 is 6.048 billion yuan, reflecting a decline of 8.1% compared to 2024, with a projected recovery in subsequent years [8].

Investment Rating - The report maintains a strong buy recommendation for the company [1][3][7] Core Views - The company is facing growth pressure due to weak industry demand and strategic adjustments, but it is actively seizing opportunities from core system upgrades and the domestic innovation window [1][7] - The long-term development of the company's main business is viewed positively, leading to the strong buy rating [1][7] Financial Data and Valuation - Total revenue for 2023 is projected at 72.81 billion yuan, with a year-on-year growth of 12%. However, a decline of 10% is expected in 2024, followed by a further decline of 9% in 2025 [2][14] - Operating profit for 2023 is estimated at 14.52 billion yuan, with a year-on-year growth of 29%. A decrease of 27% is anticipated in 2024, but a recovery of 12% growth is expected in 2025 [2][14] - Net profit attributable to shareholders for 2023 is projected at 14.24 billion yuan, with a year-on-year growth of 31%. A decline of 27% is expected in 2024, followed by a recovery of 12% growth in 2025 [2][14] - Earnings per share (EPS) for 2023 is estimated at 0.75 yuan, with a projected decline to 0.55 yuan in 2024, and a gradual recovery to 0.61 yuan in 2025 [2][14] - The company’s price-to-earnings (PE) ratio is 41.8 for 2023, increasing to 57.1 in 2024, and then decreasing to 51.2 in 2025 [2][14] Business Performance - In the first three quarters of 2025, the company achieved a total revenue of 3.49 billion yuan, a year-on-year decrease of 16.66%. The net profit attributable to shareholders was 455 million yuan, with a year-on-year increase of 2.16% [7] - The company is focusing on improving operational quality during the industry downturn, with a significant improvement in cash flow and a 32.39% year-on-year increase in operating cash flow [7] - The company has made progress in launching key products, with several projects signed and implemented in the securities industry, indicating a positive outlook for future growth [7]