Core Viewpoint - Changjie Tong (01588) experienced a significant stock price increase of over 14%, reaching HKD 8.5 with a trading volume of HKD 328 million, following the announcement of share sales by its controlling shareholder, Yongyou Network (600588) [1] Group 1: Shareholder Actions - Yongyou Network and its subsidiary, Yongyou Youpu, sold a total of 28.1351 million and 13.9728 million H-shares of the company, respectively, at a price of HKD 7.6 per share, reducing their stake by 12.93% [1] - After the sale, Yongyou's ownership in Changjie Tong decreased to 53.53% [1] Group 2: Company Outlook - The board of directors expressed confidence in the company's business operations, stating that the sale will strengthen connections with long-term value investors and broaden the shareholder base, which will enhance stock liquidity [1] - Guohai Securities highlighted that the cloud subscription model has become the mainstay of Changjie Tong, with the company expanding into lower-tier markets, adding 86,000 new cloud-paying enterprise users in the past six months, bringing the total to 861,000 [1]

Group 1 - The stock price of Changjie Tong (01588) increased by over 14%, reaching 8.5 HKD with a trading volume of 328 million HKD [1] - The company announced that its controlling shareholder, Yongyou Network, sold a total of 28.1351 million and 13.9728 million H-shares at a price of 7.6 HKD per share, reducing its stake by 12.93% [1] - After the sale, Yongyou's ownership in the company decreased to 53.53% [1] Group 2 - The board expressed confidence in the business operations of the group, stating that the sale will deepen connections with long-term value investors and broaden the shareholder base, which will enhance stock liquidity [1] - Guohai Securities noted that the cloud subscription model has become the main focus for Changjie Tong, with 86,100 new cloud-paying enterprise users added in the past six months, bringing the total to 861,000 [1]

Core Viewpoint - The company Changjie Tong (01588.HK) announced that its controlling shareholder, Yongyou Network Technology Co., Ltd. (stock code: 600588), will sell a total of 42,107,849 H-shares through block trading, which represents approximately 12.93% of the company's issued shares as of the announcement date [1] Summary by Relevant Sections - **Share Sale Details** - Yongyou and its subsidiary, Yongyou Youpu Information Technology Co., Ltd., will sell 28,135,071 shares and 13,972,778 shares respectively, at a price of HKD 7.60 per share [1] - The shares sold represent about 8.64% and 4.29% of the company's issued shares, excluding treasury shares [1] - **Post-Sale Ownership** - After the sale, Yongyou will continue to hold 174,350,542 shares in the company, which accounts for approximately 53.53% of the issued shares [1] - This includes 173,344,366 shares directly held by Yongyou and 1,006,176 shares held by its subsidiary, Beijing Yongyou Happiness Investment Management Co., Ltd. [1] - **Strategic Implications** - The controlling shareholder expresses confidence in the company's business operations [1] - The sale is intended to deepen connections with long-term value investors, broaden the shareholder base, and enhance the liquidity of the company's stock [1]

Core Viewpoint - The announcement from Changjie Tong (01588) indicates that its controlling shareholder, Yonyou Network Technology Co., Ltd. (Yonyou, 600588.SH), will sell a total of 42.11 million H-shares through block trades, which represents approximately 12.93% of the company's issued shares, to meet its own development needs [1] Group 1 - Yonyou and its subsidiary, Yonyou Youpu Information Technology Co., Ltd., will sell 28.1351 million shares and 13.9728 million shares, respectively, at a price of HKD 7.60 per share [1] - The shares sold represent about 8.64% and 4.29% of the total issued shares of the company as of the announcement date, excluding treasury shares [1] - After the sale, Yonyou will retain ownership of approximately 53.53% of the company's issued shares, which includes 171.3 million shares directly held and 1.0062 million shares held by its subsidiary [1] Group 2 - The board of directors expresses confidence in the business operations of the group and believes that the sale will strengthen connections with long-term value investors and broaden the shareholder base [1] - The sale is expected to enhance the liquidity of the company's stock and is not anticipated to negatively impact the group's business operations [1]

Core Viewpoint - Bank of America Securities reports that during a recent investor event, discussions with management from Chinese software companies and data center/cloud computing firms revealed steady progress in AI monetization and an increase in AI-related contract values [1] Group 1: Software Companies - AI agency and AI coding deployment are enhancing operational efficiency for software companies [1] - Companies like Kingdee and Meitu, which have a high proportion of subscription revenue, are expected to show greater growth visibility [1] - Bank of America Securities prefers companies with robust downstream demand and high recurring revenue, with Kingdee and Meitu being top picks, rated "Buy" with target prices of HKD 20.7 and HKD 13.5 respectively [1] Group 2: Data Centers and Cloud Services - AI development is driving strong growth in data center demand, supported by positive progress in domestic AI chip research [1] - The public cloud business is also experiencing robust growth due to AI [1] - Bank of America Securities is optimistic about companies like GDS Holdings, Century Internet, and Kingsoft Cloud, all benefiting from strong AI demand, with all performance exceeding expectations and rated "Buy" [1] - Mingyuan Cloud's target price has been raised from HKD 3.7 to HKD 4, maintaining a "Neutral" rating [1]

Market Overview - The Shanghai Composite Index rose by 0.04% on September 16, with 21 out of the 28 sectors experiencing gains, led by the comprehensive and machinery equipment sectors, which increased by 3.62% and 2.06% respectively [1] - The computer industry ranked third in terms of daily gains, also rising by 2.06% [1] Fund Flow Analysis - The main funds in the two markets experienced a net outflow of 37.426 billion yuan, with 11 sectors seeing net inflows [1] - The machinery equipment sector had the highest net inflow of 5.508 billion yuan, followed closely by the computer sector with a net inflow of 4.945 billion yuan [1] Computer Industry Performance - The computer industry saw a total of 335 stocks, with 295 stocks rising and 39 stocks declining; 3 stocks hit the daily limit up while 1 stock hit the limit down [2] - Among the stocks with net inflows, 143 stocks experienced positive fund flow, with 12 stocks having net inflows exceeding 100 million yuan [2] - The top three stocks by net inflow were Huasheng Tiancheng (19.95 billion yuan), Zhongke Shuguang (1.636 billion yuan), and Yinzhi Jie (429 million yuan) [2] Computer Industry Outflow - The computer industry also had stocks with significant net outflows, with 6 stocks experiencing outflows exceeding 100 million yuan [3] - The stocks with the highest net outflows included Yongyou Network (-228 million yuan), Zhongke Jincai (-171 million yuan), and Hengsheng Electronics (-136 million yuan) [3]

Core Viewpoint - The Chinese AI agent industry has established a "SaaS-MaaS-RaaS" tripartite business model, driven by technology, policy, and ecosystem factors, accelerating the commercialization of a trillion-level market through regional differentiated competition [1]. Business Model Summary - The AI agent industry in China can be categorized into three main models based on service form, deployment method, and application scenario: - **SaaS Model**: Dominates the market with a 30% share, driven by the demand for standardized intelligent tools. It operates on a subscription basis, focusing on efficiency improvement through basic subscription fees and value-added services [3][12]. - **MaaS Model**: Fastest growth at 15%, reflecting the acceleration of model-as-a-service commercialization. It relies on computational power and model innovation for customer acquisition, with significant cost advantages, such as SenseTime's model inference cost being 60% lower than the industry average [3][8]. - **RaaS Model**: Accounts for 12% of the market, focusing on human-machine collaborative automation in sectors like manufacturing and finance, with notable improvements in operational efficiency [3][8]. Market Dynamics - The AI agent industry is experiencing a competitive race among innovation parks, with Shanghai's Xuhui District housing over 1,000 companies and offering substantial computational subsidies. SenseTime's generative AI revenue reached 2.4 billion yuan in 2024, constituting 63.7% of its total revenue [4]. - The industry is supported by policy initiatives, such as the Ministry of Industry and Information Technology promoting "AI + manufacturing" actions and various cities providing computational vouchers and project subsidies to foster ecosystem development [7][8]. Financial Metrics - **SaaS Model**: Average gross margin of 60%-80%, customer retention rate of 75%-90%, and annual customer spending between 50,000 to 500,000 yuan [11][12]. - **MaaS Model**: Average gross margin of 40%-60%, customer retention rate of 60%-75%, and annual customer spending between 100,000 to 2 million yuan [11][12]. - **RaaS Model**: Average gross margin of 30%-50%, customer retention rate of 50%-65%, and annual customer spending between 200,000 to 1 million yuan [11][12].

Core Insights - The software service index has shown a slight increase, with notable gains in specific stocks such as Kingsoft Office and Tuowei Information, indicating a positive trend in the software sector [1][3]. Market Performance - The software ETF experienced a turnover of 4.37% with a transaction volume of 196 million yuan, and it has the highest average daily transaction volume of 583 million yuan over the past month among comparable funds [3]. - The software ETF has seen a significant growth of 1.543 billion yuan in scale over the past three months, leading in new scale among comparable funds [3]. - The ETF's net value has increased by 21.34% over the past three years, with the highest single-month return reaching 39.35% since its inception [3]. Industry Trends - The value in the computer and software development industry is currently concentrated among upstream core technology suppliers, which enjoy high bargaining power and profit margins due to technological barriers [4]. - As technology advances and production scales up, hardware costs are expected to decline, shifting industry value towards software and services, with intelligent algorithms and continuous services becoming key growth areas [4]. - Future business models are anticipated to evolve from hardware-centric to an integrated model of "hardware + software + ecosystem services," maximizing value and profit through software platforms and ecosystems [4]. Key Stocks - The top ten weighted stocks in the software service index account for 62.05% of the index, with notable companies including iFlytek, Kingsoft Office, and Tonghuashun [4][6]. - The performance of key stocks includes iFlytek at 0.79%, Kingsoft Office at 1.47%, and Tuowei Information at 1.27%, indicating a mixed performance among the top players [6].

Group 1 - The China Securities Information Technology Application Innovation Industry Index (931247) has seen a strong increase of 1.70% as of September 16, 2025, with notable gains from constituent stocks such as Zhongke Shuguang (603019) up 8.49%, Foxit Software (688095) up 6.41%, and Haiguang Information (688041) up 6.31% [3] - The Xinchuang ETF (562570) has risen by 1.51%, with a latest price of 1.48 yuan, and has accumulated a weekly increase of 4.07% as of September 15, 2025, ranking in the top third among comparable funds [3] - The Xinchuang ETF has shown significant liquidity with an intraday turnover of 4.76% and a transaction volume of 25.2587 million yuan, while the average daily transaction volume over the past month reached 80.0323 million yuan, ranking first among comparable funds [3] Group 2 - The Xinchuang ETF closely tracks the China Securities Information Technology Application Innovation Industry Index, which selects up to 50 listed companies involved in various segments such as basic hardware, software, application software, information security, and external devices [4] - As of August 29, 2025, the top ten weighted stocks in the index include Zhongke Shuguang (603019), Haiguang Information (688041), and others, collectively accounting for 50.4% of the index [4] - The top ten stocks by weight include Hengsheng Electronics (600570) at 6.07%, Zhongke Shuguang (603019) at 5.58%, and Haiguang Information (688041) at 5.09%, among others [6]

Summary of Key Points from the Equity Research Report on China Software Equities Industry Overview - The report focuses on the **China Software Industry**, particularly in the context of **AI monetization** and competition dynamics within the sector [2][3]. Core Insights 1. **AI Monetization Stage**: - AI monetization is still in its early stages, with significant policy support leading SOEs to prioritize AI projects, particularly in finance, healthcare, and education [3][4]. - SMEs in the manufacturing sector show strong demand for cost control, benefiting software companies like Yonyou and Nancal, which are experiencing good order momentum [3][4]. - Consumer-oriented software companies are currently focused on user acquisition and loyalty rather than immediate monetization of AI functionalities [3][4]. 2. **Competition Landscape**: - Simpler AI applications face intense competition, leading to a decline in Average Selling Price (ASP) [4]. - Complicated software, such as ERP systems, is less likely to be replaced by AI due to the necessity of industry-specific knowledge, which AI cannot easily replicate [4]. 3. **Stock Recommendations**: - **Sangfor (Buy)**: Expected to benefit from AI-driven IT infrastructure upgrades, with a target price of RMB143.00, implying a 30% upside from the current price [5][13]. - **Yonyou (Buy)**: Notable for its rapid AI order ramp-up, with 1H25 AI orders reaching RMB320 million, approximately 9% of total revenue. Target price set at RMB22.00, indicating a 54% upside [5][13]. - **ThunderSoft (Buy)**: Positioned to benefit from strong software upgrade demand from AI IoT suppliers, with a target price of RMB90.00, suggesting a 25% upside [5][13]. - **Kingsoft Office (Buy)**: Unique position as the only office software vendor in China with a closed-loop system for AI, targeting a price of RMB353.00, reflecting a 20% upside [5][13]. Financial Metrics - **Yonyou**: 1H25 AI orders at RMB320 million, with expectations for further growth in 2H25 [5][9]. - **Sangfor**: Revenue CAGR of 15% from 2018-2024, with a projected revenue of RMB9.1 billion by 2026 [13]. - **Kingsoft Office**: Historical average PS multiple of 33x, with a projected revenue CAGR of 15% for 2024-2026 [13]. Additional Insights - The report highlights the importance of **on-device AI** products, such as AI glasses and toys, which are seeing robust demand [3]. - Companies like Arcsoft and ThunderSoft are noted for their strong order momentum in the AI hardware space [3][5]. - The report emphasizes the potential for AI to enhance existing software capabilities rather than completely replace them, particularly in complex applications [4]. Risks and Challenges - Key risks include fierce competition, weaker-than-expected business expansion due to macroeconomic challenges, and potential chip shortages impacting production [13]. This summary encapsulates the critical insights and financial metrics from the report, providing a comprehensive overview of the current state and future outlook of the China software industry, particularly in relation to AI monetization and competitive dynamics.