Core Viewpoint - China Soft International (00354) is experiencing a decline of over 5%, currently trading at HKD 6.17 with a transaction volume of HKD 280 million. The company plans to hold a board meeting on August 25 to discuss its mid-term performance [1] Group 1: Company Performance - The report from Credit Lyonnais indicates that the long-term development trend of China Soft International remains unchanged, with expectations that the launch of Huawei's HarmonyOS personal computers will drive the virtual machine business to become a key focus for growth this year [1] - Credit Lyonnais anticipates a slight improvement in gross margin for China Soft International, benefiting from the rapid growth of high-margin businesses, with projected revenue and net profit growth of 10.5% and 10.1% year-on-year for the first half of the year, respectively [1] Group 2: Market Outlook - The rating for China Soft International has been downgraded from "Highly Confident to Outperform" to "Outperform" due to the current valuation not being cheap, while the target price has been raised from HKD 6.5 to HKD 7.1 [1] - It is expected that large-scale procurement orders from the government and state-owned enterprises for Huawei's new PCs will not materialize until the end of this year or next year, leading to a downward adjustment of the 2025 revenue growth forecast from 10% to 7.6%, reflecting a delay in revenue contribution from its virtual machine products [1]

Core Viewpoint - Zhongsoft International (00354) experienced a significant stock increase, rising over 6% in early trading, attributed to developments in Huawei's Ascend hardware and its open-source strategy [1] Group 1: Company Developments - Huawei's rotating chairman Xu Zhijun announced the full open-source of Ascend hardware at the Ascend Computing Industry Development Summit on August 5 [1] - The commercialization of the Ascend ecosystem is accelerating, particularly in sectors such as finance, energy, and manufacturing [1] - By May 2025, the Ascend ecosystem is expected to have over 6.65 million developers, more than 8,800 partners, and 23,900 solution certifications completed [1] Group 2: Industry Insights - The Cyberspace Administration of China recently held discussions with NVIDIA regarding security risks associated with the H20 chip, indicating a focus on domestic alternatives [1] - Jin Yuan Securities suggests a long-term commitment to domestic core replacement sectors, particularly emphasizing the Ascend industry chain [1] - AVIC Securities highlights the long-term collaboration between Zhongsoft International and Huawei, covering a full-stack partnership from basic software and hardware to AI platforms and industry applications [1]

此外，网信办近日就H20芯片安全风险约谈英伟达，金元证券表示，中长期看应坚定布局国产替代核心 赛道，重点关注昇腾产业链等。中航证券指出，中国软件国际与华为长期保持从基础软硬件、AI平 台、智能体到行业应用的全栈合作，系华为云连续七年的"同舟共济"合作伙伴，双方在协同创新、生态 共建与行业赋能等方面多维度深度合作。 消息面上，8月5日，在昇腾计算产业发展峰会上，华为轮值董事长徐直军宣布，华为昇腾硬件使能 CANN全面开源开放。据悉，昇腾生态的商业化进程加速，尤其在金融、能源、制造等行业。截至2025 年5月，昇腾已发展超过665万开发者、8800多家合作伙伴，完成23900多个解决方案认证。 智通财经APP获悉，中软国际(00354)早盘涨超6%，截至发稿，涨5.5%，报6.12港元，成交额4.96亿港 元。 ...

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 | | | 致：香港交易及結算所有限公司 公司名稱: 中軟國際有限公司 第 1 頁 共 10 頁 v 1.1.1 呈交日期: 2025年8月4日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 00354 | 說明 | | | | | | | | | | | 法定/註冊股份數目 | | | 面值 | | | 法定/註冊股本 | | | 上月底結存 | | | 4,000,000,000 | HKD | | 0.05 | HKD | | 200,000,000 | | 增加 / 減少 (-) | | | | | | | HKD | | | | 本月底結存 | | | 4,000,000,000 | HKD | | 0.05 | HKD | | 200,000,000 | 本月底法定/註冊 ...

Investment Rating - The investment rating for the company is "Buy," indicating a potential return exceeding 10% relative to the CSI 300 index over the next six months [20]. Core Insights - The company is focusing on a multi-dimensional layout in the "AI + HarmonyOS" market, leveraging its partnership with Huawei to enhance its service offerings across various sectors including finance, government, and energy [2][3]. - The company has experienced a revenue growth decline during the transition period from 2023 to 2024, with expected growth rates of -14.44% and -0.97% respectively, but anticipates a recovery with growth rates of 6.74% and 9.37% in the following years [2][13]. - The company aims to build a comprehensive AI technology stack, including AI-native ERP solutions and various AI applications tailored for key industries [2][3]. Summary by Sections 1. IT Services and Business Outlook - The company is stabilizing its IT service core business, focusing on AI and HarmonyOS integration, and has maintained its leading position in the Huawei cloud ecosystem for seven consecutive years [2][3]. - Revenue projections for 2024 show a total of approximately 16,950.73 million, with a slight decline expected, followed by a recovery in subsequent years [11][16]. 2. Revenue Forecast - The Technical Professional Services Group (TPG) is expected to see a revenue decline of 1.7% in 2024, while the Internet Information Technology Services Group (IIG) anticipates a 4.0% increase due to growth in Agent products and HarmonyOS solutions [13][16]. - Revenue growth rates for TPG are projected at 7.00%, 10.00%, and 10.00% from 2025 to 2027, while IIG is expected to grow at 5.00% annually during the same period [14][15]. 3. Financial Performance - The company's net profit attributable to shareholders is projected to decline by 28.10% in 2024, with subsequent growth rates of 19.46%, 18.21%, and 12.77% in the following years [11][19]. - Earnings per share (EPS) are expected to increase from 0.19 in 2024 to 0.30 by 2027, reflecting a positive trend in profitability [11][19].

Investment Rating - The report maintains a "Buy" rating with a target price of HKD 6.1 per share, indicating a potential upside of 20.6% from the current price of HKD 5.06 [5][7][20]. Core Insights - The company is transitioning into a full-stack AI product and service provider, with significant growth expected from its AIGC (Artificial Intelligence Generated Content) business, which is becoming a key driver of revenue [2][9]. - The company is actively participating in the construction of digital currency systems and exploring opportunities in stablecoins and Real World Assets (RWA) tokenization, leveraging its expertise in big data, AI, blockchain, and cloud computing [4][17]. Financial Performance - For 2024, the company is projected to achieve revenue of RMB 16.95 billion, a slight decline of 1.0% year-on-year, with a net profit of RMB 512.9 million, down 28.1% [8][20]. - The second half of 2024 is expected to show a recovery, with a significant increase in revenue from full-stack AI products and services, which is projected to reach RMB 957 million, accounting for 5.6% of total revenue [2][12]. Strategic Developments - The company is deepening its collaboration with Huawei, enhancing its KaihongOS applications and completing over 200 Huawei cloud CTSP projects, which strengthens its cloud integration and domestic substitution strategy [3][13]. - The company is also focusing on international expansion, establishing a presence in the Asia-Pacific and Middle Eastern markets, and successfully executing projects in digital governance and smart cities [14][16]. Future Projections - Revenue forecasts for 2025 to 2027 are RMB 18.22 billion (+6.1%), RMB 20.01 billion (+9.86%), and RMB 22.32 billion (+11.5%), respectively, with net profits expected to grow significantly during this period [5][20]. - The report emphasizes that the company is in a transitional phase, moving from traditional service adjustments to emerging business growth, supported by national policy initiatives [20].

Investment Rating - The investment rating for the company is "Outperform" [1][5] Core Views - The Hong Kong Special Administrative Region has officially passed the "Stablecoin Ordinance," establishing a licensing system for the issuance of legal tender stablecoins, which is expected to enhance the regulatory framework for virtual asset activities and maintain financial stability [2][3] - The stablecoin market is projected to grow rapidly, with an expected market size of $2 trillion by 2028. As of June 3, 2025, the global stablecoin market size is approximately $227.3 billion, with major players like Tether and Circle holding significant market shares [3] - The company is deeply engaged in the digital finance sector, providing digital RMB system solutions based on its proprietary microservices technology platform, Toplink, which positions it to benefit from the growth of the stablecoin market [6][9] Summary by Sections Regulatory Developments - The "Stablecoin Ordinance" has been officially enacted, which aims to regulate the issuance of stablecoins in Hong Kong and ensure financial stability [2][3] Market Outlook - The stablecoin market is expected to reach $2 trillion by 2028, indicating a robust growth trajectory. The current market size is around $227.3 billion, with Tether and Circle being the dominant players [3] Company Positioning - The company is focused on the digital finance sector, offering comprehensive solutions for digital RMB system construction and ecosystem development, which includes various operational and regulatory scenarios [6][9] - The company is also involved in infrastructure projects in Hong Kong and has established a joint venture in Saudi Arabia to expand its international presence [7]

Summary of Conference Call Notes Company and Industry Overview - **Company**: 中软国际 (China Software International) - **Industry**: ICT (Information and Communication Technology), Software Development, Cloud Computing Key Points and Arguments - **Hongmeng Ecosystem Growth**: The Hongmeng ecosystem is expected to see significant growth, with related revenues projected to double year-on-year by 2025. Although there may be short-term impacts on Huawei's sales, long-term technological iterations are anticipated to enhance user experience [2][4] - **Hongmeng PC Business**: The Hongmeng PC business includes virtual machine software and hardware PCs. Software will be sold to both ToC (Consumer) and ToB (Business) markets, while hardware PCs will initially target B-end customers, with potential future expansion into the ToC market [2][5] - **ICT Spending Trends**: Operators are showing significant incremental spending in the ICT sector, with a concentration of market share leading to sustained growth rates of 40-50%. Central state-owned enterprises are increasing software investments, driven by AI transformation and demand for new projects [2][7] - **China Software International's Financials**: The company's revenue is expected to remain flat compared to 2021, but profit levels are comparable to those in 2016. The company is transitioning towards productization and new business layouts, with a projected compound annual growth rate (CAGR) of 70-80% over the next three years, and an anticipated gradual increase in gross margin [2][7] - **New Business Segment Impact**: The new product-oriented business segment, which includes self-developed products and services, is expected to reach nearly 1 billion in size by 2024, positively impacting the overall retail proportion and gross margin of the company [2][8] - **Huawei Cloud Business**: Huawei's cloud intelligent business has surpassed 40% of its revenue, with the pure product segment estimated at around 1 billion, expected to grow to 2 billion by 2025, representing over 10% of total revenue [2][9] Additional Important Insights - **Employee Planning at Huawei**: Huawei plans to maintain its workforce at approximately 75,000 employees in 2025, aiming for revenue growth without increasing headcount through AI coding tools and cost optimization [3][10] - **Future Development Events for Huawei**: Key events to watch for Huawei in 2025 include the establishment of joint ventures and product launches. Investors should pay attention to mid-term performance reports, with expectations of over 30% annual growth and potential stock buybacks [3][11]

Financial Performance - The company achieved a revenue of RMB 16.951 billion and an adjusted profit of RMB 650 million during the reporting period, with an investment of RMB 906 million in product and solution R&D[8]. - The company's revenue for 2024 was RMB 16,950,733 thousand, a decrease of 1.0% compared to RMB 17,116,894 thousand in 2023[92]. - Service revenue declined by 1.9% to RMB 16,314,168 thousand from RMB 16,631,560 thousand year-over-year[92]. - Annual profit decreased by 28.3% to RMB 511,145 thousand from RMB 712,667 thousand year-over-year[91]. - Basic earnings per share fell by 22.7% to RMB 20.01 from RMB 25.88 in the previous year[92]. - The adjusted profit for 2024 was RMB 650,240 thousand, an increase of 3.8% from RMB 626,350 thousand in 2023, with an adjusted profit margin of 3.8% compared to 3.7% in 2023[129]. - The company's annual profit attributable to owners was RMB 512,925 thousand in 2024, down 28.1% from RMB 713,394 thousand in 2023, resulting in basic earnings per share of RMB 20.01, a decrease of 22.7%[128]. - The company achieved a compound annual growth rate (CAGR) of 24.6% in total revenue and 30.8% in service revenue since its listing in 2003[102]. Research and Development - The company invested RMB 906 million in product and solution R&D[8]. - R&D expenses for 2024 were RMB 906,274 thousand, a decrease of 16.0% from RMB 1,078,296 thousand in 2023, with a focus on AI and ERP solutions[119]. - The company has developed over 50 general AI algorithms and launched 6 industry-specific smart terminal products, successfully implementing real-time monitoring in various scenarios across cities[16]. - The company has established a technology innovation center to enhance AI service capabilities, integrating AI computing services and engineering[94]. - The company has developed a self-research AI financial analysis tool that automates report generation and provides interactive decision support[22]. AI and Technology Integration - The company launched the Agentic AI platform suite Lumi and Lumi ONE, along with the training and inference integrated platform ARK Foundry, significantly shortening the innovation cycle for AI applications[12]. - The AI data analyst Agent, based on the AI native application engine, enhances data analysis efficiency and supports enterprise management and business decision-making[13]. - The company has established a digital power innovation center in collaboration with Huawei and Beijing Changping Future Science City, integrating DeepSeek models to provide comprehensive AI services[10]. - The model factory has been upgraded to 2.0, offering full lifecycle services from data governance to model training and deployment verification[9]. - The company aims to drive the intelligent upgrade of SMEs by integrating AI Agent service scenarios into their operations[12]. Market Expansion and Partnerships - The company has established a joint venture in Saudi Arabia as a strategic center for the Middle East market, signing a memorandum of cooperation with Huawei to promote regional digital development[21]. - The company is expanding its global market presence, using Hong Kong as a hub to reach Asia-Pacific and Middle Eastern regions[26]. - The company has partnered with state-owned banks and leading city commercial banks for AIGC projects, demonstrating its capabilities in the financial sector[20]. - The company has secured contracts worth HKD 410 million for the Hong Kong Police Central Digital Imaging Platform project, establishing a benchmark for government-controlled IT[21]. - The company has established cloud excellence centers (CCOEs) in key cities to enhance localized service capabilities and support AI cloud transformation for enterprises[71]. Operational Efficiency and Innovations - The company has achieved a 10x efficiency improvement in core services such as project review and acceptance through AI upgrades, utilizing a knowledge base covering over 100,000 project rules and experiences[39]. - The company has launched an intelligent risk control solution for bills, which automates compliance checks and risk detection, showcasing significant potential for cost reduction and risk management in the financial sector[40]. - The company has successfully implemented AI solutions in multiple sectors, including smart power, government, finance, and healthcare, showcasing the extensive application value of Agentic AI[20]. - The company has launched various AI applications in traditional manufacturing, focusing on enhancing production efficiency and market competitiveness[76]. - The company has established a layered defense architecture for AI applications, ensuring security through fine-grained access control and enhanced isolation mechanisms[33]. Corporate Governance and Compliance - The board of directors includes a mix of executive, non-executive, and independent directors, ensuring diverse expertise[140]. - The company emphasizes the importance of board diversity, considering various factors such as gender, age, and professional background in the selection of candidates[150]. - The audit committee reviewed the group's financial reporting procedures and internal control systems, ensuring compliance with applicable accounting standards[161]. - The company has established a clear delegation of authority to the executive directors and management for daily operations and business strategy[145]. - The company is committed to continuously optimizing its risk management system to enhance its risk management capabilities and ensure long-term growth and sustainability[172]. Social Responsibility and Sustainability - The company is committed to fulfilling corporate social responsibility (CSR) by aligning with SA8000 standards and promoting green innovation[181]. - The company is facing challenges in talent acquisition and retention due to intensified market competition for skilled personnel[181]. - The company is enhancing information security management and has achieved ISO27001 certification while introducing ISO27701 for personal privacy protection[182]. - The company aims to maintain its competitive edge by accelerating the transition from traditional IT services to high-value AI solutions[184]. - The company is committed to building a "healthy win-win" ecosystem with partners to enhance supply chain management and cost control[179].

Financial Performance - For the fiscal year ending December 31, 2024, the total revenue was RMB 16,950,733 thousand, a decrease of 1.0% compared to RMB 17,116,894 thousand in 2023[2]. - The annual profit decreased by 28.3% to RMB 511,145 thousand from RMB 712,667 thousand in the previous year[3]. - Adjusted profit increased by 3.8% to RMB 650,240 thousand from RMB 626,350 thousand in 2023[2]. - Basic earnings per share fell by 22.7% to RMB 20.01 from RMB 25.88 in 2023[4]. - The company reported a total comprehensive income of RMB 502,673 thousand, down from RMB 706,486 thousand in the previous year[4]. - Gross profit for 2024 was RMB 3,741,502 thousand, representing a 6.5% decline from RMB 4,003,076 thousand in 2023, with a gross margin of 22.1%[45]. - The company's administrative expenses decreased by 9.9% to RMB 1,220,082 thousand in 2024, with the expense ratio dropping to 7.2% from 7.9% in 2023[47]. - Research and development costs were RMB 906,274 thousand in 2024, down 16.0% from RMB 1,078,296 thousand in 2023, with the R&D expense ratio at 5.3%[48]. - Other income fell by 43.6% to RMB 241,941 thousand in 2024, primarily due to reduced government subsidies and interest income[50]. - Financial expenses decreased by 13.3% to RMB 175,918 thousand in 2024, with the expense ratio at 1.0% compared to 1.2% in 2023[52]. - The effective tax rate increased to 7.4% in 2024 from 2.9% in 2023, with income tax expenses rising to RMB 56,951 thousand, a 167.6% increase[52]. Revenue Breakdown - Service revenue for 2024 was RMB 16,314,168 thousand, down 1.9% from RMB 16,631,560 thousand in 2023[10]. - The Technology Professional Services Group generated revenue of RMB 14,770,393 thousand in 2024, down from RMB 15,020,564 thousand in 2023[12]. - The Internet Information Technology Services Group reported revenue of RMB 2,180,340 thousand in 2024, an increase from RMB 2,096,330 thousand in 2023[12]. - Revenue from the Technology Professional Services Group decreased by 1.7% to RMB 14,770,393 thousand in 2024, while the Internet Information Technology Services Group saw a 4.0% increase to RMB 2,180,340 thousand[57]. Dividends and Shareholder Information - The company proposed a final dividend of HKD 0.0533 per share for the fiscal year[2]. - The proposed final dividend is HKD 0.0533 per ordinary share, subject to shareholder approval at the annual general meeting on May 20, 2025[71]. - The company plans to hold its annual general meeting on May 20, 2025[73]. - The company will suspend share transfer registration from May 14 to May 20, 2025, to determine shareholder eligibility for voting at the annual general meeting[74]. - The company will also suspend share transfer registration from June 3 to June 6, 2025, to determine eligibility for the proposed final dividend[74]. Assets and Liabilities - Non-current assets increased to RMB 5,642,061 thousand from RMB 4,122,341 thousand in 2023, reflecting a significant growth[5]. - Current liabilities rose to RMB 6,103,164 thousand from RMB 2,962,210 thousand in the previous year, indicating increased financial obligations[6]. - The total equity attributable to the owners of the company decreased to RMB 11,415,975 thousand from RMB 11,742,461 thousand in 2023[6]. - Trade receivables (net of provisions) increased to RMB 5,998,723 thousand in 2024 from RMB 5,304,724 thousand in 2023[21]. - Trade payables rose to RMB 930,191 thousand in 2024, compared to RMB 641,287 thousand in 2023[22]. - The net cash balance for 2024 was RMB 4,747,142 thousand, down from RMB 5,088,641 thousand in 2023, primarily due to increased share buybacks totaling HKD 926,726,800[54]. - The current ratio for 2024 was 2.1, a decrease from 4.4 in 2023, indicating a decline in liquidity[54]. - The group's total borrowings increased to RMB 4,416,097 thousand in 2024 from RMB 3,016,817 thousand in 2023[54]. - The net debt ratio was negative, indicating strong debt repayment capability, as available cash exceeded total borrowings of RMB 4,416,097 thousand in 2024[54]. Strategic Initiatives and Growth - The company established an innovation center to enhance AI service capabilities, integrating AI computing services and engineering[27]. - The company expanded its computing power operations and established multiple data centers, including a collaboration with Huawei[28]. - The JointPilot AI application platform was upgraded, resulting in over 60 AI agents deployed and 30 benchmark cases created[29]. - The company launched a domestic ERP system for the power industry, successfully delivering projects for major state-owned enterprises[30]. - The KaihongOS platform was developed to provide integrated hardware and software solutions, achieving significant advancements in various industries[31]. - The company achieved over 30% growth in Huawei Cloud SMB CORE performance during the reporting period, leading the Huawei Cloud ecosystem[32]. - The company plans to leverage domestic computing power and AI capabilities to enhance enterprise productivity and create long-term value for stakeholders[33]. - The company has established R&D and delivery centers in multiple countries, including Saudi Arabia, to support its international expansion strategy[37]. - The company expanded its presence in the Asia-Pacific and Middle East regions, establishing a joint venture in Saudi Arabia to promote digital transformation[33]. Workforce and Corporate Governance - The total number of employees reached 75,075 by the end of 2024, reflecting a 7.3% increase from the previous year[38]. - Technical personnel comprised 95.6% of the total workforce, with project managers, consultants, and senior engineers making up 36.6% of the technical staff[39]. - The board believes that corporate governance is crucial for the company's success and has adopted various measures to maintain high standards[61]. - The audit committee reviewed and monitored the financial reporting procedures and internal control systems during the fiscal year[69]. - The chairman and CEO roles are currently held by the same individual, which the board believes provides strong and consistent leadership[66]. - The board of directors consists of three executive directors, two non-executive directors, and three independent non-executive directors[75]. Future Outlook - The company plans to enhance gross margin by increasing the proportion of high-margin services and accelerating the deployment of AI products and services[49]. - The company aims to improve operational efficiency through self-developed Agent products and AI tools integrated into delivery processes[49]. - The company's performance in the Internet Information Technology Services Group improved by 20.8% when excluding bad debt impacts, despite a reported decline of 40.5%[58]. - The company expects to utilize approximately HKD 394 million for general operating funds by December 31, 2024[60].