CS&S(SH:600536) Guotou Securities·2024-07-29 09:30Investment Rating - The report assigns a "Buy -A" investment rating to the company with a target price of 39.06 CNY over the next six months [5][6]. Core Insights - The company is positioned as a leading player in the domestic software industry, focusing on foundational software and digital tax solutions, with significant investments in the Kylin operating system [2][3][5]. - The rise of the "Xinchuang" (innovation and self-reliance) strategy in China emphasizes the importance of domestic software solutions, particularly in light of recent security incidents that highlight the need for self-sufficiency [3][19]. - The upcoming tax reforms are expected to drive demand for digital tax solutions, positioning the company favorably within the evolving fiscal landscape [4][29]. Summary by Sections 1. Company Overview - The company is a core asset of the central enterprise China Electronics, specializing in foundational software and high-tech application solutions, with a focus on self-developed software products and industry solutions [2][12][14]. 2. Xinchuang Strategy - The Kylin operating system, developed by the company, is a leading domestic operating system that has achieved the highest security ratings and is widely adopted across various sectors, including government and critical industries [3][22]. - The company has established partnerships with over 24,800 vendors, showcasing its extensive ecosystem and market competitiveness [3][26]. 3. Tax Reform and Digital Finance - The company plays a crucial role in the "Golden Tax Project," which aims to modernize tax management through digital solutions, thereby enhancing the efficiency and effectiveness of tax collection [4][30]. - The anticipated tax reforms are expected to create significant opportunities for digital tax services, with the market for integrated financial and tax services projected to grow substantially in the coming years [29][33]. 4. Financial Projections - Revenue forecasts for the company indicate a growth trajectory, with expected revenues of 74.25 billion CNY in 2024, 85.44 billion CNY in 2025, and 97.87 billion CNY in 2026, alongside net profits projected to reach 1.16 billion CNY in 2024 [5][36]. - The company is expected to benefit from the increasing demand for domestic software solutions and digital tax services, driven by both market trends and government policies [5][35].