CS&S(SH:600536) Guolian Securities·2024-09-01 04:03Investment Rating - The investment rating for China Software (600536) is "Buy" [6]. Core Views - The company reported a significant narrowing of losses in the first half of 2024, with revenue of 1.984 billion yuan, a year-on-year decrease of 21.73%. The net profit attributable to shareholders was -273 million yuan, also showing a reduction in losses [10][11]. - The subsidiary, Kirin Software, achieved a revenue growth of 14.13% year-on-year, reaching 498 million yuan in the first half of 2024, and maintained its leading position in the Chinese Linux market for 13 consecutive years [10][11]. - The company is expected to focus on industry sectors, with projected revenues for 2024-2026 of 6.038 billion, 6.431 billion, and 7.019 billion yuan, respectively, with corresponding growth rates of -10.19%, 6.51%, and 9.14% [10][11]. Summary by Sections Financial Performance - In the first half of 2024, the company reported a revenue of 1.984 billion yuan, down 21.73% year-on-year, with a gross margin of 43.88%, an increase of 7.94 percentage points [10][11]. - The second quarter of 2024 saw revenue of 1.281 billion yuan, a decrease of 2.67% year-on-year, with a gross margin of 36.28%, down 0.36 percentage points [10][11]. - The projected net profit for 2024 is expected to be 114 million yuan, transitioning from losses to profits, with an EPS of 0.13 yuan per share [10][11]. Business Segments - Kirin Software's revenue reached 498 million yuan in the first half of 2024, with a net profit of 121 million yuan, marking a year-on-year increase of 4.89% [10][11]. - Guangzhou Zhongsoft benefited from increased electricity project settlements, achieving a revenue of 293 million yuan, a year-on-year growth of 44.27% [10][11]. - The company is focusing on enhancing its core competitiveness in the operating system sector, with a strong market presence across various industries [10][11].