CS&S(SH:600536) Minsheng Securities·2024-10-31 00:46Investment Rating - The report maintains a "Recommended" rating for the company, with a current price of 46.12 yuan [4]. Core Views - The company reported a revenue of 2.92 billion yuan for the first three quarters of 2024, a year-on-year decrease of 29.77%. The net profit attributable to the parent company was -338 million yuan, showing a reduction in losses compared to the previous year [2]. - In Q3 2024, the company focused on its core business, resulting in a significant reduction in losses for the non-recurring net profit, which was -64.96 million yuan, a substantial improvement year-on-year [2]. - The subsidiary Kylin Software generated revenue of 784 million yuan in the first nine months of 2024, up 18.61% from 661 million yuan in the same period of 2023, indicating resilience in core assets [2]. - Kylin Software has established a comprehensive ecosystem and continues to lead the Chinese Linux market for 13 consecutive years, which is crucial for long-term development [2]. - The company is positioned as a key player in the domestic software industry, leveraging its core assets in the context of domestic substitution trends [2]. Financial Summary - The company's total revenue for 2023 is projected at 6.723 billion yuan, with expected growth rates of 2.97%, 13.46%, and 13.48% for 2024, 2025, and 2026 respectively [5]. - The net profit attributable to the parent company is forecasted to be 133 million yuan in 2024, 228 million yuan in 2025, and 314 million yuan in 2026, with corresponding PE ratios of 295X, 172X, and 125X [5]. - The company’s gross margin is expected to improve from 36.89% in 2023 to 38.09% in 2026, reflecting enhanced profitability [5].