CS&S(600536)2024-12-08 06:17Investment Rating - The report maintains a "Recommended" rating for the company [3] Core Views - The company is increasing its stake in its subsidiary, Kirin Software, through a capital increase of up to 3 billion yuan, with the company participating with a maximum of 2 billion yuan [4] - Following the capital increase, the company's shareholding in Kirin Software is expected to rise from 40.25% to 47.23%, or potentially to 51.79% if certain conditions are not met [4] - The capital increase is significant for the company's strategy in the domestic software market, particularly in the context of state-owned enterprise reform [4] - Kirin Software has established a strong position in the domestic operating system market, holding the top market share in China's Linux market for 12 consecutive years [4][7] - The company aims to enhance its core capabilities and market position in the "Xinchuang" (information technology innovation) sector through this investment [7] Summary by Sections Event Overview - On December 6, 2024, the company announced a capital increase for Kirin Software, aiming to raise no more than 3 billion yuan [4] - The company plans to use funds from a specific A-share issuance to participate in this capital increase [4] Financial Projections - The company's revenue for 2023 is projected at 6.723 billion yuan, with a growth rate of -30.3% [7] - Expected net profit for 2024 is 133 million yuan, with a significant recovery from a loss of 233 million yuan in 2023 [7] - The company anticipates a compound annual growth rate (CAGR) of 28% in revenue and 37% in net profit for Kirin Software from 2020 to 2023 [4][7] Strategic Importance - The capital increase is expected to enhance Kirin Software's R&D capabilities and product line, optimizing its business structure [7] - The company is positioned as a key player in the "Xinchuang" sector, focusing on foundational software and high-tech applications for government and industry [7]