CS&S(600536)2024-12-11 01:34Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for its stock performance relative to the market index [12]. Core Views - The company is set to increase its stake in its subsidiary, Kirin Software, through a capital increase of up to 3 billion yuan, with the company planning to invest no more than 2 billion yuan [3][4]. - Following this capital increase, the company's ownership in Kirin Software is expected to rise from 40.25% to 51.79%, significantly enhancing its control over the operating system segment [4]. - The report highlights the favorable market conditions for the company, particularly in the context of domestic software development and the increasing importance of self-sufficiency in technology [6]. Financial Summary - Revenue Projections: The company anticipates revenue growth from 6,723 million yuan in 2023 to 9,014 million yuan by 2026, reflecting a compound annual growth rate (CAGR) of approximately 10.6% [2]. - Net Profit Forecast: The net profit is projected to recover from a loss of 233 million yuan in 2023 to a profit of 181 million yuan by 2026, indicating a strong turnaround [2]. - Gross Margin Improvement: The gross margin is expected to improve from 36.9% in 2023 to 41.1% in 2026, showcasing enhanced operational efficiency [2]. - Earnings Per Share (EPS): EPS is forecasted to increase from -0.27 yuan in 2023 to 0.21 yuan in 2026, reflecting the company's recovery trajectory [2]. Market Position - Kirin Software has maintained its leading position in the Chinese Linux market for 13 consecutive years, which is expected to strengthen further with the new capital injection aimed at enhancing research and development [5]. - The report emphasizes the strategic importance of Kirin Software in the context of national policies promoting the use of domestic technology solutions, positioning the company to benefit from these trends [6].