Group 1 - The core viewpoint of the news highlights the significant advancements in AI applications and financial technology, marking a pivotal moment in the software revolution, with AI applications being the central theme for the future [1] - The computer industry is experiencing rapid market expansion driven by factors such as domestic innovation and policy support, although competition remains intense in areas like databases and operating systems [1] - The domestic computer industry is improving its market share year by year due to the push for localization policies, despite still lagging behind foreign giants in product performance and ecosystem [1] Group 2 - The Computer ETF tracks the CS Computer Index, which is compiled by China Securities Index Co., selecting listed companies in the software development, IT services, and hardware manufacturing sectors to reflect the overall performance of China's computer-related listed companies [1] - The CS Computer Index exhibits high industry concentration and technological orientation, effectively representing the development trends of the Chinese computer industry [1]

Group 1 - The A-share market opened higher on June 5, with the CSI Computer Theme Index rising by 0.64%, driven by significant gains in stocks like Guangdian Yuntong and Langxin Group, which increased by over 3% [1] - The Computer ETF (159998) also opened positively, increasing by 0.35% with a premium rate of 0.40%, indicating active trading [1] - The Computer ETF has seen substantial capital inflow, with over 28 million yuan net inflow on the previous day, marking it as the top product in its category, and it has recorded net inflows for 13 consecutive trading days [1] Group 2 - The Computer ETF tracks the CSI Computer Theme Index, which includes stocks from sectors such as information technology services, application software, system software, and computer hardware [1] - The top ten holdings of the ETF as of March 31 include leading companies like Hikvision, Zhongke Shuguang, and Keda Xunfei, with Zhongke Shuguang accounting for 6.86% of the fund's net value [1] - Zhongyuan Securities anticipates a continuation of structural market trends in June, focusing on sectors like computers, components, electronics, and communications, alongside defensive sectors such as banks and coal [2]

Core Viewpoint - The Shanghai Stock Exchange and China Securities Index will officially launch the Shanghai Stock Exchange Science and Technology Innovation Board Computer Theme Index on May 27, which aims to reflect the overall performance of listed companies in the computer sector on the Science and Technology Innovation Board [1][3]. Group 1: Index Launch and Market Performance - The new index will include 50 stocks from the computer sector, such as Anheng Information, Guodun Quantum, and Shanshi Network Technology, focusing on software development, IT services, and computer hardware [3][5]. - On May 26, the computer sector saw a strong performance, with the CSI Computer Index rising by 1.39%, driven by news of a merger between two major computing companies [3][4]. - Several computer-themed ETFs also experienced significant gains, with Tianhong CSI Computer Theme ETF rising by 1.77% as of May 26 [3][4]. Group 2: Investment Opportunities and Trends - Over the past year, various computer-related indices have shown an increase of over 19%, indicating strong investment interest in the sector [4]. - The launch of the new index is expected to attract more ETFs that track it, providing investors with low-cost, diversified investment tools [5][6]. - The ongoing development of AI applications is anticipated to boost demand for software and computer hardware, further enhancing the investment landscape in the computer sector [5][6].

Core Insights - The Huawei HarmonyOS ecosystem is significantly focused on the desktop version of the Harmony system, which aims to create a seamless multi-device experience [1] Multi-Screen Collaboration - The HarmonyOS computer lacks direct support for popular applications like WeChat, but users can utilize "multi-screen collaboration" to control their mobile WeChat from the computer [2][4] - The core functionality of the HarmonyOS computer is to achieve an ecosystem closed loop, allowing for seamless multi-device connectivity, including shared mouse and file drag-and-drop capabilities [5] Software Availability - While the HarmonyOS computer does not support major software like Photoshop and CAD, it offers various domestic alternatives for photo editing, modeling, and video editing, such as "Meitu Xiuxiu" and "Jianying" [7] - The software ecosystem is rapidly expanding under Huawei's promotion, indicating that the HarmonyOS computer can handle most tasks effectively [7][19] User Experience - The keyboard and touchpad experience is generally satisfactory, with room for improvement. Special keys like the "Harmony Key" and "Voice Key" enhance usability [9][11] - The touchpad supports various gestures, but some functionalities, such as three-finger app switching, need further optimization [11] Windows Compatibility - Users can install Windows on the HarmonyOS computer through a virtual machine application, providing a rich software experience, including access to applications like WeChat and After Effects [12][16] - The virtual machine allows for smooth operation and shared keyboard and mouse functionality between HarmonyOS and Windows [16] Domestic Software Ecosystem - The HarmonyOS computer represents a significant step for domestic operating systems aimed at general consumers, with high completion levels and quality build [17] - The introduction of HarmonyOS is expected to greatly enhance the domestic software ecosystem, leading to the emergence of more high-quality applications [19]

Investment Rating - The report maintains an investment rating of "Outperform the Market" for the computer industry [5]. Core Insights - In Q1 2025, Tencent's capital expenditure reached 27.476 billion yuan, a year-on-year increase of 91.35%, with 23 billion yuan allocated to AI-related business, accounting for over 80% of total capital expenditure. Alibaba's capital expenditure was 24.612 billion yuan, up 120.68% year-on-year, with a signed but unrecognized capital expenditure commitment amounting to 45.321 billion yuan, a 146.68% increase year-on-year. Despite a slowdown in chip procurement due to US-China trade tensions, major companies continue to invest heavily in AI [34][21][18]. - The launch of Huawei's Harmony PC on May 19 marks a significant breakthrough for domestic operating systems, supported by local software vendors, enhancing the Harmony ecosystem and providing localized AI experiences through the assistant "Xiao Yi" [24][29][32]. Summary by Sections Market Review - The computer (Shenwan) index fell by 1.26% this week, underperforming the CSI 300 index by 2.38 percentage points [12]. Investment Portfolio - Current recommendations include Longxin Group, Tax Friend Co., Bosi Software, Compass, Newland, Guoneng Rixin, Top Software, and Daotong Technology. The previous portfolio had a return of -1.01%, outperforming the Shenwan computer index's decline of -1.26% by 0.26% [3][36]. Industry News - Tencent's Q1 2025 report showed a revenue of 180.022 billion yuan, a 12.87% increase year-on-year, with a net profit of 47.821 billion yuan, up 14.16% year-on-year. The financial technology and enterprise services segment generated 54.907 billion yuan, a 5% increase year-on-year [18]. - Alibaba's Q1 2025 report indicated a revenue of 236.454 billion yuan, a 6.57% increase year-on-year, with an adjusted EBITA of 32.616 billion yuan, up 36.07% year-on-year [21]. Investment Recommendations - Continued investment in AI models and technologies is expected, with a focus on ERP and government sectors for initial orders and products. Recommended stocks include Bosi Software, Tax Friend Co., and Kingdee International. The demand for private models is increasing, benefiting integrated machines and B-end service outsourcing companies [35]. - The Harmony PC is anticipated to drive domestic demand, with investment opportunities in the Xinchuang and industrial software sectors. Recommended stocks include Haiguang Information, Dameng Data, and Kingsoft Office [35].

Core Viewpoint - The emergence of Harmony OS on computers signifies a pivotal shift towards a self-controlled and secure digital ecosystem, addressing the growing concerns over privacy and security in the digital age [4][5][24]. Group 1: Security and Privacy - The increasing complexity of network threats necessitates a new operating system that can reconstruct security order, particularly in sectors that prioritize personal privacy and sensitive data [5]. - The Harmony OS emphasizes self-controlled security, which is deemed essential in the AI era, as traditional centralized security measures fail to meet real-time and privacy protection needs [4][5]. - Harmony OS has achieved the highest international CC EAL6+ certification for its kernel, establishing a robust security framework that protects user data at multiple levels [17][18]. Group 2: Technological Advancements - Harmony OS is built on a microkernel architecture that minimizes core functions, reducing the attack surface and enhancing system stability, which is crucial for sectors like government and finance [27]. - The operating system supports a distributed architecture that allows seamless cross-device connectivity, enhancing user experience and operational efficiency [12][15]. - The integration of AI capabilities, such as the intelligent assistant "Xiao Yi," enhances productivity by providing real-time assistance and facilitating knowledge management across devices [12][15]. Group 3: Market Position and Ecosystem - The launch of Harmony OS on computers represents a significant breakthrough in the desktop market, traditionally dominated by Windows, providing a viable alternative for users [24][25]. - Harmony OS aims to create a unified ecosystem that connects various devices, from mobile to desktop to IoT, positioning itself as a foundational platform for intelligent services [24][30]. - The operating system's ability to support "one development, multi-terminal deployment" significantly lowers development costs for developers and fosters a more cohesive ecosystem [28]. Group 4: Future Outlook - With over 1 billion Harmony devices already in use across various sectors, the company is rapidly building a future-oriented digital ecosystem [19]. - The ongoing development of Harmony OS is expected to lead to a substantial increase in compatible applications, with projections of reaching 2,000 by the end of 2025 [28]. - The transition towards a self-controlled operating system marks a critical juncture for China's ICT industry, providing a clear path for overcoming foreign technology monopolies [24][30].

Summary of the Conference Call on HarmonyOS PC Industry and Company Overview - The conference call discusses the current status and future plans of Huawei's HarmonyOS, particularly focusing on the newly launched HarmonyOS PC, which aims to reshape the 1+8+n ecosystem and address previous gaps caused by chip and licensing issues [1][2]. Key Points and Arguments - **Ecosystem Integration**: HarmonyOS PC is designed to complete the ecosystem by integrating various devices, including smartphones, tablets, wearables, and now PCs, creating a closed-loop system [2]. - **Software Compatibility**: The initial focus is on compatibility with Windows design software like PS and CAD, with a long-term goal of establishing a fully closed and pure ecosystem [1][4]. - **Software Adaptation Speed**: The speed of software adaptation is influenced by planning, software complexity, and collaboration with manufacturers. Basic applications adapt quickly, while games and design applications take longer [5]. - **Developer Incentives**: By the end of 2025, Huawei plans to restart developer incentive policies to boost software adaptation and enhance market competitiveness [1][6]. - **Current Software Adaptation**: As of now, approximately 35 software applications have been adapted for HarmonyOS PC, primarily focusing on light office and social applications [7]. - **Future Goals**: The goal is to increase the number of adapted applications to around 200 by the end of 2025 and achieve compatibility with software used by over a million users by the second quarter of 2026 [8][9]. Additional Important Content - **Market Focus**: HarmonyOS PC primarily targets the ToB (business) and ToG (government) markets, with a sales target of 300,000 units for 2025, despite high initial pricing [3][10]. - **Production Challenges**: Current challenges include hardware firmware updates, BOM configuration integration, and production capacity, necessitating partnerships with external manufacturers [11][12]. - **Profit Margins**: The expected profit margin for PC manufacturing is slightly higher than that of GPU servers, with margins around 10% for PCs [13]. - **Open Source Strategy**: The open-source version of HarmonyOS is aimed at becoming a universal operating system, while the proprietary version is led by Huawei for various devices [14]. - **Competitive Landscape**: The market share forecast indicates HarmonyOS could reach 30% within three years, with a goal to surpass iOS but still needing support to compete with Android [16]. - **Technical Advantages**: HarmonyOS offers several technical advantages over Android, including better performance on less powerful hardware and a developer-friendly ecosystem [17]. - **Consumer Market Readiness**: The consumer market for HarmonyOS PC is expected to mature by the end of 2026, with significant recognition anticipated if progress is steady [25]. This summary encapsulates the essential insights from the conference call regarding Huawei's HarmonyOS PC, its ecosystem integration, software adaptation strategies, market focus, and competitive positioning.

Market Overview - The Shanghai Composite Index rose by 0.28% on May 8, with 21 out of the 28 sectors in the Shenwan classification experiencing gains, led by the communication and defense industries, which increased by 2.60% and 2.57% respectively [1] - The computer industry saw a rise of 0.71% [1] - The beauty care and non-ferrous metals sectors had the largest declines, falling by 0.96% and 0.43% respectively [1] Capital Flow Analysis - The main capital flow showed a net outflow of 118 million yuan across the two markets, with 11 sectors experiencing net inflows [1] - The communication sector led the net inflow with 2.60% increase and a total inflow of 2.423 billion yuan, followed by the power equipment sector with a 1.62% increase and an inflow of 1.669 billion yuan [1] - The basic chemical sector had the largest net outflow, totaling 2.663 billion yuan, followed by the computer sector with a net outflow of 1.173 billion yuan [1] Computer Industry Performance - In the computer sector, 336 stocks were tracked, with 255 stocks rising and 73 stocks declining; three stocks hit the daily limit up [2] - The top three stocks with the highest net inflow were Donghua Software, with an inflow of 649 million yuan, followed by Wangda Software and Wanxing Technology with inflows of 264 million yuan and 234 million yuan respectively [2] - The stocks with the highest net outflow included Huasheng Tiancheng, Changshan Beiming, and Ruantong Power, with outflows of 548 million yuan, 454 million yuan, and 426 million yuan respectively [2][3] Top Gainers in Computer Sector - The top gainers in the computer sector included: - Donghua Software: +9.96% with a turnover rate of 8.19% and a main capital flow of 649.29 million yuan - Wangda Software: +7.67% with a turnover rate of 22.22% and a main capital flow of 264.49 million yuan - Wanxing Technology: +6.17% with a turnover rate of 12.42% and a main capital flow of 233.92 million yuan [2] Top Losers in Computer Sector - The top losers in the computer sector included: - Huasheng Tiancheng: -2.64% with a turnover rate of 45.15% and a main capital flow of -547.88 million yuan - Changshan Beiming: -2.90% with a turnover rate of 11.66% and a main capital flow of -454.25 million yuan - Ruantong Power: -2.14% with a turnover rate of 6.06% and a main capital flow of -425.53 million yuan [3]

Summary of Key Points from the Conference Call Industry and Company Involved - The document pertains to the technology industry, specifically focusing on Huawei and its associated projects through a company referred to as "Softcom" (软通). Core Insights and Arguments - Softcom announced a private placement plan to raise no more than 3.378 billion yuan, which will be allocated to various projects: - **Beijing-Tianjin-Hebei Soft Communication Innovation Manufacturing Base Project**: 1.38 billion yuan [1] - **AIPC Intelligent Manufacturing Base Project**: 1.2 billion yuan [1] - **Softcom Power Huailai Intelligent Computing Center (Phase I) Construction Project**: 1.03 billion yuan [1] - **Computer Production Workshop Intelligent Upgrade Technology Transformation Project**: 160 million yuan [1] - Following the integration of Tongfang in 2024, the company has undergone comprehensive transformation with significant results: - **Overall Hardware Business Revenue**: Expected to reach 12.9 billion yuan in 2024, representing a year-on-year growth rate of 30% [1] - **PC Business Performance**: The company anticipates a year-on-year increase of 106% in PC shipments (including desktops and laptops), with market share doubling to 9%, ranking third in the domestic market [1] - **Huailai Intelligent Computing Center**: Aimed at expanding the company's computing power pool, with existing interested clients [1] Other Important but Potentially Overlooked Content - The document highlights the strategic investments in intelligent manufacturing and computing capabilities, indicating a strong focus on technological advancement and market competitiveness [1]

Investment Rating - The investment rating for the computer industry is "Buy" [2] Core Insights - The computer industry is experiencing a bottoming out of demand in 2024, with significant differences in structural performance across various segments. Companies are enhancing operational efficiency to cope with the challenges [6][14] - The median revenue growth rate for the industry in 2024 is -1.59%, a decrease of 4.88 percentage points from 2023. The median net profit growth rate is -2.24%, down 8.35 percentage points from the previous year [15] - The report highlights that while revenue and profit metrics are declining, the rate of decline is slowing, indicating potential for improvement in Q1 2025 [15][16] Summary by Sections 1. 2024 Annual Report: Bottoming Demand and Efficiency Improvements - The report analyzes the performance of 208 listed companies in the computer industry, revealing that the overall revenue growth is stabilizing, and profit margins are showing signs of recovery [14][15] - Different segments within the industry show varying performance, with IT hardware, trusted computing, and smart vehicle sectors demonstrating positive growth trends [16][28] 2. Demand Stabilization and Financial Indicators - The report notes that contract liabilities are beginning to improve, and accounts receivable growth is declining, indicating a more stable financial environment [23][24] - Cash inflows from sales of goods and services have significantly increased, reflecting a positive trend in operational cash flow [24] 3. Investment Activity and Valuation Levels - The report indicates an increase in net cash outflow from investment activities, suggesting an expansion trend among companies [26] - As of April 30, 2025, the industry’s price-to-earnings (P/E) ratio is 46 times, with software companies showing a higher P/E increase compared to hardware companies [19][20] 4. Key Areas of Investment Value - The report identifies several key areas with strong investment potential, including AI applications, domestic software and hardware replacements, and the smart driving industry [20][21] - The acceleration of domestic orders in trusted computing and the expansion of the Harmony OS ecosystem are expected to enhance the competitive edge of leading companies in the industry [20][21]