Summary of China CIO 2H25 Survey: The Worst May Be Over Industry Overview - **Industry**: China IT Services and Software - **Survey Date**: November 27, 2025 - **Key Focus**: Insights from CIOs regarding IT budget allocations and trends in AI adoption Key Findings IT Budget Growth - **2025 IT Budget Growth**: Revised upward to 7.4%, an increase of 1.6 percentage points from the previous survey, marking the first upward revision since 2H21 [2][12] - **2026 IT Budget Growth Expectation**: Anticipated growth of 12.6%, indicating a recovery from previous trade tensions, with software expected to lead at 13.1% growth [3][12][16] - **Long-term Investment Confidence**: 47% of CIOs expect IT spending as a percentage of revenue to grow over the next three years, up from 34% previously [12][26] Shift in Budget Drivers - **Primary Driver Shift**: The focus has shifted from macroeconomic conditions to micro-level business growth, with 44% of CIOs citing business requirements as the top factor influencing IT spending [12][27] - **Vendor Price Competition**: 88% of CIOs reported increased aggressive discounting from vendors, indicating ongoing supply-side challenges despite a five-year down cycle [12][44] AI Adoption Trends - **AI as a Priority**: AI remains the top investment priority, but the pace of adoption has moderated, with many CIOs delaying their first AI projects to 2026 [4][11][55] - **AI Budget Allocation**: The share of IT spending allocated to AI is projected to rise from 7.7% in 2025 to 13% in 2026, with a notable shift towards purchasing AI applications rather than building them in-house [12][55][69] - **Public Cloud Adoption**: 38% of CIOs plan to accelerate public cloud usage next year, with Alibaba expected to be the biggest beneficiary in AI and cloud spending [12][55] Enterprise Type Insights - **State-Owned vs. Privately Owned Enterprises**: Both SOEs and POEs revised their 2025 IT budgets upward to 8.3% growth, but POEs are expected to lead in 2026 with 13.3% growth compared to SOEs' 12.5% [12][37][41] Other Notable Insights - **ERP Resilience**: ERP systems regained their position as a resilient spending segment, ranking second in terms of least likely to be cut [51] - **Data Center Investments**: There is an increasing interest in data center build-outs, with 9% of CIOs indicating it as a priority for increased spending [50] Conclusion The survey indicates a positive shift in the outlook for the China IT Services and Software industry, with CIOs showing renewed confidence in budget growth and a strategic focus on AI and cloud technologies. The normalization of IT budgets and the shift towards micro-level business growth are critical trends to monitor moving forward.

Summary of Meitu Inc. Conference Call Company Overview - **Company**: Meitu Inc (1357.HK) - **Industry**: Greater China IT Services and Software - **Current Stock Price**: HK$9.57 (as of September 18, 2025) - **Market Capitalization**: RMB 40,270 million - **52-Week Price Range**: HK$2.04 - HK$12.56 - **Stock Rating**: Overweight [6][65] Key Takeaways - **DesignKit Launch**: Meitu's DesignKit has been launched on Amazon, qualifying to enter the Amazon Solution Provider Network (SPN), which allows it to serve e-commerce merchants, particularly cross-border merchants from China. This is seen as a positive development for DesignKit, which is a key productivity product for Meitu [9][4]. - **Revenue Growth Projections**: Revenue is projected to grow from RMB 3,341 million in FY 2024 to RMB 6,771 million by FY 2027, indicating a compound annual growth rate (CAGR) of approximately 30% [6]. - **Earnings Per Share (EPS)**: EPS is expected to increase from RMB 0.13 in FY 2024 to RMB 0.40 by FY 2027 [6]. - **EBITDA Growth**: EBITDA is forecasted to rise from RMB 584 million in FY 2024 to RMB 2,131 million by FY 2027 [6]. - **Valuation Methodology**: The company is valued using a 10-year Discounted Cash Flow (DCF) model, with a Weighted Average Cost of Capital (WACC) of 10.9% and a terminal growth rate of 3% [10]. Risks and Opportunities - **Upside Risks**: - Faster user penetration due to AI adoption and increased market share overseas - Higher-than-expected Average Revenue Per Paying User (ARPPU) - Improved operating leverage [12]. - **Downside Risks**: - Slower-than-expected growth in paying users - Increased R&D expenses related to AI development - Heightened competition from larger internet companies [12]. Financial Metrics - **Projected Revenue**: - FY 2024: RMB 3,341 million - FY 2025: RMB 4,021 million - FY 2026: RMB 5,120 million - FY 2027: RMB 6,771 million [6]. - **Projected EBITDA**: - FY 2024: RMB 584 million - FY 2025: RMB 1,040 million - FY 2026: RMB 1,504 million - FY 2027: RMB 2,131 million [6]. - **Projected P/E Ratios**: - FY 2024: 21.1 - FY 2025: 42.3 - FY 2026: 32.0 - FY 2027: 21.9 [6]. Conclusion Meitu Inc is positioned for significant growth, particularly through its DesignKit product and expansion into e-commerce via Amazon. The financial projections indicate strong revenue and EBITDA growth, although the company faces risks from competition and user growth dynamics. The current stock rating of Overweight suggests a favorable outlook for investors.

Summary of Chinasoft International Ltd Conference Call Company and Industry Overview - **Company**: Chinasoft International Ltd (0354.HK) - **Industry**: Greater China IT Services and Software - **Current Stock Rating**: Equal-weight - **Price Target**: HK$5.40, representing a downside of 17% from the current price of HK$6.50 as of August 25, 2025 [3][3][3] Financial Performance Highlights - **Revenue**: Grew 7.3% YoY to Rmb 8,507 million, driven by an 8% YoY increase in service revenue, while product sales revenue declined by 7% YoY [6][6][6] - **AI Revenue**: Increased significantly by 130% YoY to Rmb 656 million, attributed to AIoT, AI applications, and AI computing power [6][6][6] - **Gross Margin**: Decreased by 1.1 percentage points YoY to 22% [6][6][6] - **Operating Profit**: Rose by 12.8% YoY [6][6][6] - **Net Profit**: Increased by 10.4% YoY to Rmb 316 million [6][6][6] - **Operating Cash Flow (OCF)**: Deteriorated by 11.6% to negative Rmb 990 million, raising concerns due to rising debt levels [6][6][6] - **Net Debt Position**: Company is in a net debt position of Rmb 2,317 million [6][6][6] Earnings Estimates and Valuation Metrics - **Earnings Per Share (EPS)**: - 2025e: Rmb 0.34 - 2026e: Rmb 0.38 - 2027e: Rmb 0.41 [3][3][3] - **Revenue Projections**: Expected to reach Rmb 20,550 million by 2026 and Rmb 22,159 million by 2027 [3][3][3] - **Valuation Methodology**: Based on a 15x multiple of 2025e EPS and 2026e EPS [8][8][8] Risks and Opportunities - **Upside Risks**: - Stronger-than-expected demand for digital transformation driven by generative AI [10][10][10] - Recovery in demand for external IT services from top customers [10][10][10] - Potential for gross margin recovery due to a shift towards high-value services [10][10][10] - **Downside Risks**: - Stagnation in digital transformation demand among Chinese enterprises [10][10][10] - Significant increases in labor costs [10][10][10] Market Position and Trading Information - **Market Capitalization**: Rmb 14,837 million [3][3][3] - **Average Daily Trading Value**: HK$242 million [3][3][3] - **52-Week Stock Price Range**: HK$9.32 - HK$3.51 [3][3][3] Conclusion Chinasoft International Ltd is experiencing moderate growth in revenue, particularly in AI services, but faces challenges with declining product sales and cash flow issues. The company's cautious outlook reflects potential risks in the broader IT services market in China, while opportunities exist in the growing demand for digital transformation services.