Core Viewpoint - Southbound funds reduced their holdings in China Software International (00354.HK) by 3.412 million shares on February 9, while experiencing a net increase of 36.868 million shares over the past five trading days [1] Group 1: Southbound Fund Activity - Over the last 20 trading days, Southbound funds have increased their holdings in China Software International on 14 occasions, resulting in a total net increase of 65.024 million shares [1] - Currently, Southbound funds hold 896 million shares of China Software International, accounting for 32.78% of the company's total issued ordinary shares [1] Group 2: Company Overview - China Software International is an investment holding company that provides global technology software and information technology services [1] - The company operates through two main segments: Technical Professional Services and Internet Information Technology Services [1] - The primary business focus includes the development of generative artificial intelligence (AIGC), sales of large model software and hardware, and digital transformation consulting services for enterprise resource planning (ERP) [1] - Key products include the "Question Series" solutions, large model application integrated machines, and Lingxi AI application platform [1] - Services are provided to various sectors including water conservancy, transportation, government platforms, military, energy, education, and finance, with operations in both domestic and international markets [1]

Core Insights - The National Innovation Center in Beijing has gathered over 700 enterprises, covering key sectors such as CPU, operating systems, databases, complete machines, network security, and application software [5][21]. Group 1: Key Enterprises - Loongson Technology (龙芯中科, 688047) is a leader in domestic CPU with its LoongArch instruction set and has a strong market share in government and terminal markets [6][22]. - Phytium Technology (飞腾信息, 000066) leads in the integration of servers and terminals with its FT series CPUs and has a well-adapted ecosystem [6][22]. - Haiguang Information (海光信息, 688041) focuses on general-purpose CPUs and DCU chips, being a major player in high-performance computing and data center chips [7][22]. - Tongxin Software is a core manufacturer of domestic desktop and server operating systems with a rich adaptation ecosystem [8][23]. - Kylin Software (麒麟软件, 600536) is a key supplier for critical industries such as government and finance with its Galaxy Kylin OS [9][24]. - DM Database (达梦数据库) is recognized as a benchmark for domestic databases with leading transaction processing performance [10][25]. - Renmin University of China Database (人大金仓) has a high penetration rate in government and central enterprise markets with its KingbaseES database [11][26]. - Sugon (中科曙光, 603019) is a leader in server and supercomputing infrastructure with advanced liquid cooling technology [12][27]. - China Great Wall Technology (中国长城, 000066) is a core enterprise in the domestic closed-loop for innovation with its Feiteng platform and terminals [13][28]. - Aisino (亚信安全, 688225) leads in security solutions for innovation environments with strong adaptation capabilities [14][29]. - Sangfor Technologies (深信服, 300454) is a leader in enterprise security and cloud computing solutions [15][29]. - Kingsoft Office (金山办公, 688111) is a leading domestic office software provider with extensive adaptation in innovation [15][29]. - Yonyou Network (用友网络, 600588) is a core manufacturer for enterprise management software transformation in innovation [16][30]. - SMIC (中芯国际) supports domestic chip manufacturing with its advanced 12-inch wafer fabrication capabilities [16][30]. - Unisoc (紫光汉图) provides adaptation and solutions for innovation [16][30].

格隆汇2月9日丨中国软件(600536.SH)在互动平台表示，麒麟软件与国外航天公司没有业务合作。 ...

Core Viewpoint - Southbound funds have significantly increased their holdings in China Software International, indicating strong investor interest and confidence in the company's future prospects [1] Group 1: Investment Activity - On February 6, southbound funds increased their holdings by 28.48 million shares of China Software International (00354.HK) [1] - Over the past five trading days, there have been four days of net increases in holdings, totaling 39.41 million shares [1] - In the last 20 trading days, there were 15 days of net increases, amounting to 70.15 million shares [1] - Currently, southbound funds hold 899 million shares of China Software International, representing 32.9% of the company's total issued ordinary shares [1] Group 2: Company Overview - China Software International Limited is a global technology software and IT services investment holding company [1] - The company operates through two main divisions: Technology Professional Services and Internet Information Technology Services [1] - The primary business focus includes the development of generative artificial intelligence (AIGC), large model software and hardware sales, and digital transformation consulting services for enterprise resource planning (ERP) [1] - Key products include the "Question Series" solutions, large model application integrated machines, and Lingxi AI application platforms [1] - The company provides services to various sectors, including water conservancy, transportation, government platforms, military, energy, education, and finance, operating in both domestic and international markets [1]

Summary of Conference Call Notes Industry Overview - **Industry**: Greater China IT Services and Software - **Current Market Sentiment**: China software stocks have declined by 3-12% on February 4, 2026, compared to a -0.2% change in MSCI China, indicating a negative sentiment influenced by a sell-off in US software stocks [1][2] Core Insights - **AI Disruption**: The market perceives a risk of AI disrupting China software companies, marking the beginning of a long-term narrative shift after an unjustified rally in January 2026. While SaaS is rare in China, conventional software, especially tools, is also at risk of long-term disruption [1] - **Earnings Consensus**: A-share Chinese software companies are expected to face significant earnings cuts due to deflation, while H-share software companies may experience multiple de-rating pressures as the AI theme evolves [2] Key Company Insights - **Underweight Recommendations**: Key underweight (UW) recommendations include Kingsoft Office, Yonyou, and VenusTech. There is an upside risk due to a lack of institutional participation in the A-share software sector, which could lead to long-term deviations from fundamentals [3] - **Institutional Focus**: Institutional investors are primarily focused on Kingdee (rated Equal-weight), which is facing more selling pressure despite having better fundamentals and valuation compared to its peers [3] Valuation Methodology - **Valuation Models**: - VenusTech and Kingdee International Software Group utilize a 10-year discounted cash flow (DCF) model with a WACC of 10.9% and 9.8% respectively, assuming a terminal growth rate of 3% [6][7] - Yonyou Network Technology also employs a DCF model with a WACC of 9.3% and similar assumptions [9] Risks Identified - **Downside Risks**: - Stricter government policies on cybersecurity and potential cybersecurity events such as information leaks pose significant risks [9] - Intensified competition from other vendors and new entrants, along with the risk of losing market share to cloud vendors, are also highlighted [10][14] - **Upside Risks**: - Faster cloud revenue growth and well-managed implementation offloading could provide upside potential [11][14] Additional Considerations - **Market Dynamics**: The software sector in China is undergoing significant changes, with AI adoption and cloud transitions being critical factors influencing future performance [1][10] - **Institutional Participation**: The lack of institutional participation in A-share software stocks could lead to mispricing and deviations from fundamental values, presenting both risks and opportunities for investors [3] This summary encapsulates the key points from the conference call, focusing on the industry dynamics, company-specific insights, valuation methodologies, and identified risks.

Core Viewpoint - The article discusses the potential flaws identified in the B-21 aircraft by a Chinese software analysis, questioning the validity of these claims and the implications for the $203 billion investment in the program [1] Group 1: Investment Implications - The B-21 program represents a significant financial commitment of $203 billion, raising concerns about the return on investment if the identified flaws are accurate [1] - The analysis suggests that if the defects are substantiated, it could lead to substantial financial losses and impact future defense spending [1] Group 2: Technical Analysis - The Chinese software reportedly identified specific defects in the B-21 design, prompting debates over the reliability and effectiveness of the aircraft [1] - The validity of the software's findings is under scrutiny, with experts divided on whether the identified issues are genuine or exaggerated [1] Group 3: Industry Impact - The discussion around the B-21's potential flaws could influence perceptions of U.S. military technology and its competitiveness in the global defense market [1] - If the defects are confirmed, it may lead to increased scrutiny of other defense projects and a reevaluation of military procurement strategies [1]

Group 1 - The core point of the article highlights that southbound funds have reduced their holdings in China Software International (00354.HK) by 868,000 shares on February 2, with a total net reduction of 1,302,000 shares over the past five trading days [1] - Over the last 20 trading days, there have been 12 days of net increases in southbound fund holdings, totaling 26,244,000 shares [1] - As of now, southbound funds hold 859 million shares of China Software International, accounting for 31.43% of the company's total issued ordinary shares [1] Group 2 - China Software International Limited is an investment holding company that provides global technology software and information technology services [1] - The company operates through two main segments: technology professional services and internet information technology services [1] - Its primary business focuses on the development of generative artificial intelligence (AIGC), sales of large model software and hardware, and digital transformation consulting services for enterprise resource planning (ERP) [1] - Key products include the "Question Series" solutions, large model application integrated machines, and the Lingxi AI application platform [1] - The company serves various sectors, including water conservancy, transportation, government platforms, military, energy, education, and finance, operating in both domestic and international markets [1]

Core Insights - The overall performance of China's software and information technology services industry is strong, with software business revenue exceeding 15 trillion yuan in 2025, maintaining positive growth in exports [1] Group 1: Industry Performance - In 2025, China's software business revenue reached 15,483.1 billion yuan, a year-on-year increase of 13.2%, continuing a steady growth trend [1] - The total profit of the software industry was 1,884.8 billion yuan, reflecting a year-on-year growth of 7.3% [1] - Software business exports amounted to 62.73 billion USD, with a year-on-year increase of 7.7%, marking ten consecutive months of positive growth [1] Group 2: Sector Breakdown - Software product revenue showed stable growth, totaling 3,236.1 billion yuan in 2025, a year-on-year increase of 10.4%, accounting for 20.9% of the total industry revenue [1] - Basic software product revenue was 214.6 billion yuan, growing by 11.1% year-on-year, while industrial software product revenue reached 333 billion yuan, with a year-on-year growth of 9.7% [1] Group 3: Information Technology Services - Information technology services, as the mainstay of the industry, contributed 10,636.6 billion yuan in revenue, a year-on-year increase of 14.7%, representing 68.7% of the total industry revenue [1] - Revenue from cloud computing and big data services reached 1,623 billion yuan, growing by 13.6% year-on-year, while integrated circuit design revenue was 442.1 billion yuan, with an 18.9% year-on-year increase [1] Group 4: Regional Performance - In 2025, the Beijing-Tianjin-Hebei region saw software business revenue grow by 14.9% year-on-year, while the Yangtze River Delta region experienced a 15.2% year-on-year increase [2] - The software business revenue shares of these two regions in the national total were 26.7% and 28.9%, respectively [2] - Beijing, Guangdong, Jiangsu, Shandong, and Shanghai ranked as the top five provinces in software business revenue nationwide [2]

Core Viewpoint - The company is leveraging its "Entropy" digital intelligence platform to apply AI technology in government and judicial sectors, aiming to enhance business processing efficiency and decision-making accuracy [1] Company Summary - The company is currently in the exploratory and expansion phase of its AI-related business, which has not yet generated significant revenue [1] - The impact of AI-related business on the overall operational performance of the company is currently minimal [1] Industry Summary - The AI industry is characterized by rapid technological iteration and a complex competitive landscape [1] - There is a degree of uncertainty regarding the commercialization progress of related businesses within the AI sector [1]

Core Viewpoint - The company is leveraging its "Entropy Boat" digital intelligence platform to focus on core scenarios in government and enterprise services, applying AI technology in areas such as legislative and judicial services to enhance operational efficiency and decision-making accuracy [1] Group 1: AI Technology Application - The company has integrated AI technology into various fields, including legislative and judicial services, providing intelligent solutions to clients [1] - Current AI applications are in the early stages of business empowerment and market expansion, with limited impact on overall operational performance [1] Group 2: Future Strategy - The company plans to continue advancing research and application of relevant technologies in line with its development strategy and market demand [1] - There is an emphasis on steadily expanding the integration of technology within business operations [1] Group 3: Market Conditions - The rapid iteration of AI technology and intense market competition contribute to uncertainties in the commercialization progress of related businesses [1]