CS&S(600536) 东吴证券·2024-09-03 00:03Investment Rating - Buy (Maintained) [1] Core Views - The company's subsidiary, Kirin Software, achieved a 14% YoY revenue growth to 498 million yuan and a 5% YoY net profit growth to 121 million yuan in H1 2024, solidifying its leading position in the domestic operating system market [3] - Dameng Data reported a 22% YoY revenue growth to 352 million yuan and a 41% YoY net profit growth to 103 million yuan in H1 2024, with a net profit margin increase of 3.47 percentage points [3] - The company's overall profitability improved in H1 2024, with a gross margin of 44%, up 8 percentage points YoY, driven by higher-margin independent software products and cost reduction efforts [2] - The report maintains the company's net profit forecasts for 2024-2026 at 157 million yuan, 345 million yuan, and 608 million yuan, respectively, and reiterates a "Buy" rating due to its leadership in the domestic OS market and its stake in Dameng Data [3] Financial Performance Summary - In H1 2024, the company reported revenue of 1.984 billion yuan, a 21.73% YoY decline, and a net loss of 273 million yuan, a 47.09% YoY improvement [2] - The company's operating income is projected to grow from 8.067 billion yuan in 2024E to 12.339 billion yuan in 2026E, with a CAGR of 22.61% [2] - Net profit attributable to shareholders is expected to increase from 156.8 million yuan in 2024E to 608.18 million yuan in 2026E, with a CAGR of 76.43% [2] Subsidiary Performance - Kirin Software maintained its leading position in the domestic Linux market, with a 13-year streak as the market share leader, and established partnerships with 25,500 ecosystem vendors by H1 2024 [3] - Dameng Data's gross margin reached 97% in H1 2024, up 1.41 percentage points YoY, while its sales expense ratio decreased by 3.16 percentage points [3] Market and Valuation Data - The company's closing price was 29.93 yuan, with a 52-week range of 23.10-43.75 yuan and a P/B ratio of 11.55 [4] - The company's total market capitalization was 25.4456 billion yuan, with a circulating A-share market capitalization of 25.22964 billion yuan [4] - The company's EPS is projected to grow from 0.18 yuan in 2024E to 0.72 yuan in 2026E, with a P/E ratio decreasing from 162.28 in 2024E to 41.84 in 2026E [2]