Jinwu Financial News | FIRST SHANGHAI issued a report indicating that in the first half of 2024, ChinaSoft International (00354) realized revenues of 7.926 billion yuan, a year-on-year decrease of 6.2%, primarily due to reduced demand from core major client business. Among them, the revenue from Asia Vets business was 3.368 billion yuan, a year-on-year increase of 2%; the Net income attributed to the parent company was 0.286 billion yuan, a year-on-year decrease of 18.6%. The gross margin decreased year-on-year to 23.1%, mainly due to macroeconomic factors affecting client pricing. From 2023 to 2024, the company continuously conducted multiple share repurchases, accumulating a total of nearly 0.26 billion shares of Stocks, demonstrating the company's firm belief and confidence in its long-term development.

The bank pointed out that the company aims to become a comprehensive AI Software and service provider and is accelerating its efforts, deeply embedding itself in the core business of leading clients across diversified Industries such as finance, electrical utilities, Energy, Steel, and pharmaceuticals, forging close and far-reaching cooperative relationships. In the field of model factories, the company precisely identifies AI consulting planning as a breakthrough, strategically entering the top-level design architecture, deeply exploring the infinite potential of Natural Language Processing (NLP), Computer Vision (CV), and predictive applications. Through innovative practices, it continuously injects dynamic energy, shaping industry-leading model solutions and solidifying the foundation for the intelligent transformation of client businesses.

The bank further indicated that the company’s Asia Vets business revenue for the first half of 2024 was 3.368 billion yuan, showing a year-on-year growth of 2%, primarily driven by Harmony, Autos, and solution-related businesses. Currently, the company will continue to focus on CTSP as the core driving force to propel the evolution of its Asia Vets services. Through continued deep cooperation, the company was awarded the top Huawei Cloud ecosystem partner, precisely targeting core Industries such as Energy, Steel, and pharmaceuticals, successfully implementing over 40 CTSP projects, establishing a model for digital transformation in the industry. Meanwhile, the company has brought together over 6,000 ecological partners to collectively create highly adaptable digital solutions and outstanding services for over 20,000 clients, successfully shaping a high-quality ecological cluster in the Cloud Computing Service field and significantly driving the wave of digital transformation in the industry.

The bank stated that, overall, ChinaSoft International has a steady revenue stream, and the company's R&D capabilities continue to strengthen. The bank is Bullish on the company's impact and layout in the Asia Vets business. Under several business cooperation lines with Huawei and its deep binding with Huawei, the Asia Vets and Autos businesses are developing steadily. Considering the impact of pressured gross margins, the bank adjusted the valuation anchor to 20 times PE, deriving a Target Price of 6.4 Hong Kong dollars based on the predicted earnings for 2024, which represents a 17.89% upside potential compared to the last closing price, maintaining a Buy rating.