Chinasoft International Ltd (CFTLF)

[StockpickerCAPC]

Pay attention to the ecological opportunity of Hongmeng, Chinasoft International (00354) is the first choice for the scarce target with a target price of HK$20.6.

source
https://finance.sina.com.cn/stock/hkstock/hkgg/2021-06-30/doc-ikqcfnca4106142.shtml

At 09:54 on June 30, 2021 Zhitong Financial Network

Everbright Securities released a research report stating that based on Chinasoft International's (00354) traditional cornerstone business customer expansion beyond expectations, and Hongmeng related businesses are expected to bring more performance contributions, the net profit for 2021-23 is raised The forecast is 7%/14%/22% to 12.6/16.8/22 billion yuan, corresponding to a year-on-year growth rate of 32%/33%/31%, respectively. Taking into account the gradual verification of the rapid growth trend of future performance, the development of new business related to Hongmeng ecology and the future A-share listing are expected to boost the company's valuation, 40 times PE in 21 years (corresponding to 30 times PE in 22 years), the target price is raised to 20.6 Hong Kong dollar, maintain a "buy" rating.

According to the report, Harmony will occupy an important position in the Chinese IoT market:
Compared with the Android system, Harmony is more conducive to the sharing of the IoT terminal ecosystem:
- 1) Harmony's ecosystem is based on the microkernel design to modularize system services, thereby providing greater flexibility Security and security;
- 2) The use of distributed architecture and distributed soft bus technology can achieve a seamless collaborative experience across terminals;
- 3) Equipped with a unified old E for multi-terminal development, supporting developers to develop once and deploy on multiple terminals.

The bank predicts that Harmony is expected to occupy an important position in the Chinese IoT market:
- 1) Huawei's domestic 1+8 equipment is expected to be fully upgraded to HarmonyOS;
- 2) Third-party partners are also actively joining, including smart home, healthy travel, education, and entertainment , Office and other terminals. With the gradual advancement of the Hongmeng ecology, future opportunities in the Hongmeng related industry chain are worthy of attention.

Everbright Securities stated that ChinaSoft is a veteran participant of the Hongmeng Ecosystem and will continue to grow rapidly with Hongmeng: ChinaSoft International participated in the construction of Hongmeng OS from 0 to 1 and is a white governing unit of the Open Atom Open Source Foundation. It has a "code level" for Hongmeng. Understanding. The company has comprehensively built Hongmeng's ecological enabling service capabilities, from the bottom chip adaptation to software and hardware and full-scenario solutions, from the joint customer ecological product innovation and landing, to the self-developed Hongmeng development kit for sale. With the software and hardware capabilities of Fu Hongmeng, Hongmeng will continue to create a world of interconnected everything in the future, and is committed to becoming the leader of Hongmeng's ecological full-stack enabling services.

The report mentioned that the expandable model of Hongmeng ecology is not just IoT modules. The new profit model and incremental space in the future are worth looking forward to:
Based on the I, P, and S three-tier structure of Hongmeng ecology, the company currently has three clear Business model:
- 1) Huawei Hongmeng related R&D outsourcing;
- 2) Middleware development;
- 3) IoT module and development board products, mainly for consumer Internet of Things, providing software and hardware module products for third-party manufacturers, and revenue depends on the installed capacity. At present, the company has provided services for more than 70 equipment vendors, with more than 100 access SKUs. In addition to the above three models, based on its own capabilities and resource accumulation, the company is expected to open up new profit models such as joint research and development of smart products with manufacturers, and bring more room for incremental performance.