Minsheng Securities: Why did DeepSeek first activate SaaS direction?

Minsheng Securities released a research report stating that DeepSeek is accelerating the AI equalization process. Cloudification is needed before AI can be implemented globally. Enterprise SaaS is expected to usher in development opportunities far exceeding the era of remote work. Considering the current low valuation of SaaS companies based on PS-TTM, coupled with the potential additional increment brought by AI applications, SaaS enterprises have the potential for a "Davis double-click". In terms of classification, General SaaS is expected to become the infrastructure for AI Agents, utilizing historical data mining to enhance the value of SaaS. Industry-specific SaaS will leverage AI to increase capabilities and expand market size. General SaaS and large model vendors will complement each other through industry-specific SaaS. Minsheng Securities' main points include: DeepSeek is accelerating the AI equalization process, opening a new era of AI applications. In January 2025, DeepSeek open-sourced R1, achieving results comparable to OpenAI O1 while developing numerous official application integration cases, marking the beginning of a new era of AI applications. After AI equalization, the competition in AI applications lies in data and access. Salesforce and ServiceNOW, two cloud giants, focus their AI strategy on data and access: Data: Large models can only determine the lower limit of AI applications. High-quality non-public data determines the upper limit. Due to SaaS's inherent ability to accumulate and store various user data, its massive high-quality data is expected to become important fuel for AI applications, leading to a reassessment of value. Access: SaaS has significant access effects. SaaS platforms can extend towards upstream or downstream workflows based on user needs, continuously uncovering user demands. In the current AI era, the access effects of SaaS are more scarce. SaaS is expected to undergo a revaluation, driven by accelerated cloud migration and AI Agent. Looking at the successful case of global traditional software giant SAP's cloud and AI transformation in 2024: Accelerated cloud migration: Cloudification is necessary before AI implementation can become a global consensus. Enterprise SaaS is expected to enter a new phase of corporate cloud transformation beyond the era of remote work. AI Agent: AI Agent will open a trillion-dollar blue ocean market for enterprise SaaS. Overall, AI Agent symbolizes the paradigm shift of software from a "tool" to "digital labor". AI Agent transforms software from a mere "expense" to an "investment", expanding software vendors' potential market size from the enterprise IT budget to the human labor market, achieving significant growth; General SaaS is expected to become the infrastructure for AI Agent, utilizing historical data mining to enhance the value of SaaS; Industry-specific SaaS will leverage AI to increase capabilities and expand market size. General SaaS and large model vendors will complement each other through industry-specific SaaS; AI Agent has stronger consumer attributes and can adopt diversified payment models in the future, breaking the valuation ceiling of software. Valuation perspective: Most current SaaS companies have PS-TTM valuations lower than the average since 2019, far below the valuation levels during the peak of cloud transformation in 2020, with the potential for a significant increase in the AI era. Recommended targets: Office: Beijing Kingsoft Office Software, Inc (688111.SH), Intsig Information (688615.SH), Fujian Foxit Software Development Joint Stock (688095.SH). CRM: KINGDEE INT'L (00268), Yonyou Network Technology (600588.SH). OA: Weaver Network Technology (603039.SH), Beijing Seeyon Internet Software Corp. (688369.SH), iSoftStone Information Technology (301236.SZ). ERP: Digiwin Co., Ltd. (300378.SZ), Hand Enterprise Solutions (300170.SZ), Nancal Technology (603859.SH), Guangzhou Sie Consulting (300687.SZ), CHINASOFT INT'L (00354). Programming: Jiangsu Eazytec Co., Ltd. (688258.SH), Primeton Information Technologies, Inc. (688118.SH), Shenzhen Kingdom Sci-Tech (600446.SH). Customer Service: Montnets Cloud Technology Group (002123.SZ), Richinfo Technology (300634.SZ). AIGC: Wondershare Technology Group (300624.SZ), MEITU (01357). Medical: Shanghai Runda Medical Technology (603108.SH), XUNFEIHEALTH (02506). Financial: Shanghai Newtouch Software (688590.SH), Servyou Software Group (6031).71.SH, Hithink RoyalFlush Information Network (300033.SZ), Hundsun Technologies Inc. (600570.SH).Legal: Beijing Thunisoft (300271.SZ), Shanghai Golden Bridge InfoTech (603918.SH). AI terminal: Thunder Software Technology (300496.SZ), Hangzhou EZVIZ Network (688475.SH). Local life: Beijing Zhidemai Technology (300785.SZ), Focus Technology (002315.SZ), Hangzhou Raycloud Technology Co., Ltd. (688365.SH). Risk warning: The technology may not be implemented as expected, and industry competition may intensify.