Bank of America Securities: Preferred stocks of Chinese software companies KINGDEE INT'L (00268), MEITU (01357), and Beijing Kingsoft Office Software, Inc (688111.SH).

Bank of America Securities released a research report stating that the stock price of China National Software & Service, covered by the firm, is expected to increase by an average of 16% by 2025, which is lower than the 23% increase in the MSCI China Index. Looking ahead to 2026, the firm holds a cautiously optimistic view on the future demand for software, as the acceleration of AI monetization and the trend of software import substitution will coexist with weak demand in multiple vertical industries. Overall, the firm predicts a 12% year-on-year growth in revenue for China National Software & Service and the IT services industry in 2026, compared to the 13% year-on-year growth forecast for 2025. After lowering revenue forecasts for 2025-2026 by about 2%, it is expected that the average revenue growth of covered software companies in 2026 will accelerate to 14%, compared to 7% in 2025. The firm holds a selectively positive view on companies in the enterprise resource planning (ERP), photo editing software, and office software sectors, as these targets have higher growth visibility under the SaaS model and AI-driven trends. However, the firm remains cautious about network security and real estate software due to weak demand. The top picks are KINGDEE INT'L (00268), MEITU (01357), and Beijing Kingsoft Office Software, Inc (688111.SH), all of which have a "buy" rating.