中国会议纪要：加速AI商业化；聚焦增长能见度

monetization; focus on growth visibilityIndustryOverview ERP/photo&designtoolsbetter;solidAlmonetization ChinaSoftware Kingdee, Meitu, Chinasoft, Ming Yuan Cloud, Xunce and etc.)at the 2026 BofA ChinaConference in Shenzhen during the week of May 11. We also hosted an expert meeting Daley Li, CFA >>Research AnalystMerrill Lynch (Hong Kong) on agentic Al and Al models.Key takeaways include: (1) software Al monetization is generally accelerating, with ARPUuplift potential driven by token-based revenue models; (2) Al is driving a shift in daley.li2@bofa.comHarryZhuang>>MerillI Lynch (Hong Kong) software service models, transitioning from SaaS to RaaS; (3) demand trends arediverging: ERP / photo editing & design tools demonstrate better growth visibility,supported by rising Al revenue contributions and a higher share of recurring revenue;while IT outsourcing, cybersecurity, and property software demand remain soft; (4)byclient type and vertical: SOEs-particularly those in critical infrastructure sectors (e.g.,energy)-as well as large private enterprises, are showing solid demand, while demandfrom gov't-related clients has yet to recover; and (5) overall cash flow and profitabilityare expected to further improve in FY26E, supported by disciplined headcount expansionand rising operating efficiency driven by Al. Considering growth visibility and risk/rewardon valuation, our preferred Buy-rated names are Kingdee and Meitu.Key takeaways from agentic Al expert meeting +85235087998harry.zhuang@bofa.comOwenWang>>Research AnalystMerill Lynch (Hong Kong) +85235086533owen.wang2@bofa.com We hosted an expert meeting with Mr.Wang Zhe (Founder of Hangzhou BaizefengIntelligent Technology) to discuss recent developments in Al applications and LLMs.Key APl:application programming takeaways: 1) Al coding capability has experienced rapid improvement, significantlyenhancing developerproductivity,driving a structural decline in software developmentcosts; 2) software monetization models are shifting from traditional seat-based pricingtoward usage- and token-based pricing; 3) industry structure is evolving, with largesoftware vendors and small, agile teams emerging as potential beneficiaries, while mid-sized software companies mayface increasingpressureforbusiness transformation;and4) rising adoption of multi-model strategies is lowering switching costs and intensifyingcompetition across LLM vendors. interfaceARPU:average revenueperuser CRM: customer relationship managementERP: enterprise resource planning IT: information technology LLM: large language model We hosted an investor meeting with UCloud (Not covered) mgmt. during our Al/Tech POE: privately-owned enterprise tour in Shanghai. Mgmt is positive on the Al cloud computing demand especially for Alinferencing. Due to recent stronger demand and higher costs for Al servers, they haveraised the price of GPU-based Al cloud services by 20-25% on average. Its profitabilityhasbeen improving in the past few quarters and has achieved breakevensince 4Q25.Looking ahead, mgmt.targets to expand both their Al cloud services and data centerbusiness (in Shanghai and Inner Mongolia). RaaS: results-as-a-service Please click through for more takeaways of individual companies... >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analystunder the FINRA rulesRefer to 'Other Important Disclosures' for information on certain BofA Securities entities that takeresponsibility for the information herein inparticular jurisdictionsBofASecurities does and seeks to do business with issuerscovered in its researchreports. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision.Refer to important disclosures on page 8 to 10.Analyst Certification on page 6.PriceObjective Basis/Risk on page 4.12975163 Accelerated revenue growth in 1Q26; NDR for large enterprises to recover Mgmt. sees faster revenue growth in 1Q26, compared with 12% YoY in FY25, indicating solid downstream customer demand, along with strong OCF and profitabilityimprovement. Despite a decline in NDR (net dollar retention) for large enterprises to adjusted NPM to exceed 7%, and 3) >20% YoY 0CF (operating cash flow) growth. Totalnumber of employees further reduced by 6% YTD to around 10.6k, mainly on R&D andimplementation staff, and mgmt. plans to reduce the total number of employees to lessthan 10k by FY28E, which we think is a conservative target. Contract value of Al-native products was RMB230mn in 1Q26 and mgmt. expects revenue from Al-native products to exceed RMB1bn in FY26. Kingdee will host a productlaunch event on 2o May to release more Al agent products, featuring multi-function andmulti-agent applications. Meitu (1357 HK) - BuyPromisingARPUupliftpotential,especiallyproductivitytools Mgmt. sees promising