Zhitong Financial APP learned that China Post Securities released a research report saying that Huawei officially released HarmonyOS NEXT is China's first domestic mobile operating system, becoming the world's third largest mobile operating system after Apple's iOS and Android systems in one fell swoop, showing strong competitiveness. The release of the Huawei Mate70 series marks the start of commercial use of pure-blooded Hongmeng, PCs equipped with Hongmeng desktop OS may be coming, Xinchuang has entered a new round of acceleration period, Huawei database has entered the national test, and Shenzhen has launched special support policies to speed up the construction of Hongmeng ecosystem.

The main views of China Post Securities are as follows:

China's first domestic OS, pure-blooded Hongmeng, was released

On October 22, Huawei officially launched HarmonyOS NEXT, China's first domestically produced mobile operating system, making it the world's third largest mobile operating system after Apple's iOS and Android operating systems, demonstrating strong competitiveness. It has comprehensively self-developed from kernels, databases, programming languages, AI large models, etc., breaking through the core technology of the operating system and realizing the independent and controllable domestic operating system. According to Huawei's official introduction, pure-blooded Hongmeng has significantly improved its performance, saving 1.5G in running memory, increasing the performance of the whole machine by 30%, and increasing battery life by nearly an hour. In terms of security, HarmonyOS is equipped with a new self-developed Star Shield security architecture, which prohibits the opening of 9 types of unreasonable permissions and reduces the risk of privacy leakage from the source. Support multi-terminal deployment to achieve ecological integration.

According to the latest data released by CounterpointResearch, Huawei's HarmonyOS share in the Chinese market increased from 8% in the first quarter of 2023 to 17% in the first quarter of 2024, while the share of iOS decreased from 20% to 16%. This means that Huawei HarmonyOS surpassed Apple's iOS for the first time in the Chinese market and became the second largest operating system in China.

Mate70 is about to be released, and pure-blooded Hongmeng will start commercial use

The Huawei Mate 70 series is an important step in Huawei's independent innovation, from chips to operating systems. For the first time, the Mate70 series will be equipped with the "pure-blooded HarmonyOS" operating system (HarmonyOS NEXT), which will be officially released on November 26. Since the original HarmonyOS ecosystem is not yet perfect, the Mate70 series will be equipped with a dual-frame system with a high probability, that is, it supports both the native HarmonyOS system and the previously compatible Android HarmonyOS system, and users can switch on the premise of doing a good job of data backup. As for when the dual-system model will end, it depends on the speed of development of the HarmonyOS ecosystem.

At present, more than 2.04 million users have pre-ordered the Mate70 series on Huawei's official website, and the number of pre-orders in offline physical stores is expected to increase further. PC equipped with Hongmeng desktop OS or is coming,Yu Chengdong said in the CCTV live broadcast room on September 20,The current Huawei PC may be the last batch of notebooks equipped with Windows,Next,Huawei will release PC products equipped with Hongmeng system。

Xinchuang has entered a new round of acceleration period, and Huawei's database has entered the national test

In May 2024, the Cyberspace Administration of China and other departments jointly issued the Action Plan for the Construction of Informatization Standards (2024-2027), emphasizing the key time nodes in 2027: by 2027, the coordination mechanism for informatization standards will be more complete, the layout of the informatization standard system will be more perfect, and the basic capabilities such as standard development and service will be further consolidated. From the perspective of the development stage of "2+8" of information and innovation, the replacement of information and innovation in 2024 has entered a critical period, and relevant policies are expected to be introduced one after another to ensure the time rhythm of the completion of the replacement.

On November 2, the Ministry of Industry and Information Technology mentioned that it would comprehensively and accurately carry out key core technology research and accelerate the realization of high-level scientific and technological self-reliance and self-reliance. Huawei is an important force in localization, and the pure-blooded Hongmeng system is self-developed in the full stack, with a localization rate of 100%, and is expected to deeply participate in this round of information innovation and open the Hongmeng era of information innovation. On September 30, the China Information Security Evaluation Center announced the results of the second security and reliability assessment in 2024, and in the database part, Huawei Cloud Computing Technology Co., Ltd.'s GaussDBV2.0 (centralized version) won recognition with a security rating of II.

The construction of the Hongmeng ecosystem has been accelerated, and special support policies have been launched

Shenzhen is the first to build a "Hongmeng City". In March 2024, Shenzhen released the "Shenzhen 2024 Action Plan for Supporting the Development of Open Source HarmonyOS Native Applications"; On November 1, the official website of the Nanshan District Government released the "Special Support Measures for Promoting the Development of Hongmeng Industry in Nanshan District (Draft for Comments)" and the policy drafting instructions. Specifically, the "Draft for Comments" clarifies that the HarmonyOS native application will be included in the scope of the first edition of software funding in Nanshan District, and for eligible key service enterprises, if the cumulative sales revenue received within one year from the date of obtaining the software copyright of the "first edition" software product is not less than 500,000 yuan, it is proposed to give a single enterprise a maximum of 1.5 million yuan per year according to no more than 30% of the amount of any three sales contracts of the product.

At the same time, for Internet or software companies that participate in major open source projects such as Hongmeng and Euler, and carry out relevant cooperation and obtain support from relevant departments at the higher level, it is proposed to give a subsidy of up to 2 million yuan at a rate of no more than 30% of the support amount of the relevant departments at the higher level. In order to encourage enterprises to develop HarmonyOS native applications, the "Draft for Comments" also mentions that those who have passed the HarmonyOS native application certification and have a certain number of downloads in the app store will be given a reward of up to 2 million yuan according to certain conditions.

Investment advice

1. System development service provider:

iSoftStone (301236.SZ), Runhe Software (300339.SZ), Changshan Beiming (000158.SZ), Jiulian Technology (688609.SH), Topway Information (002261.SZ), China Software International (00354), ArcherMind Technology (300598.SZ).

2. Hongmeng ecological construction service provider:

(1) Hospital: Yahua Electronics (301337.SZ), Dinik (300884.SZ).

(2) Mine: Yunding Technology (000409.SZ).

(3) Intelligent driving: Thundersoft (300496.SZ), Farben Information (300925.SZ), NavInfo (002405.SZ).

(4) Finance: Beyondsoft (002649.SZ), Kelan Software (300663.SZ), Sunline Technology (300348.SZ

(5) Electric power: Zhiyang Innovation (688191.SH).

(6) Security: Digital Video (300079.SZ), AsiaInfo Security (688225.SH), Qianxin-U (688561.SH), Dongfang Zhongke (002819.SZ), Guohua Network Security (000004.SZ

(7) Urban governance: Supermap software (300036.SZ), digital government communication (300075.SZ).

(8) Office: Foxit Software (688095.SH), Color News (300634.SZ), Wondershare Technology (300624.SZ).

(9) Payment: New World (000997.SZ), New Country Capital (300130.SZ).

Risk warning: the follow-up policy is lower than expected; The technology iteration is less than expected; Downstream demand is less than expected, etc.

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