Cinda Securities: Computer Sector's "Bull Market Flag Bearer" Traits Highlighted, Resonating with Fundamentals and Liquidity

Cinda Securities released a research report noting that the computer sector's performance this year has followed four distinct phases: "accumulation in early months, surge in February, mid-year adjustment, and breakthrough in September." This trajectory was driven by factors such as the extended "September 24 rally," catalysts like DeepSeek, and structural improvements in fundamentals.

From a valuation perspective, the sector's price-to-sales (PS) ratio currently sits at historically elevated levels. The AI industry trend has pushed the sector's revenue ceiling higher, with strong growth prospects supporting PS valuations—reflecting market optimism about its potential in industrial transformation.

Looking ahead, AI application-focused companies stand to benefit from expanded computing power and rapid advancements in model capabilities, positioning them for notable valuation elasticity. Key insights from Cinda Securities include:

**AI + Coding** AI coding tools are gaining global adoption, with significant market growth potential. Research and Markets estimates the global AI code tool market at $6.7 billion in 2024, projected to reach $25.7 billion by 2030 (25.2% CAGR). In China, the AI code generation market hit RMB 6.5 billion in 2023 and is expected to grow to RMB 33 billion by 2028 (38.4% CAGR), driven by high compatibility with industries like internet and gaming.

**AI + Office Software** China’s AI-powered office software market is forecast to expand from RMB 30.86 billion in 2024 to RMB 191.14 billion by 2028 (57.75% CAGR). The sector is consolidating, with top players like Quark, Tencent Docs, and WPS AI dominating. Over 80% of leading products are controlled by internet firms leveraging traditional tools enhanced with AI.

**AI + Cybersecurity** Machine learning and NLP are boosting detection efficiency, while large models enable customized security strategies. IDC predicts China’s AI-driven security market will hit $1.6 billion by 2028 (230%+ CAGR), signaling a shift toward proactive defense systems.

**Autonomous Driving** Vision-Language-Action (VLA) architecture, a cutting-edge approach, translates visual data into actionable logic for vehicles. With OEMs accelerating adoption, highway and urban NOA penetration surged from 8.7% to 35.7% between 2023 and 2025, reflecting dual breakthroughs in scale and adoption.

**Industrial Software** While capital expenditure in sectors like steel and petrochemicals remains subdued, high-end design software—particularly AI-powered simulation—shows strong valuation resilience. Next-gen smart industrial controls (e.g., Zhongkong TPT, UCS) are reshaping production paradigms.

**Investment Recommendations** Focus on: - **AI + Coding**: Zhuoyi Information - **AI + Office**: Kingsoft Office, Foxit Software, Zhiyuan Interconnect, Fanwei Network - **AI + Finance**: Jiufang Zhitou, Tonghuashun - **AI + Cybersecurity**: Sangfor Technologies, DBAPP Security - **Smart Vehicles**: Horizon Robotics, Desay SV, ThunderSoft - **Industrial Software**: Suzhou Industrial Park, Rongzhi Rixin, SIE Consulting

**Risks**: Policy delays, slower tech advancements, or weaker-than-expected demand.