Software development stocks were active today (June 15th). The Huabao Software Development ETF (159036), which focuses on the cutting edge of AI applications, saw its intraday price surge by up to 3.75%. It is currently up 1.98%, aiming for a second consecutive day of gains.
Among its constituent stocks, Anbotong led the gains, rising over 16%. SIE Information, Zhongke Jiangnan, and Yingshangsheng rose over 8%, while Dingjieshuzhi gained more than 7%. Tianyang Technology, Compass, Airong Software, and other stocks also followed the upward trend.
On the news front, the strongest model from Anthropic has been restricted, while the domestic new model from Zhipu has been fully opened, leading industry insiders to anticipate a revaluation of domestic models. The US government issued an export control order citing national security, requiring the suspension of access for all foreign nationals to Anthropic's most advanced models, Fable5 and Mythos5. Meanwhile, Zhipu's domestic large model, GLM-5.2, has been made available to all users of the GLM Coding Plan. Industry professionals believe that as uncertainty regarding access to cutting-edge closed-source foreign models increases, the usability, stability, and developer ecosystem value of domestic open-source models are being reassessed.
It is reported that Ant Group Co., Ltd. is secretly testing an AI-powered version of Alipay. Major players like Tencent's WeChat, Alibaba's Tongyi Qianwen, and ByteDance's Doubao are all accelerating the construction of their respective AI ecosystems, indicating a widespread push to deploy AI applications.
China Galaxy Securities points out that with the continuous iteration and deployment of domestic large models, the commercialization of AI applications has vast development potential. Related companies stand to benefit from new demand increments, and attention is advised on major model providers. Concurrently, the cultivation of user habits also benefits the development of vertical AI applications, suggesting a focus on AI applications and related sub-sectors within the industrial chain that are experiencing deepening AI empowerment.
Guosheng Securities posits that the increasing maturity of IT governance and harness environments for AI applications, combined with the ongoing cooperation models between large model enterprises and FDE, will facilitate the continued deployment of AI in the enterprise market. This is expected to drive a sustained increase in AI penetration within the B2B sector.
Regarding valuation, as of June 12th, the price-to-earnings ratio (PE TTM) for the target index (Software Development Index) of the Huabao Software Development ETF (159036) was 183.75 times, sitting at the 26.22nd percentile since its listing. This indicates relatively high value for money and a strong margin of safety.
Software's Potential Following Hardware Cycles
Throughout historical technological revolutions, profits have consistently flowed from hardware to applications. Following hardware cycles, a spring for software often arrives. Earlier this year, the narrative of "large models consuming software" caused significant valuation discounts for the AI application sector compared to the computing power and model ends. The software sector has become a segment with relatively "lower water levels" within the AI industrial chain, offering higher valuation appeal and safety margins. Coupled with AI empowerment and domestic software innovation drivers, the software development sector is poised for potential growth.
The software industry as a whole is in an upward cycle, but it is uncertain which specific sub-sector or individual stock will outperform. Rather than betting on a single niche, investors might consider the target index (Software Development Index) of the Huabao Software Development ETF (159036), which covers the entire industry with 112 constituent stocks. This offers a more comprehensive and balanced portfolio to capture the industry's beta returns.
The target index of the Huabao Software Development ETF (159036) encompasses several hot concepts. As of the end of May, the weightings for AI applications, cloud computing, domestic software innovation, fintech, cybersecurity, and HarmonyOS ecosystem concepts were 46.58%, 43.50%, 42.36%, 29.90%, 15.72%, and 14.29% respectively.
Note: As of June 12th, the latest size of the Huabao Software Development ETF (159036) was 402 million yuan. Among the two ETFs tracking the same target index in the entire market, it is the largest by size.
ETF fee information: On-exchange transaction fees are subject to the actual charges by securities firms. When subscribing for or redeeming fund units, subscription/redemption agents may charge a commission of up to 0.3%. The Huabao Software Development ETF does not charge a sales service fee.
Risk Disclosure: The Huabao Software Development ETF passively tracks the CSI All Share Software Development Index. The base date for this index is December 31, 2021, and its release date is March 29, 2023. The fund is issued and managed by Huabao Fund. Distributors do not bear investment or redemption responsibilities for the product. Investors should carefully read the Fund Contract, Prospectus, Key Facts Statement, and other legal fund documents to understand the fund's risk-return characteristics and choose products suitable for their own risk tolerance. The fund manager assesses this fund's risk level as R3 - Medium Risk, suitable for Balanced (C3) and above investors. Suitability matching opinions are subject to the sales institution. Sales institutions (including the fund manager's direct sales channels and other distributors) evaluate the fund's risk according to relevant laws and regulations. Investors should promptly pay attention to the suitability opinions issued by sales institutions and base their decisions on the matching results. Suitability opinions from different sales institutions may not be consistent, and the fund product risk level assessment results issued by fund sales institutions shall not be lower than the risk level assessment results made by the fund manager. The fund's risk-return characteristics in the Fund Contract and its risk level may differ due to different consideration factors. Investors should understand the fund's risk-return profile and choose fund products cautiously based on their own investment objectives, horizon, experience, and risk tolerance, bearing the risks themselves. The China Securities Regulatory Commission's registration of this fund does not indicate a substantive judgment or guarantee of its investment value, market prospects, or returns. The fund's past performance and its net asset value do not predict its future performance. The performance of other funds managed by the fund manager does not guarantee this fund's performance. Funds carry risks; investment requires caution.
Comments