Event: 1) China National Software And Service Company Limited(600536) international agreed to transfer about 50.83% of the equity interest of Shenzhen kaihong to Hongju innovation, and the relevant cost is RMB 76.25 million. Hongju innovation will pay in cash. Hongju innovation is the employee stock ownership plan of Shenzhen kaihong, and its equity plan will be fully distributed to the employees of Shenzhen kaihong within two years. Hubble, CCB China soft international and Hongju innovation will inject a total of 200 million yuan of equity capital into Shenzhen kaihong. After the completion of this equity transfer agreement and capital injection agreement, China National Software And Service Company Limited(600536) international will indirectly hold about 19.50% equity of Shenzhen kaihong. Shenzhen kaihong is a flagship developer of operating system based on openharmony. It does product business based on the distribution of open source Hongmeng operating system.
2) Talkweb Information System Co.Ltd(002261) it is proposed to invest in the establishment of a wholly-owned subsidiary, Hunan kaihong Zhigu Digital Industry Development Co., Ltd. (hereinafter referred to as “Hunan kaihong Zhigu”, subject to the final approval and registration of relevant departments). The company will build an industry distribution operating system based on open source Hongmeng, with a registered capital of 200 million yuan.
Core view
The capitalization process of Hongmeng business has been promoted, the rights and responsibilities and talent incentive mechanism have been gradually clarified, and the process of productization and commercialization is expected to accelerate. We believe that Shenzhen kaihong will have four important shareholder backgrounds: 1) Hubble (an investment platform 100% owned by Huawei) will hold 20% of the shares of Shenzhen kaihong, which will be Huawei’s first explicit support to the core enterprises of Hongmeng distribution at the capital level; 2) Hongju innovation (holding 31%) is an important employee stock ownership platform; 3) Yixin Technology (100% held by Shenzhen Capital Group) will hold 29.5%, which is expected to become an important background for Xinchuang and government enterprise business; 4) China National Software And Service Company Limited(600536) international indirectly holds about 19.5% as the core partner of Hongmeng ecology. In addition, Hunan kaihong Zhigu was also established as a subsidiary of a listed enterprise with clear business boundary and focused main business. We believe that the previous development of Hongmeng OS focused on the establishment of technical foundation and the promotion of ecosystem. The capital injection of Shenzhen kaihong and the establishment of Hunan kaihong wisdom Valley mark the development stage of the main rights and responsibilities, talent incentive mechanism and capital operation mode of Hongmeng business, which is an important milestone in the commercialization process of Hongmeng operating system.
Hongmeng has a clearer ecological level, which is conducive to resource focus and further industrial division. Since Huawei officially announced the open source Hongmeng operating system in 2020, Hongmeng OS ecological partners have made continuous and strong contributions in various important links such as community core code supplement, compatibility, migration and adaptation, upper layer application development and so on. The total amount of the whole ecosystem tends to be prosperous, but the level and division boundary within the ecosystem are relatively vague. We believe that the capital injection / establishment of Hongmeng operating system distribution enterprise is the division of roles within the ecosystem, helps to focus resources on key links, and will lead to more efficient internal cooperation and clearer ecological hierarchy of the ecosystem, It is possible to form: open source community – commercial distribution operating system – Implementation of operation and maintenance support system – level by level ecosystem of upper application development, so as to drive the orderly promotion of the whole ecosystem.
Core ecological partners are expected to obtain more sufficient resource support and consolidate competition barriers. We believe that the establishment of the main body of Hongmeng operating system commercial distribution will form multi-directional support for core ecological partners in business development, channel sharing and resource endorsement, and the leading enterprises that have established technology and market teams related to Hongmeng business are expected to form a stronger interest sharing relationship, so as to fully benefit from the dividend of Hongmeng ecological development, Continuously strengthen core competition barriers.
Investment proposal and investment object
It is recommended to pay attention to the objects of holding / establishing Hongmeng operating system distribution enterprises: China National Software And Service Company Limited(600536) International (00354, not rated), Talkweb Information System Co.Ltd(002261) (002261, not rated).
Risk statement
The promotion of Hongmeng ecology was less than expected, the industry competition intensified, and the promotion of relevant policies was less than expected
