For 1H2008, China’s software industry realized total turnover of Rmb345.7mn (+30.40 yoy), among which the listed companies of software & service segment reported total operating income of Rmb15.4bn (+23.42 yoy). Besides, net profit of the A share market listed companies was increased by 54.87% yoy deducted fair value fluctuating income.
Listed companies of the software industry can be classified into two categories, i.e. application software suppliers and outsourcing enterprises. As to the industry information segment, some software enterprises service for cyclical businesses such as manufacturing and financing industries, etc. had experienced a high increase in their performances. Benefited from large-sized IT construction projects, those small-mid sector enterprises including QiMing Information Technology (002232), Guangdong YGsoft Inc. (002063), etc. are our recommendations. As for outsourcing, yuan appreciation and the increased labor cost had continuously deteriorated profit abilities of relative companies, thus we think enterprises advanced in scale and those that will be benefited from future industrial consolidations deserve more attentions, such as Neusoft Corporation (600718), etc.