Jefferies-SaaS、人工智能和机器人技术尚未抵消核心需求的疲软；D_G将保持-20250911【16页】

China (PRC) | Software Supcon SaaS, AI and Robotics Not Yet OffsettingWeak Core Demand; D/G to Hold 2Q missed as rev down 12% and margins fell, driving a 37% NP drop. Weattribute this to weak demand from its core downstream markets: chem/petrochem, price competition on DCS, and weak overseas growth. Despiteits efforts to migrate to SaaS, industrial AI and robotics, these are still in anearly stage and cannot offset weak growth in its core business. We've cut Slowing demand in core downstream markets is the biggest overhang.Supcon reported 2Qresult miss with topline down by 12% and below cons by 18%. GM and OPM decreased by1.4pp/3.1pp yoy, driving a 37% NP decline. Supcon's results have missed four quarters in arow, which is driven by: 1) weak demand in its core downstream chem/petrochem/oil & gasindustries as de-stocking has led to scale back in IT investment; 2) SaaS migration's impact onNT software (SW) rev; 3) slowing overseas growth momentum due to personnel changes and SaaS, industrial AI and robotics are still small to move the needle.We believe Supcon hasrightly shifted its strategic focus to SaaS (SW subscription), industrial AI, and robotics. In1H25, It added 200+ new SaaS customers (~600 at end of 2024) and generated Rmb~60mof subscription rev, and targets Rmb~200m in rev in FY25. SaaS migration and weak demandfrom its core customers provide a double whammy effect, driving a 7% fall in SW rev in 1H25. In Aug, Supcon launched its industrial AI model TPT 2.0. It provides consulting services toprocess manufacturing customers and allow them to generate AI agents to tackle specificproduction issues. Supcon already signed 100+ TPT 2.0 projects and won a handful of AGV = Automated Guided Vehicle; CV = In 1H25, robotics expanded use cases from warehouse AGV and routing inspection topipeline inspection, high-temperature sampling and factory floor operation. Aramco is now anoverseas lighthouse customer. In 2025, mgt expect robotics to bag Rmb300~500m CV andRmb200~300m rev. While these are the right strategic moves, they would contribute only ~9% D/G to Hold.We cut our 2025-27 NP forecasts by 40+% on lower automation and SW rev,reduced GM and higher opex ratios. Our rolled forward DCF-based PT based on 10.88% WACCand 3% terminal growth implies 11% downside. Thus, we downgrade Supcon to Hold. Supcon'svaluation at 41x 2025E PE or 1.4x PEG is expensive. Our 2025E/26E EPS are 17%/16%