Nomura has raised its target price for CHINASOFT INT'L (00354) by 33.9%, from HK$5.6 to HK$7.5, while maintaining a "BUY" rating. The investment bank believes that CHINASOFT INT'L's worst period may be behind it, as the company's core IT outsourcing business showed signs of recovery in the first half of 2025 with 7% year-over-year growth, following nearly three years of decline. This improvement is primarily attributed to Huawei's business restructuring.

Nomura expects that Huawei's aggressive AI initiatives and business expansion in cloud, software, and automotive applications could drive increased demand for CHINASOFT INT'L's IT services. While traditional IT outsourcing (the company's most basic business) continues to face pricing pressures, Nomura forecasts this segment will achieve mid-to-high single-digit year-over-year growth during fiscal years 2025-2027, with the company's overall revenue growing 10-15% year-over-year during the same period.

Additionally, Nomura anticipates margin expansion over the next 2-3 years, driven by increased contributions from the higher-margin AI cloud business segment.