We initiate on six software stocks that adopt SaaS strategies, with OW ratings on Weimob (2013 HK), Ming Yuan Cloud (909 HK), Beijing Kingsoft Office Software (KOS, 688111 CH), Glodon (002410 CH), and N ratings on Yonyou (600588 CH) and Kingdee (268 HK). We believe these companies are the best plays on China’s digital transformation, software localization and SaaS prosperity themes, and benefit from a favorable regulatory environment. The software industry, especially SaaS, provides investors with good exposure to the secular digital transformation trend in China, where software spending could potentially increase by 11x if China’s spending as a percentage of GDP catches up to U.S. levels. We think China’s SaaS market is a long-term structural growth opportunity, and estimate sector revenue will grow 7x between 2019 and 2025E.