\u3000\u3000 Zwsoft Co.Ltd(Guangzhou)(688083) (688083)
Event overview
On January 28, Zwsoft Co.Ltd(Guangzhou)(688083) announced the annual performance forecast for 2021. It is estimated that the company will realize an operating revenue of 605-625 million yuan in 2021, with a year-on-year increase of 32.65% – 37.03%; The net profit attributable to the parent company was 176-186 million yuan, with a year-on-year increase of 46.20-54.51%; The net profit deducted from non parent company was 93-103 million yuan, a year-on-year decrease of 2.55% – an increase of 7.93%. The average growth rate of the company’s revenue in 2021 was 34.84%, in line with expectations; The single quarter revenue of 21q4 was 249-269 million yuan, with a year-on-year increase of 30.3% – 40.8%, which was 10-20 percentage points higher than the single quarter revenue growth of 21q3, with significant improvement month on month.
Strengthen investment in R & D and solve the problem of “neck sticking” for a long time
In order to meet the needs of continuous innovation and sustainable business development, the company continued to strengthen R & D investment in 2021:
1) R & D expenses continue to increase, and R & D investment will increase in the second half of 2021. As of Q3 in 2021, the company’s R & D investment totaled 122 million yuan, with a year-on-year increase of 29.79%; Among them, the R & D investment of 21q3 in the single quarter increased by 45.97% year-on-year, which significantly increased on the basis of the year-on-year increase of 20.7% in the first half of the year, showing the company’s determination to adjust its strategy in the R & D link, carry out pressure investment and expand its technical advantages since the second half of 2021.
2) take the lead in preparing to build a provincial Innovation Center for industrial software and strengthen the leading ability. According to the disclosure on the company’s official website, in early January this year, the Guangdong Industrial Software Innovation Center, led by Zwsoft Co.Ltd(Guangzhou)(688083) and jointly established with 11 major member units such as the fifth Electronic Research Institute of the Ministry of industry and information technology, was officially approved by the Department of industry and information technology of Guangdong Province. The innovation center integrates 9 national key laboratories, 3 provincial engineering centers and 6 innovation platforms jointly built by schools and enterprises, and gathers China’s advantageous resources in the innovation chain, industrial chain and innovation ecosystem of industrial software fields such as CAD, cam, CAE and CAPP. It is expected to promote the technological innovation and achievement transformation of domestic industrial software with the collaborative support of all sectors of government, industry, University, research and application, Give full play to the technology leading role of Zhongwang as a leading enterprise in the industry and drive the linkage development of industrial software industry.
3) equity incentives bind core talents, expand R & D scale and accelerate product iteration. In order to retain key employees, the company implemented the equity incentive plan on July 27, 2021, and confirmed the share based payment amount of about 8 million yuan throughout the year. According to the disclosure on the company’s official website, the company established Xi’an new R & D center in 2021, forming the layout of six R & D centers; We continued to attract high-end R & D talents, and the scale of R & D Team exceeded 500. By continuously improving the core algorithm, optimizing the platform architecture and upgrading the industrial application functions, the company further strengthened its product strength in 2021, and upgraded Zhongwang cad2022 and Zhongwang 3d2022 iteratively. The annual version Zhongwang 3d2022x was issued for the first time in a year, and the software capability boundary, stability and applicability continued to improve. Zhongwang simulation 2022 realizes the independent breakthrough of iterative solver, and the prototype development of the next generation high-end 3D design platform “Wukong plan” is completed.
4) focus on the localization of basic tool industrial software in the short, medium and long term. In the short term, the company has overall advantages in the field of 2dcad. After strengthening the investment in 2D R & D since the second half of the year, it is expected to have an effect on the sales side in the short term and consolidate the basic market of revenue; In the medium term, the company has its own 3D geometric modeling core. It is expected to polish and mature by serving key customers within 2-3 years, usher in the turning point of qualitative change and lay the cornerstone of medium and long-term growth; In the long run, CAE, facing the simulation market with greater potential and broader space, the company is steadily building a product line iron triangle composed of electromagnetic simulation, Zhongwang structure simulation and zwmeshworks platform. In the future, multi-disciplinary and multi physical scene simulation application solutions may open up a growth board. We believe that the current localization in the field of information technology has entered the stage of 3.0. The core is to focus on the localization of basic tool chain in innovation and R & D. Zhongwang has become the main force to solve the “neck” problem of R & D tool software CAX.
The user side determines the strategy in combination with the actual situation and follows the trend to lay out different directions
In 2021, the company focused on user needs and continued to highlight in marketing, customers, ecology and market:
1) adjust the sales strategy in time. In order to cope with the trend of diversified customer types and intense regional competition, Zhongwang began to clarify and refine the sales end operation mode from the second half of last year, and adopted different systematic sales strategies for large customers and small and medium-sized customers, so as to improve the existing marketing management system of the company.
2) serve large benchmark customers. According to the disclosure on the company’s official website, the company has formed alliances with leading users in Huawei, CRRC, BOE and other industries, carried out multi-dimensional cooperation from “product design function application, PLM data connection, secondary development transplantation, customized development support” with R & d-level localized service configuration, and continuously tested product quality and polished core technology in the real application scenario of the enterprise, And then improve their own strength by serving key customers.
3) build a win-win cooperation ecosystem. Zhongwang takes CAD / CAE / CAM core technology as the engine, general tool platform software as the carrier, and enables the integrated development of professional applications in various industries through mature and diverse API interfaces, so as to create a rich developer ecosystem. According to the disclosure on the company’s official website, in 2021, the company held 8 “China industrial design software innovation summits” nationwide to display the latest products and solutions, share and exchange CAX technology application experience, and build an interactive platform for all parties in the industrial chain.
4) vigorously cultivate the education market. According to the company’s semi annual report, the company’s education sector business maintained rapid growth in 2021, with a year-on-year growth rate of 231.92% in the first half of the year. The fully upgraded K12 innovative education brand “Zhongwang 3done” has played a role in the normalization of artificial intelligence education and the assessment of construction / machinery certificates of the Ministry of education in many provinces and cities. More and more vocational schools Colleges and enterprises use Zhongwang education CAD to carry out teaching activities. We believe that the soft development talent training system from professional enlightenment to skill application and then to software R & D was once an important driving force for the development and growth of foreign software giants. Zhongwang is expected to maintain rapid growth in the education industry in the future and may also walk out of the “Chinese path” of user ecology construction.
Investment advice
It is estimated that the company will realize an operating revenue of RMB 630 / 8.5 / 1.15 billion and a net profit attributable to the parent company of RMB 180 / 2.3 / 310 million in 2021 / 22 / 23. Zwsoft Co.Ltd(Guangzhou)(688083) business layout and market expansion around the all in onecax strategy is the core target of the localization 3.0 stage of R & D basic tools. Maintain the investment rating of buy-a. As the company is in the investment period, the net profit can not fully reflect the company’s profitability, so we use PS for valuation. In terms of business model, the former should be between 862 times that of the former and 682 times that of the latter in 202E, and the former should be closer to that of the former. The six-month target price is 411.20 yuan, equivalent to 30 times PS in 2022.
Risk warning: the research and development of core technology is not as expected; Product promotion and industrial ecological construction were not as expected.
