Zwsoft Co.Ltd(Guangzhou)(688083) Theory: the maximum proportion of lifting the ban is only nearly 16%. The announcement on the ESOP platform shows long-term confidence

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Event:

Announcement issued by the company: Zwsoft Co.Ltd(Guangzhou)(688083) received the notice from the shareholders of the company, Xiamen Mengze investment consulting partnership (limited partnership), Xiamen senxi investment partnership (limited partnership) and Xiamen shuoyu investment partnership (limited partnership). The above three shareholders are the employee stock ownership platform of the company and plan to extend the reduction period and reduce the reduction limit.

1. The reduction ratio of the three ESOP platforms was reduced from 60% to 30% in the first year, and the reduction period was extended from 2 years to 4 years

Mengze investment, senxi investment and shuoyu investment are employee stock ownership platforms of the company, holding 7122500 shares in total, accounting for 11.50% of the total shares of the company. Recently, all its partners negotiated and unanimously decided to extend the reduction period and reduce the upper limit: the reduction proportion in the first year was reduced from 60% to 30%, and the reduction period was extended from 2 years to 4 years. We believe that the announcement shows the company’s employees’ confidence in the company’s future development prospects and recognition of its intrinsic value.

2. According to our calculation, the maximum lifting proportion of the company’s theoretical ban is only 15.59% – 17.17%

Up to now, the total number of shareholders of the company’s restricted shares is 25, and the corresponding number of shares is 17296728, accounting for 27.92% of the total share capital of the company. Now the restricted period is about to expire and will be listed and circulated from March 11, 2022.

According to our calculation, although the lifting of the ban on restricted shares accounts for 27.92% of the total share capital of the company, the theoretical maximum lifting proportion is only 15.59% – 17.17%. First of all, the three ESOP platforms reduced the proportion of shareholding reduction in the first year from 60% to 30%, and the actual proportion that can be lifted this time only accounts for 3.45% of the total share capital; At the same time, Lei Jun investment is also a Zhongwang ESOP platform. Although no announcement has been made this time, we think it is possible to keep pace with the three announced ESOP platforms, and the reduction ratio may be reduced from 2.26% to 0.68%; Finally, some shareholders, directors and core technicians of the company have issued commitments that the number of shares transferred each year will not exceed 25% of the total shares of the company they hold, and the actual reduction proportion will also be greatly reduced.

3. The valuation is low, but the company’s dominant position in the field of industrial software remains unchanged, maintaining the buy rating

The company’s underlying CAD engine is independent and controllable and has technical advantages. In 22 years, 3D products are expected to continue to make breakthroughs in specific industries. At present, the valuation has been at a low position. We maintain the profit forecast. It is expected to achieve an operating revenue of RMB 616 / 844 / 1147 million from 2021 to 2023 and a net profit of RMB 180 / 253 / 345 million from 21 to 23, maintaining the “buy” rating.

Risk warning: the implementation of the policy is less than expected; The progress of localization is less than expected; The market competition intensifies and the R & D progress is less than expected;

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