\u3000\u3 Guocheng Mining Co.Ltd(000688) 083 Zwsoft Co.Ltd(Guangzhou)(688083) )
Key investment points
Deeply plough the golden track of industrial software and nuggets CAX field with high flexibility opportunities. In recent years, the income of China’s industrial software products has been basically stable at around 15%, while from 2012 to 2017, the compound annual growth rate of the income of R & D and design industrial software was 26.75%. Because the production control software usually has the characteristics of customization, non standardization and can not be distinguished separately, the growth of the whole market scale also slows down and stabilizes, and the characteristics of high yield make the income of R & D software products show high elasticity, such as high growth rate and high volatility.
Industrial software replaces non strong policy orientation, and domestic software is a must for industrial enterprises in the short term. In the short term, there is still the possibility of overcapacity and inventory backlog in industrial enterprises, and the downward pressure on the profits of industrial enterprises is further increased. In the past, enterprises usually chose to reduce procurement or use piracy. However, with the promotion of legalization, it is becoming more and more difficult to replace piracy. According to the data of bisresearch, an international authoritative research organization, the global CAD market is expected to reach US $11.22 billion in 2023 and US $13.83 billion in 2028. However, according to the market scale data of China’s R & D and design industrial software, the scale of China’s CAD market around 2017 is 4.291 billion yuan, assuming an annual growth rate of 20%. It is estimated that the current market scale of CAD products in China is 6.179 billion yuan, which is still more than 10 times larger than the estimated demand scale. According to our calculation, at present, the supply-demand ratio of R & D software is nearly 1:10, and the compressible space of procurement volume is gradually shrinking. For the production of industrial R & D software, industrial enterprises urgently need to find a new solution.
Four factors bring the possibility of market loosening. In the long run, the prospect of domestic substitution is also optimistic. 1) When the external environment is uncertain, CAD software becomes the risk cost of enterprises. Based on the consideration of risk factors, some enterprises may avoid such problems and turn to domestic software; 2) Overseas manufacturers further expand the market through comprehensive cloud, but the market stability of such new version products needs to be improved; 3) Although the products of some overseas manufacturers have stable performance, the update frequency is slow. Enterprises often use the old version to integrate with PDM / PLM. However, as the functions of the old version are difficult to support production, the compatibility between the new version and enterprise PDM / PLM may be uncertain. 4) When Xinchuang reconstructs the IT bottom layer, the market pattern may eventually be overturned. It is a general trend for domestic operating systems with Linux as the core to fully replace Windows systems. However, considering that mainstream overseas products such as AutoCAD (2D), SOLIDWORK and Creo (3D) do not have good compatibility with Linux, it is said that on the premise of Xinchuang reconstructs the IT bottom layer, Chinese and foreign manufacturers almost return to the same starting line.
Zhongwang’s growth logic is from “going to customers” to “attracting customers”. Its most essential driving force comes from the cost-benefit consideration of downstream manufacturers. The market generally believes that Zhongwang’s substitution is a price war, but we believe that Zhongwang’s product can not only help enterprises reduce costs, but also achieve efficiency. It is a high-quality domestic product with independent choice power based on cost-benefit analysis – which also means that Zhongwang’s substitution essentially has a global perspective. At the same time, the market underestimates the capacity of Zhongwang products and believes that the replacement process may be long and the success rate is low. However, combined with Daimler’s successful case of NX’s substitution for CATIA in the process of 20122015, we believe that the success rate of medium hope substitution and substitution space may exceed market expectations.
Profit forecast and rating: we predict that the company’s revenue from 2021 to 2023 will be 619 / 878 / 1257 million respectively, the net profit attributable to the parent company will be 181 / 258 / 370 million respectively, and the corresponding EPS distribution will be 2.93/4.17/5.97 yuan. Give the company 70 ~ 80x target P / E in 2022, and the target price is 291.83 ~ 333.53 yuan. For the first time, give a “buy” rating.
Risk warning: the policy strength is less than expected, and the technology R & D has not been transformed; The core technology competitiveness is reduced.
