Zwsoft Co.Ltd(Guangzhou)(688083) 3d products break through new industries, and the overseas market is expected to grow rapidly

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Event overview

On April 11, 2022, Zwsoft Co.Ltd(Guangzhou)(688083) released the annual report for 2021. The company’s operating revenue in 2021 was 618680700 yuan, an increase of 35.65% over 2020; The net profit attributable to the owners of the parent company was 181650200 yuan, an increase of 50.89% over 2020; After deducting non recurring profits and losses, the net profit attributable to shareholders of the parent company was 994038 million yuan, an increase of 4.16% over 2020.

3D products have broken through new industries, and CRRC has become the fifth largest customer

According to the company’s official website, CRRC Zhuzhou Institute further adopted Zhongwang 3D instead of ptccreo after adopting Zhongwang 2D instead of AutoCAD Zwsoft Co.Ltd(Guangzhou)(688083) provides CRRC Zhuzhou Institute with domestic 3D CAD platform software and open API interface, and helps CRRC Zhuzhou Institute carry out personalized customization development and realize the integration and docking of product data and PLM system through R & D level technical support. According to the annual report data, Crrc Corporation Limited(601766) Group Co., Ltd. has become the fifth largest customer of the company.

Zhongwang 3D has a large number of engineering application cases in ICT and mold industries. This breakthrough in CRRC represents that Zhongwang 3D has entered a broad field of equipment manufacturing; At the same time, the company strengthened the construction of sales network in 2021 (the sales cost increased by 47.09% year-on-year), and established an industry sales team. Due to the characteristics of the industry, the market expansion effect has a certain lag. In the follow-up, it is expected to continue to break through the key industry customers, and take advantage of the exemplary effect of benchmark customers, the domestic substitution in the field of 3D CAD is expected to accelerate.

The education sector is growing strongly, CAE products have entered the market iteration, and the overseas market is expected to grow rapidly

According to the annual report data of 2021, the 2D and 3D products of the company achieved a high growth of more than 50% in the education sector as a whole, of which the 2D education products achieved a revenue of 897025 million yuan, a year-on-year increase of 51.29%; The revenue of 3D education products was 368078 million yuan, a year-on-year increase of 49.77%. The company’s layout in the education sector is conducive to the cultivation of user groups and will benefit for a long time in the future. CAE products achieved a large-scale breakthrough in 2021, with a revenue of 3.8275 million yuan, representing that CAE products have been verified by practical application and entered the market iteration stage; In the follow-up, it will quickly respond to the engineering simulation needs of customers by going deep into the actual production process of Party A’s enterprise, continuously polish the technology and products, move towards the goal of “two-way collaborative integration of design and simulation”, support the simulation needs in mechanical manufacturing, high-tech electronics and other fields, and become a strong driving force for the follow-up development of the company.

In 2021, the income of overseas market reached 109503 million yuan, with a year-on-year increase of 20.71%. Under the background of overseas travel interruption caused by the epidemic, it is not easy to achieve an increase of more than 20%. In 2022, the company increased its overseas market layout, further arranged the localized sales and service teams in Japan, Southeast Asia, the Middle East, Mexico and Europe on the basis of the existing local teams in Vietnam and the United States, better supported and managed overseas dealers, improved the operation efficiency of overseas markets, and the revenue of overseas markets is expected to achieve high growth.

China’s first Xinchuang 3D software was released, and the domestic industrial software ecosystem was further expanded

In December 2021, China released the first 3D cadlinux version suitable for Xinchuang software and hardware ecology in China, and continuously iterated the 2D cadlinux version, providing CAD application scenario support for enterprises and institutions of Xinchuang ecology. With the acceleration of industry information innovation promotion and domestic substitution, it is expected to be popularized and applied in national defense and military industry and central state-owned enterprises and usher in explosive growth with its advantages of independent core, extensive user base and full engineering application verification. In addition to actively integrating into Xinchuang ecology, the company has successively cooperated with different professional application development manufacturers such as Beijing Tianzheng Software Co., Ltd., Nanjing dinoni Technology Co., Ltd. and Guangdong Nanfang Digital Technology Co., Ltd. to jointly launch industrial application solutions based on Zhongwang platform. The cooperation fields include energy and power, highway transportation, engineering calculation, collaborative design and management, etc, The ecosystem of domestic industrial software has further expanded. In cooperation with professional application development manufacturers, the company provides API level capability support. The development manufacturers develop personalized solutions for different industries based on Zwsoft Co.Ltd(Guangzhou)(688083) platform and API interface, which is conducive to improving industry coverage and strengthening their overall advantages in the whole life cycle of the whole industry chain.

Investment advice

According to the company’s annual report, we lowered the company’s revenue forecast of 953 / 1391 million yuan for 22-23 years to 858 / 1188 / 1645 million yuan for 22-24 years; The forecast of earnings per share (EPS) of 4.0/5.7 yuan in 22-23 years was lowered to 3.98/5.45/7.52 yuan in 22-24 years, corresponding to the closing price of 204.92 yuan / share on April 11, 2022, and PE was 51.5/37.6/27.2 times respectively, maintaining the “buy” rating of the company.

Risk tips

1) the epidemic has led to the decline of IT budget of manufacturing enterprises; 2) The substitution of domestic CAD software is less than expected; 3) The company’s new product research and development progress is less than expected.

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