\u3000\u3 Guocheng Mining Co.Ltd(000688) 083 Zwsoft Co.Ltd(Guangzhou)(688083) )
Event overview
On April 12, Zwsoft Co.Ltd(Guangzhou)(688083) released its 2021 annual report, which realized an annual operating revenue of 619 million yuan, a year-on-year increase of 35.65%; The net profit attributable to the parent company was 182 million yuan, a year-on-year increase of 50.9%; The net profit deducted from non parent company was 99 million yuan, with a year-on-year increase of 4.16%. The overall performance of the company increased steadily, which was in line with the express level previously disclosed. In 2021, the company will carry out strategic layout from multiple dimensions such as R & D and products, marketing and channels, ecology and management. 2022 is expected to usher in the harvest period of initial release of results.
The advantages of technology research and development have been continuously consolidated, and the layout of product lines has been steadily promoted
1) in 2021, the company invested more than 200 million yuan in R & D expenses, with a year-on-year increase of 34.23%, which is mainly used to improve the salary of R & D personnel to practice the core talent development strategy. In terms of quarters, the R & D investment in Q3 increased by 45.97% year-on-year, and that in Q4 increased by 41.58% year-on-year, which significantly increased on the basis of a 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, make pressure investment and expand its technical advantages since the second half of 2021.
2) the company’s 2dcad products have become increasingly mature in technology and application, with perfect functions and APIs, and are highly compatible with similar products on the market. Compared with similar foreign software, it has the advantage of high cost performance. 3dcad products have certain market competitiveness in general machinery, 3C electronics, mold and other industries. In 2021, the company gradually expanded the application scope of 3dcad in large scenes, high-precision and high complexity fields such as rail transit, shipbuilding, intelligent construction, automobile, aviation and aerospace. Relying on the independent and controllable three-dimensional geometric modeling engine, the company has obtained the first mover advantage and customer recognition in the wave of industrial software localization.
3) the company’s CAE product line has developed three products: General pre-processing platform zwmeshworks, electromagnetic simulation software zwsim EM and structural simulation software zwsimstructural, which are respectively for solver developers, 3D high-frequency electromagnetic simulation engineers and structural analysis engineers with pre-processing and post-processing development needs. In terms of software cloud, the company actively complied with the industrial technology trend and established the cloud division in 2021 to develop a new generation of cloud CAD products based on the accumulation of existing overdrive geometric modeling engine technology and 2D & 3dcad product technology.
4) after two years of continuous research and development, the company’s new generation of 3D geometric modeling engine (Wukong plan) has released the experience version in 2021, marking that the core competence of the new generation of 3D CAD graphics platform has gradually matured, from the previous internal iterative research and development stage to the stage of landing industry application and polishing products. 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.
Adjust the organizational structure, sink the marketing channels and build the distribution network
1) in 2021, the company focused on strengthening the construction of marketing system, and the sales expenses increased by 47.09% year-on-year, mainly in the salary and welfare of sales personnel and business promotion service expenses. Considering the demand difference brought by industry segmentation, in order to better serve end customers and shorten the service radius, the company set up small and medium-sized customer teams and special key customer teams in 2021, focusing on strengthening the transformation of direct sales team to key customer model, so as to respond to customer needs and provide after-sales service in time.
2) facing China, in addition to the existing sales and service outlets with Guangzhou, Shanghai, Beijing, Wuhan and Chongqing as the core, the company has further expanded the sales and service outlets in secondary provinces and cities such as Nanjing, Qingdao, Xi’an, Shenyang, Hefei and Xiamen to deeply serve local customers and respond to the needs of regional customers faster; Facing the international market, the company has component localization teams in many countries and actively participated in international competition. In 2021, the company maintained a growth trend in major markets such as South Korea, France, Germany, Poland, Spain and Italy. With the weakening of the impact of the epidemic worldwide, the growth contribution of overseas markets in 2022 is still expected.
3) with the improvement of product power and brand power, the company complies with the business development trend, starts to establish a distribution network in 2021, launches the “Honghu plan” in the Chinese market, and orderly and widely absorbs professional dealers in the industry, which greatly improves the coverage and quality of the overall distribution network and makes a significant contribution to the revenue. It is expected that in 2022, the company’s distribution network and distribution partners of “Honghu plan” will also play a greater role in China’s business and education market.
Build a secondary development ecosystem and strengthen win-win cooperation with partners
1) in terms of business ecology, the company has contact and cooperation with Chinese leading manufacturers in sub industries such as cost, survey, regulation control, coordination and distribution network, and drives other manufacturers in the industry to join the ecosystem through the influence of leading 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 technologies in the real application scenarios of the enterprise, so as to improve its own strength by serving key customers.
2) in the aspect of educational ecology, based on the deep understanding of the key points, difficulties and pain points of teaching in Vocational and undergraduate colleges, the company relies on the secondary development technology of ZWCAD and integrates AR / VR and other new technologies to develop the teaching and training software of “teaching, learning, examination and evaluation” for machinery and architecture majors, extend the secondary development ecology of 2dcad to the vocational education track and cultivate the user group of ZWCAD from the campus. The soft development talent training system from career 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 not only maintain rapid growth in the education industry in the future, but also walk out of the “Chinese path” of user ecology construction.
3) on February 17 this year, Zwsoft Co.Ltd(Guangzhou)(688083) announced the establishment of a joint venture with foreign investment: it plans to establish a joint venture with China State Construction Engineering Corporation Limited(601668) listed company Shenzhen Capol International&Associatesco.Ltd(002949) in the field of engineering design to jointly develop domestic BIM software that meets the standards, specifications and workflow of the local construction industry. We believe that the cooperation of Zhongwang Shenzhen Capol International&Associatesco.Ltd(002949) , is a strong combination of bottom technology and upper application. In this process, Zhongwang can not only give full play to its CAX technical advantages and provide technical support for the joint venture with “Wukong new generation 3D design platform”, but also deeply absorb Shenzhen Capol International&Associatesco.Ltd(002949) rich application scenarios and application development and R & D advantages of civil construction industry, so as to accelerate the industrial breakthrough of domestic 3dcad.
Investment advice
It is estimated that the company will realize an operating revenue of RMB 840 / 11.4 / 1.56 billion and a net profit attributable to the parent company of RMB 240 / 3.0 / 410 million in 2022 / 23 / 24 Zwsoft Co.Ltd(Guangzhou)(688083) focusing on the all in onecax strategy for business layout and market expansion 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. The six-month target price is 270.65 yuan, equivalent to 20 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.
