\u3000\u3 Guocheng Mining Co.Ltd(000688) 083 Zwsoft Co.Ltd(Guangzhou)(688083) )
Event: on April 15, 2022, the company released the first quarterly report of 2022.
Revenue continued to grow, and the epidemic and high R & D investment suppressed profitability in the short term. According to the company’s announcement, the company achieved a revenue of 86 million yuan in the first quarter of 2022, with a year-on-year increase of 1.24%. Among them, the company’s operating revenue in China’s commercial market increased by 20.30% year-on-year. The company’s net profit attributable to the parent company in the first quarter of 2022 was a loss of 20 million yuan; Deduct the net profit loss not attributable to the parent company of 37 million yuan. We believe that the company’s business is still advancing steadily. Due to the impact of the epidemic, the expansion of education market and overseas market has been suppressed in the short term, while the company’s investment in industrial basic design software has increased at the personnel level, resulting in a short-term suppression of profits.
Products continue to iterate and industrial integration continues to strengthen. According to Sinochem economic development center, the company has entered the list of the first batch of applicable technologies for intelligent manufacturing in the petroleum and chemical industry during the 14th five year plan in 2021. According to the disclosure of Southern Metropolis Daily, the company has led 11 major member units such as the Fifth Institute of electronics of the Ministry of industry and information technology to establish Guangdong Industrial Software Innovation Center to further strengthen collaborative innovation. On the other hand, according to the announcement, the company released the latest 2022 versions of 2D CAD, 3D CAD and CAE products respectively during the reporting period, and launched the Linux version suitable for Xinchuang software and hardware. The company strengthened industrial coordination as a whole and continued to move forward on the “all in one CAX” Avenue. According to the company’s announcement, the first BIM cooperation project of the company’s “Wukong platform” landed in the field of civil construction, indicating that the company’s products are in the process of steady iteration.
The repurchase plan shows development confidence, and the localization and replacement of industrial software is full of potential. According to the announcement of the company, the company plans to buy back the company’s shares in the form of centralized bidding transaction, and the total amount of repurchase funds shall not be less than 30 million yuan (inclusive) and not more than 60 million yuan (inclusive). We believe that the company’s repurchase plan fully demonstrates its confidence in development. According to the relevant data of the National Bureau of statistics, China’s manufacturing output value surpassed the United States for the first time in 2010 and has ranked first in the world for many consecutive years. With the relevant policies such as made in China 2025, the upgrading of China’s manufacturing industry has become an irreversible trend. Under the background of increasing investment in independent R & D in the manufacturing industry, the demand for industrial design software is expected to increase significantly. On the other hand, with trade uncertainty, in order to prevent the upgrading process of China’s manufacturing industry from being blocked, the autonomy of industrial design software is one of the ways to effectively avoid the phenomenon of “neck sticking”, and localization replacement is full of potential.
Investment suggestion: the company is a leading enterprise of industrial design software that is extremely scarce in China. The core product CAD design software is gradually opened up through market-oriented competition, and is expected to gradually become bigger and stronger by taking advantage of the east wind of localization. It is estimated that the company’s EPS from 2022 to 2024 will be 4.00 yuan, 5.18 yuan and 6.76 yuan respectively, and the corresponding PE will be 51x, 40x and 30x respectively, maintaining the “recommended” rating.
Risk tip: the company’s product R & D progress is less than expected, and the intensification of industry competition leads to the decline of gross profit margin
