Strengthening industrial software is the only way for China's manufacturing power: industrial software is the programmed packaging and reuse of industrial technology and knowledge, and it is the top product of industrialization. The development of industrial software is related to the lifeline of China's industrial economy. 1) whether industrial software can be controlled independently is related to industrial safety. Once industrial software is invaded or disabled, China's industry may face paralysis; 2) Industrial software is the key to catch the express train of the fourth industrial revolution and an important means to realize intelligent manufacturing. According to the data of Zhiyan consulting and the world bank, the scale of China's industrial software market in 2020 was US $28.6 billion, accounting for only 6% of the global scale, far lower than China's manufacturing added value accounting for 28.61% of the global scale in 2020. At the same time, the industrial software market is more stable than industrial growth.
High R & D, strong ecology and continuous M & A create high barriers to industrial software: industrial software needs continuous high R & D investment. In 2021, the R & D expense rate of the world's leading industrial software companies was almost higher than 10%, and even more than 35%. Ecological synergy constantly polishes industrial software products and improves product competitiveness. Customer needs are diverse, personalized, and open ecological construction can play a role in attracting customers. M & A helps industrial software enterprises quickly improve their strength and occupy the market, which is lower than their later competitors.
Since the 14th five-year plan, we have put forward a number of policies to accelerate the development of software industry and accelerate the process of software industrialization in the "14th Five-Year Plan". According to Zhiyan consulting data, the compound growth rate of China's industrial software market from 2012 to 2020 was as high as 12%, more than twice the growth rate of the global market in the same period. We expect that in the future, the country is expected to launch more targeted and supportive policies for different segments of industrial software, including mandatory use of domestic software and other policies. At the same time, the capital market is optimistic about industrial software, the number of financing in the primary market is increasing year by year, and industrial software enterprises have successively landed in the capital market and enjoy high valuation.
China's industrial software is complete but not strong, and the situation of each link is different: 1) for R & D and design software, domestic industrial software has the lowest market share in China, less than 5%. Although there have been some companies that independently develop software, such as Zwsoft Co.Ltd(Guangzhou)(688083) , Huada Jiutian, etc., they are mainly used in fields with simple industrial mechanism, single system function and low industrial complexity. 2) In terms of production and manufacturing software, it has certain strength in some fields. There are Shanghai Baosight Software Co.Ltd(600845) , Hollysys, Zhejiang Supcon Technology Co.Ltd(688777) and other enterprises, which already have the logic of substitution in the high-end market. 3) In terms of business management software, domestic manufacturers mainly occupy the middle and low-end market, mainly including Yonyou Network Technology Co.Ltd(600588) , Kingdee International, Inspur international and other ERP manufacturers, but in the high-end market (especially multinational companies), they are more occupied by SAP and Oracle. 4) Operation and maintenance service software, China National Software And Service Company Limited(600536) mainly focuses on simple capabilities such as data acquisition and monitoring, lacks mature engineering application and accumulation of data and experience.
Investment suggestion: it is suggested to give priority to the industrial software of production and execution that is easy to replace and focus on the industries mentioned, Shanghai Baosight Software Co.Ltd(600845) (production and execution of steel industry), Guangzhou Sie Consulting Co.Ltd(300687) (production and execution of electronic information industry), Digiwin Software Co.Ltd(300378) (production and execution of electronic information industry), and Zhejiang Supcon Technology Co.Ltd(688777) (production and execution of petrochemical industry). Focus on the industrial software enterprises of R & D and design with low localization rate and high difficulty in tackling key technical problems, Zwsoft Co.Ltd(Guangzhou)(688083) (CAD), Shanghai Hollywave Electronic System Co.Ltd(688682) (CAE), Huada Jiutian (EDA), and Gallen Electronics (EDA). Pay attention to the operation and maintenance service industrial software companies that are just emerging, the market space is gradually opened and the competition pattern is scattered, Anhui Ronds Science & Technology Incorporated Company(688768) .
Risk tip: the promotion of localization policy is not as expected; The progress of technology research and development is less than expected; The epidemic risk exceeded expectations.
