Core Insights - The article highlights the emergence of domestic software companies as key players in the "hard technology" sector, particularly in the context of the Chinese software ecosystem [1] Group 1: Company Highlights - Kingsoft Office's WPS series has evolved over 36 years, adapting to domestic operating systems and hardware, and has recently launched WPS AI products to enhance user efficiency [1] - As of June 2023, WPS AI's monthly active users reached nearly 30 million, which is 1.5 times the expected number by the end of 2024 [1] Group 2: Industry Trends - The database sector is experiencing a growth window due to strong policy support for data applications, mature technological frameworks, and surging market demand [1] - Wuhan Dameng Database Co., Ltd. reported a 48.65% year-on-year revenue growth in the first half of 2025, with net profit nearly doubling [1] - The company has achieved the highest market share among domestic vendors in the financial sector for centralized transaction databases, leveraging 100% self-developed core technology [1]

Core Insights - Industrial software is a crucial pillar for the transformation of manufacturing towards high-end, intelligent, and green development, acting as an "invisible engine" for modern industrial systems [1] Group 1: Company Developments - Guangzhou ZWSoft Co., Ltd. has developed an integrated product matrix for 2D CAD and 3D CAD/CAE/CAM, leveraging over 30 years of validated proprietary geometric modeling kernel, which addresses the "bottleneck" issue in high-end industrial software in China [1] - ZWSoft's 3D CAD software supports various industries, including aerospace, automotive manufacturing, electronic design, and architectural planning, becoming a vital tool for the digital transformation of manufacturing [1] - ZWSoft plans to continue increasing R&D investment, focusing on key common issues in the industry to strengthen the foundation for industrial innovation, as stated by the company's Deputy General Manager and Board Secretary, Zi Yingkun [1] Group 2: Industry Trends - Suzhou Haochen Software Co., Ltd. has long focused on CAD software R&D and services, establishing mature solutions in architecture and machinery, which supports the industry's push for software legalization and import substitution [1] - Haochen Software's main products are compatible with several mainstream domestic operating systems, including Kylin and UOS, as well as domestic CPU chips like Loongson, Feiteng, Zhaoxin, and Haiguang, addressing domestic users' needs for data security and control [2]

Investment Rating - The industry investment rating is "Recommended," indicating an expected increase in the industry index by more than 5% over the next 3-6 months compared to the benchmark index [16]. Core Insights - The report emphasizes the concept of "Lighthouse Factories," which are leading the intelligent upgrade of the manufacturing industry by integrating advanced technologies such as artificial intelligence, IoT, and big data analytics [6]. - A total of 201 factories have been recognized as Lighthouse Factories globally, with 85 located in China, showcasing their exceptional manufacturing capabilities and performance in areas like production efficiency and supply chain resilience [6]. - Industrial software is identified as the digital foundation for Lighthouse Factories, playing a crucial role in enhancing production intelligence and efficiency across four core areas: R&D design, manufacturing, operational management, and maintenance services [6]. - The report suggests focusing on companies that are positioned to benefit from the growth of industrial software and intelligent manufacturing, including Zhongwang Software, Huada Jiutian, and Yonyou Network, among others [6]. Industry Overview - The computer industry consists of 337 listed companies with a total market capitalization of approximately 60,881.53 billion and a circulating market value of about 55,021.98 billion [3]. - The absolute performance of the industry over the past 12 months has been 52.1%, while the relative performance against the benchmark index has improved by 33.9% [4].

Core Viewpoint - Zhongwang Software's stock has experienced significant fluctuations, with a year-to-date increase of 40.31% and a recent drop of 2.03% on October 14, 2023, indicating volatility in investor sentiment and market conditions [1][2]. Company Overview - Zhongwang Software, established on August 24, 1998, and listed on March 11, 2021, specializes in the research, development, promotion, and sales of CAD/CAM/CAE industrial software [2]. - The company's revenue composition includes 95.45% from standard general software, 2.45% from technical services, 1.32% from customized software, 0.66% from purchased software and hardware, and 0.12% from other sources [2]. - Zhongwang Software is categorized under the computer software development industry, focusing on vertical application software, and is involved in sectors such as industrial software and domestic software [2]. Financial Performance - For the first half of 2025, Zhongwang Software reported revenue of 334 million yuan, reflecting a year-on-year growth of 8.24%, while the net profit attributable to shareholders was a loss of 52.41 million yuan, a decrease of 976.90% compared to the previous period [2]. - The company has distributed a total of 263 million yuan in dividends since its A-share listing, with 158 million yuan distributed over the past three years [3]. Shareholder Information - As of June 30, 2025, Zhongwang Software had 7,671 shareholders, a decrease of 2.68% from the previous period, with an average of 22,107 circulating shares per shareholder, an increase of 43.65% [2]. - Notable institutional shareholders include Wanjia Youxuan and Xingquan Helun, with increases in their holdings compared to the previous period [3].

Core Viewpoint - The trading volume of Zhongwang Software reached 1 billion CNY, marking the highest level since March 16, 2021, with the latest stock price increasing by 1.28% and a turnover rate of 6.24% [2] Company Overview - Guangzhou Zhongwang Longteng Software Co., Ltd. was established on August 24, 1998, with a registered capital of 1.69584547 billion CNY [2]

Investment Rating - The report maintains a "Buy" rating for the computer industry in China, indicating a positive outlook for the sector [6]. Core Insights - The U.S. plans to impose export controls on "critical software," which includes both foundational and industrial software, highlighting its strategic importance in the ongoing U.S.-China technological competition [9]. - The domestic market for industrial design software is expected to accelerate its localization process due to potential U.S. export restrictions, with significant growth opportunities identified in this area [3][9]. - The report emphasizes that while industrial design software has a low localization rate, the industrial control systems have a relatively higher domestic market share, particularly in DCS systems [9]. Summary by Sections Investment Recommendations and Targets - The report suggests that if the U.S. imposes export controls on foundational software, it will significantly boost the localization of industrial and foundational software. Key investment targets include: - Industrial Software: Zhongwang Software (688083, Buy), Huada Jiutian (301269, Buy), and others [3]. - Foundational Software: Dameng Data (688692, Not Rated), Dongtu Technology (300353, Not Rated), and others [3]. Industry Overview - The report discusses the strategic significance of critical software, which includes operating systems and databases, and notes that the domestic market share for PC operating systems has reached 20-25%, while server operating systems are at 40-50% [9]. - The report highlights that the localization rate for industrial operating systems is still low, at around 10-15%, but is expected to improve as domestic products gain traction [9].

Investment Rating - The report maintains a "Recommended" rating for the industry [4] Core Insights - The report highlights the significant impact of U.S. tariffs and export controls on Chinese products, particularly in the software and hardware sectors, emphasizing the need for domestic innovation and self-reliance [1] - The Chinese government is actively promoting domestic products through favorable procurement policies, including a 20% price deduction for local products in competitive bidding [1] - The report indicates that the domestic chip industry is gaining traction, particularly in the financial sector, with major projects like the Industrial and Commercial Bank of China's procurement of Huaguang chip servers valued at approximately 3 billion yuan [1] - The report notes a substantial increase in domestic server procurement by China Unicom, with 90.1% of the servers being domestically produced, reflecting a strong trend towards localization [2] - The report anticipates a turning point for the domestic innovation industry (Xinchang) driven by supportive policies and improving performance of listed companies in the sector [2][3] Summary by Sections - **Policy Support**: The government emphasizes high-level technological self-reliance as a key development focus, aiming to enhance core technology research and innovation capabilities [2] - **Market Performance**: Several listed companies in the Xinchang sector have shown improved performance compared to the previous year, indicating a positive outlook for the industry [3] - **Investment Recommendations**: The report suggests focusing on key players in the Xinchang sector, including China Software, Dameng Data, and others, as well as leaders in specific sub-sectors like industrial software and the Harmony OS ecosystem [3]

Investment Rating - The investment rating for the computer industry is "Positive" (maintained) [1] Core Insights - The report emphasizes the importance of investing in the domestic innovation sector due to increasing external pressures, including the U.S. imposing software export controls and tariffs on China [6][14] - Continuous policy support and funding are expected to accelerate the development of the industry, with significant government initiatives aimed at enhancing domestic production and technology independence [7][15] - Huawei's announcement of its chip development roadmap and the launch of the domestic operating system "Galaxy Kirin V11" indicate ongoing improvements in the domestic innovation ecosystem [8][16] Summary by Sections Market Review - During the week of October 9-10, 2025, the CSI 300 index fell by 0.51%, while the computer index decreased by 1.83% [5][13] Weekly Perspective - The report highlights the need to focus on investment opportunities in the domestic innovation sector, particularly in light of the U.S. export controls on critical software [6][14] Policy Catalysts - The Ministry of Industry and Information Technology and the State Administration for Market Regulation have issued plans to support the electronic information manufacturing industry, emphasizing the promotion of domestic products and technology [7][15] Company Dynamics - The report mentions that Sucen Technology has announced the acquisition of a 55% stake in Kunyu Lancheng Technology, indicating strategic expansion efforts [18] Investment Recommendations - Recommended domestic software companies include Kingsoft Office, Dameng Data, and others, while key domestic computing power companies include Haiguang Information and Inspur Information [9][17]

Summary of Zhongwang Software Conference Call Company Overview - Zhongwang Software is a leading domestic CAD (Computer-Aided Design) enterprise in China, benefiting from accelerated domestic substitution and self-controllable policies, which have enhanced its strategic position and driven stock price increases [2][6][8]. Industry Insights - The industrial software sector is a core driver of value in the industrial chain, with China's industrial software output significantly lower than its industrial output, indicating substantial growth potential [2][5]. - The global CAD market is valued at approximately $10-15 billion, with the Chinese market nearing 10 billion RMB. The market is expected to grow at over 20% due to trends in manufacturing transformation, domestic substitution, and software legalization [16][19]. Key Financial Metrics - The company targets a revenue growth rate of 15-20% and anticipates faster profit growth in the future [2][7]. - Revenue reached 3.7-3.8 billion RMB in 2023, with a ninefold increase in profit [10]. - The company’s gross margin is reported at 95%, showcasing strong profitability [7]. Product and Market Position - Zhongwang's product line includes 2D/3D CAD, CCAM, and CAE, with 3D CAD experiencing a compound annual growth rate (CAGR) of 16% over the past five years, projected to generate 3.155 billion RMB in revenue by 2024 [2][12]. - The company has over 1.4 million legitimate users and operates in 90 countries, with overseas revenue growth reaching 42% in the first half of 2025 [2][11]. Competitive Advantages - Zhongwang offers competitive pricing, with subscription fees significantly lower than those of international giants like Siemens and Dassault [4][23]. - The company has increased its R&D expense ratio to 50% in 2024 and 67% in the first half of 2025, emphasizing its commitment to innovation [4][13]. Strategic Initiatives - The company has acquired the entire intellectual property of the Override geometric kernel, enabling the development of 3D and electromagnetic structure simulation products [2][22]. - Zhongwang is actively pursuing international expansion, collaborating with over 800 global channel partners and participating in major industrial exhibitions [24]. Future Outlook - Zhongwang aims to become a Chinese equivalent of Dassault Systems and is expected to complete its transition from catching up to independence and globalization within 5 to 10 years [7]. - The market currently undervalues Zhongwang, with a target price-to-sales (PS) ratio of 15, significantly lower than the industry average of 27 [4][25]. Additional Considerations - The importance of software legalization is emphasized, as it is crucial for the development of specialized software in China, which currently has a low industrial software output relative to its manufacturing value [5][18]. - The integration of solutions to avoid data silos and improve process efficiency is a growing trend in the industry, with Zhongwang promoting an integrated strategy for CAD and CECAM [17].

Group 1 - The stock of Zhongwang Software (688083) closed at 91.14 yuan on October 9, reaching the daily limit with a trading volume of 9.27 billion yuan and a turnover rate of 6.37% [2][3] - The stock was listed on the daily trading list due to a price increase of 15% at the close [2] - The top five trading departments accounted for a total transaction amount of 4.36 billion yuan, with a net buying amount of 40.78 million yuan [2] Group 2 - The main capital inflow for the stock was 50.98 million yuan throughout the day [3] - The largest buying department was the Shanghai-Hong Kong Stock Connect, with a buying amount of 79.84 million yuan [3] - The largest selling department was Changcheng Securities, with a selling amount of 65.09 million yuan [3]