Group 1 - Alibaba announced a partnership with NVIDIA to integrate NVIDIA's Physical AI software stack into Alibaba Cloud's AI platform PAI, providing comprehensive services for enterprises including data preprocessing, simulation data generation, model training evaluation, and reinforcement learning [1] - NVIDIA's Rev Lebaredian stated that Physical AI could unlock a trillion-dollar opportunity in the real economy, with Jensen Huang emphasizing its potential to transform the $50 trillion manufacturing and logistics sectors [1] - CITIC Securities noted that domestic CAE (Computer-Aided Engineering) vendors are expected to deeply engage in the Physical AI industry, leveraging their accumulated technical capabilities in various fields [1] Group 2 - Companies like Orbbec and Zhongwang Software are collaborating with NVIDIA, integrating multiple mainstream products into the NVIDIA Jetson platform and enhancing CAE capabilities [2] - Alibaba's CEO mentioned an increase in capital expenditure beyond the initial 380 billion, amidst a competitive landscape for large AI model clusters, with major players like Meta and Microsoft building extensive clusters [3] - DataPort and Runjian Co. are involved in AI applications and computing power collaborations with Alibaba, with Runjian having established a significant computing power cluster [3]

Investment Rating - The report maintains a rating of "Accumulate" for the company [4] Core Viewpoints - The company has established itself as a significant player in the CAE field, focusing on core technology research and development, which is crucial for national defense and industrial informationization [13][16] - The CAE software market in China is expected to grow significantly, with a projected market size of approximately 137.09 billion yuan by 2030, indicating a favorable market environment for the company [2][54] - The company is expanding its technical layout and industry fields, leveraging strong customer resources primarily from military and research institutions, which enhances its competitive position [3][8] Financial Summary - Revenue is projected to grow from 3.79 billion yuan in 2024 to 10.78 billion yuan by 2027, with a compound annual growth rate (CAGR) of 26.72% from 2019 to 2024 [27][30] - The net profit attributable to shareholders is expected to increase from 410 million yuan in 2024 to 1.44 billion yuan by 2027, with significant growth rates in the coming years [27][30] - The company's earnings per share (EPS) is forecasted to rise from 0.47 yuan in 2024 to 1.61 yuan by 2027, reflecting strong profitability potential [27][30] Industry Analysis - The CAE industry has high technical barriers due to its complex algorithms and the need for continuous innovation, which presents a significant opportunity for domestic companies to replace imported software [2][39] - The overall industrial software and CAE segments are expected to see substantial growth, supported by government policies and funding aimed at promoting domestic technology [2][56] - The company is well-positioned to benefit from the increasing demand for domestic CAE solutions, as the market is currently dominated by foreign players, providing a clear path for growth [54][56]