Core Insights - The report highlights the slowing profit growth of China's industrial enterprises over the past five years, despite increasing R&D expenditures and a focus on digital transformation as a key to enhancing competitiveness [1][2] - The three key industries—equipment manufacturing, high-tech electronics, and automotive manufacturing—exhibit differentiated development trends, with significant growth in the new energy vehicle market expected to drive the automotive sector [1][2] Group 1: Industry Development Insights - The profit growth of large-scale industrial enterprises in China has slowed, with fluctuations in the number of enterprises, while R&D spending continues to rise, indicating a strong emphasis on innovation [9] - The equipment manufacturing sector shows steady growth in both the number of enterprises and profits, but there remains substantial room for improvement in intelligence levels [9][10] - The high-tech electronics industry is expanding in scale but experiencing a slight decline in total profits, with uneven regional development [11] - The automotive manufacturing sector has seen stable growth in the number of enterprises, with the new energy vehicle market projected to account for 40.93% of total sales by 2024, becoming a new growth driver [11][12] Group 2: PLM Application Analysis - The industrial manufacturing sector is facing both opportunities and challenges in PLM (Product Lifecycle Management) applications, with policies promoting digital R&D and design tools, but also encountering issues like data silos and system fragmentation [2][5] - In the equipment manufacturing sector, the application rate of R&D design software is expected to reach 84% by 2024, with domestic PLM vendors gaining market leadership due to localization advantages [2][5] - The high-tech electronics industry focuses on advanced simulation and AI integration, with domestic companies surpassing international firms in market share among the top five [2][5] - The automotive sector is leveraging PLM for interdisciplinary collaborative design and additive manufacturing, accelerating the process of domestic substitution [2][5] Group 3: Company Overview - Dingjie Smart - Dingjie Smart stands out in the PLM field, combining various cutting-edge technologies to offer comprehensive lifecycle management capabilities, achieving the highest market share and revenue growth in the equipment manufacturing sector in 2023 [2][16] - The company's PLM solutions utilize AI capabilities for intelligent R&D management, including features like knowledge base Q&A and model similarity analysis, significantly enhancing operational efficiency and R&D capabilities for clients [2][20] - Dingjie PLM has received numerous industry certifications and honors, reflecting its strong recognition among various industry clients [2][20]

Summary of the Conference Call on the Xinchuang and Industrial Software Industry Industry Overview - The Xinchuang industry in China is set to achieve complete replacement goals for party and government systems by 2027, with a target to narrow the gap in basic software and hardware levels with international standards to within two years [1][4] - The industry is expected to establish domestic production capabilities for Anke CPU chips [1] - In 2025, state-owned enterprises are required to procure over 80% of new infrastructure from domestic sources, with clear indicators for replacing existing systems [1] Key Points and Arguments - The Xinchuang industry faces challenges due to the diversity of technology paths, including multiple operating systems and CPUs, leading to resource wastage [1][5] - A potential unification of operating systems is proposed, with Euler for servers and Harmony for non-server applications [6] - The U.S. industrial software market holds a monopoly globally, and any supply disruptions could severely impact Chinese manufacturing [7] - The next phase of the Xinchuang industry will focus on promoting self-controllable and AI-integrated manufacturing, with a clear emphasis on domestic production rates [7][8] Progress and Achievements - Significant progress has been made in the Xinchuang industry, with notable achievements in domestic software market share exceeding 50% in certain areas, such as DCS and small PLCs [22] - Companies like Zhongsoft, Dameng, and Taiji have reported impressive revenue and profit growth, indicating a strong growth trajectory for the industry [4] Challenges and Solutions - The primary challenge remains the technical diversity, which leads to inefficiencies in adaptation processes [5] - A unified operating system approach is suggested to streamline processes and enhance productivity [6] Industrial Software Importance - The importance of industrial software is underscored by the U.S. restrictions, which highlight the need for China to maintain its manufacturing edge [7] - The promotion of AI in manufacturing is seen as a critical step for the Xinchuang industry, with a focus on establishing clear domestic production rates [7][9] Policy and Strategic Directions - China is leveraging policy guidance to support domestic AI frameworks and promote the use of local operating systems [8] - The "14th Five-Year Plan" may include significant projects for lighthouse factories, presenting major opportunities for service providers [9] Company Performances - Nengke Technology is positioned as a leader in the industrial software sector, with a low valuation and significant growth potential [10] - Dongtu Technology is recognized as a key player in the industrial operating system space, recently securing large orders [11] - Rongzhixing excels in the PHM field, showcasing strong market positioning [12] - Zhongwang, as a leader in the CAD industry, is expected to benefit from policy support [14] Cloud Computing and Software Development - Domestic cloud computing foundational software is crucial for resource management and virtualization, with major players including Alibaba, Tencent, and Huawei [15] - U.S. restrictions on key software exports are anticipated to accelerate the domestic software development process [16] Industrial AI Development - Industrial AI is gaining traction, with significant advancements in large models and intelligent agents, emphasizing customization and automation in production processes [19] - The global market for industrial AI is projected to reach $150 billion by 2030, with applications in various sectors [17] Conclusion - The Xinchuang and industrial software sectors in China are poised for significant growth, driven by domestic policy support, technological advancements, and a focus on self-sufficiency in the face of external pressures [20][21]

Market Overview - The total market size for PLM software in China is projected to reach 3.51 billion RMB in 2024, with a year-on-year growth rate of 21.6%, an increase of 5.6 percentage points from the previous year [1] - The market is experiencing intensified competition, leading to a decline in average transaction prices and longer decision-making cycles [1] Competitive Landscape - Siemens, Dassault Systèmes, and PTC remain the top three players in the market, although their growth rates are slowing. Siemens' market share decreased from 14.3% in 2023 to 11.3%, while Dassault Systèmes' share fell from 10.2% to 8.0% [1] - Other notable companies include Yonyou, Kingdee, Dingjie Zhizhi, Supcon Software, Huaten Software, and Digital Dafa, which rank from fourth to ninth in market share [1] SaaS PLM Market - The SaaS PLM software sub-market in China is expected to reach 181 million RMB in 2024, with a growth rate of 21.9%, slightly higher than the overall PLM market growth rate, but it only accounts for 5.25% of the total PLM market [3] - There is a growing trend of manufacturers launching cloud-native PLM products, with an increasing adoption rate among end-users despite concerns about storing design and R&D data on public clouds [3] Industry Segmentation - The PLM market is segmented into eight major industries: high-tech electronics and computers, equipment manufacturing, automotive, aerospace and shipbuilding, consumer goods, raw materials, home appliances, and new energy [5] - The total market size for PLM solutions (including software and services) is projected to reach 5.32 billion RMB in 2024, with the top three industries being high-tech electronics, equipment manufacturing, and automotive [5] Market Share by Industry - In the high-tech electronics and computer communication PLM solutions market, Dingjie Zhizhi holds a market share of 12.2%, followed by Yonyou and Supcon Software [6] - In the equipment manufacturing PLM solutions market, Dingjie Zhizhi leads with a 6.2% market share, followed by Digital Dafa and Supcon Software [7] - In the automotive PLM solutions market, Huaten Software has a dominant share of 77.2%, with other players like Supcon Software and Kingdee following [8] - In the new energy PLM solutions market, Kingdee leads with an 11.3% market share, followed by Meiyun Zhishu and Huaten Software [9] Key Market Trends - Major market changes for 2024 include AI reshaping industrial software, the globalization of Chinese manufacturing, large-scale equipment updates, and the integration of industrial software with the industrial internet [11] - The research indicates that the intensity of R&D investment by Chinese enterprises is increasing, with a long-term trend of moving from price competition to innovation [11]

Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage in the market [4][7]. Core Views - The company has been deeply engaged in the digital transformation of the manufacturing industry for over 40 years and is now embracing AI to build a second growth curve [13]. - The company is expected to see stable revenue and profit growth, particularly from 2025 onwards, as industrial economic transformation and demand recovery in manufacturing sectors take place [6][9]. - The company is well-positioned to benefit from the ongoing trend of domestic software replacement, with strong customer loyalty and high barriers to entry [9][34]. - The company is actively promoting AI applications across various manufacturing sectors, which is anticipated to generate additional revenue and open new growth avenues [9][45]. Financial Summary - Revenue projections for the company are as follows: - 2023: 2,228 million RMB - 2024: 2,331 million RMB - 2025: 2,530 million RMB - 2026: 2,771 million RMB - 2027: 3,072 million RMB - The expected growth rates for revenue are 11.65% in 2023, 4.62% in 2024, and 8.56% in 2025 [5][51]. - The forecasted net profit attributable to the parent company for 2025-2027 is projected to be 206 million RMB, 281 million RMB, and 362 million RMB, respectively, with growth rates of 32.34%, 36.43%, and 28.70% [5][54]. Business Operations - The company has a diverse product matrix that provides comprehensive software and solutions for the entire production process, integrating AI for innovation [16][20]. - The company has established a strong presence in various manufacturing sectors, including equipment manufacturing, automotive parts, and electronics, with a significant market share in ERP, MES, and PLM solutions [13][41]. - The company is expanding its operations in Southeast Asia, with a focus on local talent and partnerships to enhance its market presence [22][27]. AI Integration - The company is leveraging its Athena platform to integrate AI applications across multiple scenarios, enhancing operational efficiency and customer engagement [45][49]. - AI applications are expected to contribute significantly to the company's revenue growth, with various tailored solutions being developed for specific industry needs [45][50].

Core Viewpoint - The industrial software sector, particularly research and design software, plays a crucial role in enhancing design efficiency, reducing costs, and achieving goals such as visualization, remote operation, and intelligent control. The market for EDA, CAD, and CAE software in China is projected to grow significantly by 2024, indicating a robust demand for these technologies in various industries [1][5][9]. Group 1: Market Size and Growth - The Chinese EDA software market is expected to reach approximately 13.59 billion yuan in 2024, up from 11.56 billion yuan in 2022, reflecting an 11.80% growth from the previous year [5][9]. - The CAD software market in China is projected to grow to around 6.07 billion yuan in 2024, increasing from 4.86 billion yuan in 2022, which represents a 15.4% growth year-on-year [7][9]. - The CAE software market is anticipated to reach about 4.92 billion yuan in 2024, up from 3.76 billion yuan in 2022, marking a 17.1% increase from the previous year [9]. Group 2: Industry Definition and Classification - Industrial software is essential for automation, information technology, and intelligent manufacturing, with research and design software being a key tool for innovation and development of new equipment [2][5]. - Research and design software includes CAD, CAE, CAM, and PLM, covering the entire lifecycle of industrial products from concept design to production and after-sales service [2][5]. Group 3: Industry Development Status - The industrial software sector is a foundational and strategic industry that significantly impacts national economic and social development [5]. - The domestic research and design software industry has established a relatively complete system, with notable companies like Zhongwang Software, Haocen Software, and Digital Dafa emerging as key players [11][17]. Group 4: Competitive Landscape - Major foreign players in the research and design software market include Dassault, Siemens, PTC, and Autodesk, which collectively hold over half of the domestic market share, particularly in high-end segments [15][16]. - Domestic companies are rapidly gaining market share, with Zhongwang and Huachen achieving significant penetration in both low-end and mature foreign markets [11][17]. Group 5: Development Strategies and Recommendations - The integration of research and design software with industrial elements is crucial for enhancing innovation capabilities and efficiency in enterprises [18]. - The industry is expected to evolve towards cloud-based, AI-driven, and domestically produced solutions, necessitating breakthroughs in core technologies and the establishment of a complete ecosystem [18].