Key points of investment:

Revenue grew steadily in 2023, and overseas business performed well. In 2023, the company achieved revenue of 278 million yuan, a year-on-year increase of 15.52%; net profit to mother was 54 million yuan, a year-on-year decrease of 13.02%.

In the first quarter of 2024, the company achieved operating income of 56 million yuan, an increase of 4.79% year on year; net profit to mother was 06 billion yuan, down 27.06% year on year. The company's revenue grew at a relatively steady rate. In 2023, the company's revenue from mainland China was 183 million yuan, up 10.10% year on year; revenue from abroad was 92 million yuan, up 28.54% year on year, and the company's overseas business grew rapidly.

Deeply involved in the CAD industry, the product matrix is constantly being improved. The company has been deeply involved in CAD-related fields for more than 20 years, and officially released 2D CAD platform software with independent core technology in 2013; in the 3D CAD software business, the company continues to arrange cooperation with leading international products and technologies to promote 3D CAD software product layout; in the CAD cloud business field, the company has successively released Haochen CAD's mobile, web and computer versions since 2011, and has continuously expanded cloud applications and services. With 15 million monthly active users (MAU), Haochen CAD Reader has become the most competitive app application in the CAD field in China.

3D CAD: The company collaborated with Siemens to release a 3D CAD product for the manufacturing industry - Haochen 3D. The product uses the world's leading Siemens core technology, covering parts design, assembly design, sheet metal, pipeline wiring, etc., and can achieve advanced functions such as motion and mechanical simulation, reverse engineering, etc., and can be widely used in industrial machinery, automobiles and parts, mechatronics, metal products, machine tools and processing equipment, pumps, valves, new energy and environmental protection equipment, heavy machinery, etc.

Haochen CAD Viewer King: Provides rich “cloud+ terminal” scenario-based applications. Through data-driven and open interconnection, drawing data and models can flow rapidly upstream and downstream of the industrial chain in engineering construction and manufacturing, and enables collaboration and collaboration across organizations and terminals. It is the core product of the company's CAD cloud business. At the same time, Haochen CAD Viewport also uses a “free+advertisement” approach to provide more users with free opportunities to use the product, while also being the carrier of the company's Internet advertising and promotion business.

Haochen CAD 365: A CAD cloud-based solution for enterprise users, including Haochen CAD mobile version, Haochen CAD web version, Haochen CAD map version, and Haochen CAD cloud-based components to enable data and models to be connected to the cloud.

Software performance has been further improved, and we will continue to invest in the cloud development direction of CAD. In 2023, the company released several upgraded iterations including Haochen CAD 2024 and Haochen CAD Linux 2024. By continuously optimizing key technologies such as display engines and data processing, Haochen CAD 2024 further enhances the display performance and operation experience of the software. Aiming at the direction of CAD cloud development, the company completed iterative development of all terminals of Gantuwang products in 2023, upgraded the products several times, and realized functions such as BIM models and 3D model maps of the manufacturing industry. At the same time, the company completed the design and development of the first phase of the Haochen CAD 365 cross-terminal CAD cloud application. This product is a CAD cloud solution for enterprise users, including Haochen CAD mobile version, Haochen CAD web version, Haochen CAD map version, and Haochen CAD cloud components to enable data and model communication between various terminals.

Customers cover multiple industries and adhere to a global development strategy. After more than 20 years of development, the company has accumulated a large user base in the global market. Looking at the breadth of the industry, users cover many fields such as construction, transportation, water conservancy, petrochemicals, urban planning, electricity, ships, automobiles, machine tools, metallurgy, new energy and environmental protection. Looking at the distribution area, the company has established stable cooperative relationships with dealers in various countries or regions such as Japan, South Korea, Thailand, Singapore, Poland, Germany, France, Italy, Russia, Brazil, Chile, Australia, New Zealand, the United Arab Emirates, and Egypt. Looking at the depth of coverage, the company focuses on developing vertical markets in the engineering construction and manufacturing industry, providing users with 2D CAD platform software, 2D CAD industry application software for such vertical markets, and 3D CAD software for high-end manufacturing. At the same time, it also provides Haochen CAD King and cloud-related services to fully meet the needs of users in the CAD field.

Profit forecasts and investment recommendations. We believe that the company is deeply involved in the CAD industry, continuously improving its product matrix, focusing on the cloud CAD direction, and achieving great results in market expansion. Along with the acceleration of the domestic production substitution process, the company's domestic revenue is expected to grow rapidly, and the overseas market layout is expected to continue to grow at a high rate for many years. It is expected that in 2024-2026, CAD software packages will achieve steady growth, giving revenue growth rates of 13%, 12%, and 12% respectively; cloud and digital service businesses will maintain high growth, giving revenue growth rates of 50%, 41%, and 41% respectively; along with the improvement of CAD ViewKing's product capabilities and adjustment of advertising strategies, the advertising and Internet business will maintain rapid growth, giving revenue growth rates of 45%, 38%, and 35% respectively.

We expect the company's revenue for 2024-2026 to be 335/401/501 million yuan, respectively, net profit to mother of 0.45/0.58/ 0.76 million yuan, EPS 0.69/0.88/1.15 yuan, respectively, and SPS of 5.11/6.23/7.64 yuan respectively, giving the 2024 dynamic PS 8-9 times, and a reasonable value range of 40.88-45.98 yuan for 6 months. The first coverage will give a “superior to the market” rating.

Risk warning. The company's business progress falls short of expectations, and industry policy risks.