Incidents:

On October 28, 2024, the company released the 2024 three-quarter report. In the first three quarters of 2024, the company's revenue was 0.512 billion yuan, +10.11% YoY, net profit to mother was 0.011 billion yuan, +159.69% YoY; net profit after deduction: 0.095 billion yuan, YoY -37.27%; in the third quarter of 2024, the company's revenue was 0.204 billion yuan, +7.66% YoY; net profit to mother 0.005 billion yuan, -11.83% YoY; net profit after deducting -0.011 billion yuan, +8.85% YoY Investment Highlights:? The 3D CAD+ overseas business performed well. I am optimistic about the future growth of new products and the recovery of downstream demand in 2024Q3. The 3D CAD and overseas business performed well, and the new products and education market have potential for growth. See for details:

① Domestic commerce: The domestic macroeconomy continues to recover moderately, and customers' willingness to purchase genuine software has not increased significantly. However, the new version of the product released by the company in mid-year has begun preliminary verification and promotion. As the performance gap with leading overseas products gradually narrows, the company's 3D products have begun to fulfill their promotion potential, and the company's 3D product revenue increased by more than 35% over the same period last year.

② Domestic education: Due to financial and budget pressure, customers are not willing to purchase digitally, but the company's position in the CAx education industry continues to be consolidated, and the shrinking trend of the education business has been mitigated.

③ Overseas business: The progress is superior to the company's overall business. The overseas sales channel network is getting better. Due to the macro environment and other reasons, the company's overseas revenue growth rate declined from the first half of the year, but as customer verification work for new versions of products progresses and the influence of overseas brands continues to increase, the company is confident that it will continue its excellent performance in overseas markets.

Cost reduction and cost control results have been shown, leading figures have been introduced, and high R&D continued to consolidate competitive barriers in 2024Q3. The company's sales/management/R&D expense ratios were 46.68%/12.51%/51.9%, respectively, -3.72/+0.5/+1.38pct. While actively exploring potential business opportunities, the company focuses on controlling and optimizing costs and expenses. Through the active introduction of industry leaders and in-depth exploration of internal teams, the company achieved remarkable results in controlling expenses and releasing profits while achieving revenue growth.

2024Q3, the company invested 0.107 billion yuan in R&D, an increase of 9.04% over the previous year. By maintaining a R&D investment ratio that far exceeds the industry average and relentlessly refining core technologies such as independent 3D geometric modeling cores, the company continues to improve the quality of each product line and overall customer service capabilities, and the industry ecosystem based on the company's products is becoming more and more mature.

Equity incentives show confidence, and the long-term growth trend remains unchanged

On September 11, 2024, the company announced the 2024 Restricted Stock Incentive Plan (draft), which plans to grant restricted shares accounting for 0.88% of the company's total share capital to incentive recipients. The total number of incentive recipients to be granted for the first time in this incentive plan is 162, accounting for about 8.15% of the total number of employees in the company.

The incentive plan sets company-level performance assessment targets: the cumulative revenue targets for 2024, 2024-2025, and 2024-2026 are 1.034/2.328/3.944 billion yuan, respectively; the cumulative revenue for 3D CAD products is 0.244/0.561/0.973 billion yuan, respectively.

As a domestic R&D and design industrial software market leader, the company has continued to increase R&D investment and technical research efforts for 3D CAD products over the years. It is hoped that the product competitiveness of 3D CAD products in the fields of general machinery, high-tech electronics, mold design, home appliances, etc., will gradually expand into high-end manufacturing industries such as automobiles, auto parts, and ships. We believe that the release of this incentive plan highlights the company's confidence in future development and will promote the development of the company's strategy in the direction of expanding market share and enhancing the competitiveness of core 3D CAD products.

Profit forecast and investment rating: The company's CAD products are being iterated at an accelerated pace, and the product matrix is constantly being improved; and domestic commercial and overseas markets are growing steadily. We expect the company's revenue in 2024-2026 to be 0.988/1.231/1.534 billion yuan, respectively; Yoy's net profit will be 0.08/0.13/0.187 billion yuan, respectively, and YOY 30%/62%/44%; EPS will be 0.66/1.07/1.54 yuan/share, respectively. The current stock price will be 87/60X for 2025-2026, maintaining a “buy” rating.

Risk warning: Technology research and development risks, risk of product planning not meeting market demand, risk of losing core technical personnel, macroeconomic downturn affecting downstream demand, and intensifying industry competition.