event: on the evening of October 8, the company announced that hong kong zhongwang, a wholly-owned subsidiary of the company, bought 100 per cent of CHAM, the target of the transaction, for 5.55 million pounds (about 48.5228 million yuan).

comments:

CHAM was founded in 1974. it is a commercial CAE software company that focuses on CFD (computational fluid dynamics) software development and uses CFD technology to provide simulation technology services for the industrial field for 49 years.

the main products for commercial fluid simulation software "PHOENICS", the software has been widely used in the fields of construction, medical, meteorology and marine, its typical customers include the University of Cambridge, Singapore Meinhardt, and the domestic China Institute of Urban Design and Planning, Tsinghua University, Fudan University and other internationally renowned enterprises and universities. CHAM has agents in more than 25 countries around the world. In fiscal year 2022, CHAM achieved revenue of £ 1.7 million and a net loss of £ 240000. As at 30 April 2023, the Company had total assets of £ 2.69 million and net assets of £ 2.16 million.

CHAM has accumulated deep technology in the field of CAE. Dudley BrianSpalding, the founder of CHAM, is a bachelor of engineering science from Oxford University, a doctor from Cambridge University, an academician of the Royal Society and the Royal Academy of engineering. He was one of the most influential figures in the field of CFD computational fluid dynamics. The SIMPLE algorithm developed by CHAM, based on PARSOL grid generation technology, combined with flexible IN-FORM user-defined data processing function, can be efficiently applied to the fluid mechanics simulation calculation in the fields of machinery, electronics, automobile, construction, transportation, energy and other manufacturing and engineering construction, and has a leading advantage.

M & A is expected to strengthen the company's technical reserves in the CAE field and improve the technical puzzle of All-in-One CAx integration scheme. After the completion of this acquisition, Zhongwang Software will have all the source code and related core technologies of CHAM's fluid simulation software PHOENICS, officially enter the field of commercial fluid simulation, and accelerate the creation of Zhongwang multi-discipline multiphysics simulation solutions covering structure, electromagnetics and fluids.

investment advice: optimistic about the company's medium-and long-term prospects, maintain the "recommended" rating. The company is a very scarce industrial design software leading enterprises, the core product CAD design software gradually through market-oriented competition to open the situation, and is expected to take advantage of the domestic east wind gradually bigger and stronger. It is estimated that the company expects to realize income of 0.811 billion yuan, 1.091 billion yuan and 1.449 billion yuan from 2023 to 2025, and realize net profit of 0.088 billion yuan, 0.235 billion yuan and 0.334 billion yuan to its parent. The corresponding EPS is 0.72 yuan, 1.94 yuan and 2.75 yuan respectively, and the corresponding PE is 168X, 62X and 44X respectively, maintaining the "recommended" rating.

risk tips: goodwill impairment risk, exchange rate change risk, merger and acquisition integration risk, technological innovation risk.