Shanghai Suochen Information Technology (688507) 信达证券·2024-11-27 08:00Investment Rating - The report assigns a "Buy" rating to Suochen Technology (688507 SH) [2] Core Views - Suochen Technology is a leading domestic CAE software company with high barriers to entry and strong growth potential [2] - The company has focused on CAE software R&D for over a decade, developing multi-disciplinary simulation products [2] - Suochen's revenue grew at a CAGR of 28 88% from 2019-2023, with gross margins consistently above 60% [2] - The CAE industry has high barriers due to its multi-disciplinary nature, with the global market reaching 9 8 billion in 2022, with China's market at 2 59 billion yuan [2] - CAE software is a core part of industrial software, requiring integration of physics, mathematics, engineering, and computer science [41] - The industry is divided into general-purpose and specialized CAE software [41] - Global industrial software market reached $456 1 billion in 2021, with China's market growing at a 14 2% CAGR from 2012-2021 [47] - Domestic CAE localization rate increased from 7% in 2016 to 16 2% in 2022 [56] Product Capabilities - Suochen's core products include Aries (fluid simulation) and Virgo (structural simulation) [69] - Aries features advanced algorithms like GKS, DSMC, and SPH, with comparable precision to international competitors [75] - Virgo offers three core solvers: nonlinear finite element, reproducing kernel particle, and peridynamics [80] - The company has developed a high-performance computing platform and industrial simulation cloud platform [83][84] Financial Projections - Revenue is projected to grow from 2 68 billion yuan in 2024E to 7 36 billion yuan in 2026E [4] - Net profit is expected to increase from 54 million yuan in 2024E to 105 million yuan in 2026E [4] - Gross margin is forecasted to remain stable around 68% from 2024E to 2026E [4] - EPS is projected to grow from 0 71 yuan in 2024E to 1 18 yuan in 2026E [4]