following the previous acquisition of Beijing bochao to complete the industrial and commercial registration, zhongwang software (688083) once again threw out a paper extension merger plan.

on the evening of October 8, zhongwang software announced that in order to enhance the company's technological accumulation in CAE (computational auxiliary engineering) industry and enrich CAE's product system, the company acquired 100 per cent of CHAM company held by Colleen Iona Spalding, or about RMB 48.5228 million yuan, with its own capital of 5.55 million pounds through its wholly-owned subsidiary hong kong zhongwang. Upon completion of the transaction, the Company will indirectly hold a 100 percent stake in CHAM, which will be included in the consolidated financial statements.

it is disclosed that CHAM was founded in 1974. it is a commercial CAE software company specializing in CFD (computational fluid dynamics) software development and using CFD technology to provide simulation technology services for the industrial field for 49 years. its main product is commercial fluid simulation software "PHOENICS". the company is located in Wimbledon, London, UK, and has agents in more than 25 countries around the world.

CHAM's core product is a universal fluid simulation software, which not only has universal CFD calculation modules and professional modules suitable for two-phase flow calculation, chemical vapor deposition, building HVAC simulation and medical flow analysis, but also provides rich CAD interfaces, three-dimensional modeling functions and more than 20 turbulence models, fully supporting various fluid simulation analysis application scenarios such as combustion, radiation, multiphase flow, etc.

in terms of financial data, as of April 30, 2023, CHAM had total assets of 2.69 million pounds, total liabilities of 526000 pounds and net assets of 2.163 million pounds. In fiscal years 2022 and 2023, the company's revenue was 2.202 million pounds and 1.702 million pounds respectively. Net profit was -239700 pounds and -240000 pounds respectively.

judging from the pricing of the transaction target, CHAM's operating income in fiscal year 2023 is about 14.8793 million yuan. The overall acquisition price is 5.55 million pounds, or about 48.5228 million yuan, with a corresponding market-to-market ratio (PS) of about 3.26 times, significantly lower than the valuation of listed companies whose main business is CAE in the-share market. In this regard, Zhongwang Software said that considering the small scale of CHAM's operating income and the market practice of different valuations in the primary and secondary markets, the pricing valuation of the acquisition of CHAM is reasonable.

when it comes to the acquisition plan, zhongwang software is very promising. it said that after the completion of the acquisition, the company will have all the source codes 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-disciplinary multiphysics simulation solutions covering structure, electromagnetism and fluid.

At the same time, the company will integrate the mature architecture of PHOENICS and the technical advantages of Zhongwang's independent 3D geometric modeling core Overdrive to provide high-quality fluid simulation solutions for industrial enterprises in the fields of global automobile, aviation, civil engineering, electronics, energy, etc., continue to consolidate the domestic industrial software technology base, and create more independent and controllable domestic solutions.

However, Zhongwang Software also warned of risks. Affected by multiple factors such as industry, policy, market environment changes and subsequent operation and management, this transaction has risks such as goodwill impairment risk, exchange rate fluctuation risk, acquisition integration risk and technological innovation risk. The company will pay full attention to changes in the macro environment, industry and market, and reduce related risks by improving internal management level.

Zhongwang Software, which was listed on the board in March 2021, is a leading supplier of R & D and design industrial software in China, mainly engaged in the R & D, promotion and sales of CAD/CAM/CAE and other R & D and design industrial software. After more than 20 years of development, the company has independent two-dimensional CAD, three-dimensional CAD/CAM and CAE products and related core technologies.

In terms of operating performance, in the first half of 2023, Zhongwang Software achieved revenue of 0.276 billion yuan, an increase of 41.97 year-on-year; the net profit loss attributable to the parent was 1.2882 million yuan, and the loss in the same period last year was 36.3908 million yuan; the non-net profit loss was 57.157 million yuan, A loss of 69.4469 million yuan in the same period last year.

It is worth mentioning that since the beginning of this year, Zhongwang Software has made frequent moves in the field of investment and mergers and acquisitions. In March 2023, Zhongwang Software announced that it intends to set up a joint venture with Su Jiaoke (300284) and Hu Yanqing to carry out the research and development of BIM (Building Information Model) software and the development and marketization of 3D forward design tools in the field of transportation and municipal administration. The registered capital of the joint venture company is 50 million yuan, of which the company contributes 9.95 million yuan, accounting for 19.9 percent. Su Jiaoke contributed 22.55 million yuan, accounting for 45.1.

in April, zhongwang software threw out a merger plan. the company plans to use its own capital of 0.165 billion yuan to acquire a total of 64.66 percent of the shares of Beijing bocho era software co., ltd. At the same time, the company and the other shareholders of Beijing Bochao after the acquisition, Beijing Bochao signed a "shareholder agreement", the company has the right to according to the operating conditions of Beijing Bochao, in 2024-2026 in batches of independent choice to acquire the remaining 35.34 of Beijing Bochao equity, so that the target company will eventually become a wholly-owned subsidiary of Zhongwang Software. In August this year, the acquisition completed the registration of industrial and commercial changes.

In fact, the acquisition of Beijing Bochao has also attracted the attention of investors. Zhongwang Software stated in the investor minutes disclosed on September 5 that the reason for the acquisition of Beijing Bochao was mainly due to the company's consideration of the future medium and long-term development strategy. "Through this acquisition, the company hopes to better grasp the opportunity of three-dimensional digital transformation in the power grid industry and provide a landing opportunity for the gradually maturing Wukong platform. Therefore, the company will not excessively pursue the financial data performance of Beijing Bochao in a short period of time."