Key takeaway

The company announced plans to acquire a 51% stake in Enercomn for RMB196mn. The acquisition includes multiple performance commitments to achieve risk hedging. Enercomn's non-recurring net profit targets for 2026–2028 are RMB30mn, RMB35mn, and RMB40mn, respectively. The acquisition valuation is well below the average for listed software companies. Enercomn serves leading clients in the energy and industrial sectors. Its OT and industrial control layer capabilities can be effectively combined with the company's IT capabilities, providing a foundation for delivering integrated AI + low-carbon smart factory solutions and supporting the replication of AI benchmarks, upgrading existing clients, and activating new client scenarios. We estimate the company's revenue for 2026-2028 to be RMB2.642bn/RMB2.861bn/RMB3.103bn, up 8.60%/8.28%/8.47% YoY. The net profit attributable to shareholders of the parent company is estimated to be RMB201mn/RMB249mn/RMB303mn, up 22.77%/24.26%/21.57% YoY. The corresponding PE is 51x/41x/34x. We maintain "Buy" rating on the company.

Event

The company announced on the evening of June 12 that it plans to use its own funds and self-raised funds totaling RMB196mn to acquire a 51% stake in Enercomn from existing shareholders. After the transaction, the company will hold a 51% stake in Enercomn, which will become a controlled subsidiary and be consolidated into the company's financial statements.

Quick Take

The acquisition includes multiple performance commitments to achieve risk hedging. The company announced plans to use its own funds and self-raised funds totaling RMB196mn to acquire a 51% stake in Enercomn. The initial payment is RMB108mn, with the remaining RMB88mn to be released as performance-based consideration over three years. For 2026–2028, Enercomn's non-recurring net profit must reach RMB30mn, RMB35mn, and RMB40mn, respectively, and its 2029 non-recurring net profit must not fall below the 2028 level. In addition, the performance commitments require that annual revenue and non-recurring net profit in each year must not fall below the prior year's level, and they also set requirements for indicators such as the ratio of accounts receivable to revenue and to net assets. In terms of acquisition valuation, based on the 2026 performance commitment (non-recurring net profit of RMB30mn), the dynamic PE for Enercomn is approximately 13x, well below the current average PE for the software sector (SWS Computer Index). Enercomn is a provider of smart energy and industrial intelligent control solutions, serving numerous leading clients. Leveraging its technological expertise and product innovation, Enercomn has established customer advantages and a strong moat in high-growth, high-barrier industries such as semiconductors, computing power centers, high-end manufacturing, and new energy vehicles. Centered around its self-developed EnerAI intelligent energy AI Agent, Enercomn has built a full-process software matrix covering energy simulation, AI optimization, industrial configuration, digital twins, and carbon management. This is complemented by self-developed hardware products such as edge controllers, I/O modules, and gateways, forming an independently controllable closed loop integrating software and hardware. Enercomn serves industry-leading clients including Yangtze Memory Technologies Co., Ltd. (YMTC), Huahong Group, China Electronics Technology Group Corporation (CETC) Chips Technology, and Tesla's Shanghai factory. With its accumulated industry experience in industrial data, mechanism models, and on-site control, Enercomn can achieve energy savings of over 15% in power generation workshops. This capability has been repeatedly validated in high-barrier scenarios such as semiconductors and intelligent computing centers, solidifying its leadership position in China's industrial energy management AI sector.

DIGIWIN is complementing its IT and OT capabilities, aiming for a fully autonomous and controllable "AI + Low-Carbon Smart Factory" integrated solution. This acquisition of Enercomn fills the OT and industrial control layer technology gaps in DIGIWIN's energy management and industrial intell igent control business, enabling DIGIWIN to close the loop between its IT and OT capabilities. DIGIWIN possesses a solid foundation in management and production intelligent software, including ERP, MES, PLM, AI Agent, and the Tianshu controller. The addition of Enercomn brings technological expertise in facility monitoring systems, industrial configuration, energy simulation, AI optimization, and edge control, enabling DIGIWIN to connect "prediction and decision-making in the digital world" with "modeling and execution in the physical world." The integration of IT and OT capabilities will drive data analysis capabilities toward a real-time control closed loop encompassing direct device connectivity, energy consumption optimization, and facility scheduling. At the same time, it will enhance DIGIWIN's ability to penetrate key accounts in semiconductors, new energy vehicles, and intelligent computing centers. Looking ahead, the integration of both parties' technologies and capabilities is expected to further expand integrated solutions in areas such as AI + low-carbon smart factories and physical AI. This will support DIGIWIN in replicating its AI solution benchmarks, upgrading existing customers, and activating new customer scenarios.

Investment recommendation: The company announced that it plans to acquire a 51% stake in Enercomn for RMB196mn. The acquisition includes multiple performance commitments to achieve risk hedging. Enercomn's non-recurring net profit targets for 2026–2028 are RMB30mn, RMB35mn, and RMB40mn, respectively. The acquisition valuation is well below the average for listed software companies. Enercomn serves leading clients in the energy and industrial sectors. Its OT and industrial control layer capabilities can be effectively combined with the company's IT capabilities, providing a foundation for delivering integrated AI + low-carbon smart factory solutions and supporting the replication of AI benchmarks, upgrading existing clients, and activating new client scenarios. We estimate the company's revenue for 2026-2028 to be RMB2.642bn/RMB2.861bn/RMB3.103bn, up 8.60%/8.28%/8.47% YoY. The net profit attributable to shareholders of the parent company is estimated to be RMB201mn/RMB249mn/RMB303mn, up 22.77%/24.26%/21.57% YoY. The corresponding PE is 51/41/34 times. We maintain "Buy" rating on the company.

Risks

(1) Risk of slower-than-expected R&D progress: The company has developed the Digiwin Athena platform, integrating large model technologies to build an AI-native application workspace. The R&D process involves significant technical challenges, and failure to deliver new products and features that meet client and market demands in a timely manner could negatively impact the company's market share and operations. (2) Overseas market risks: The company is actively expanding into overseas markets, with core products and solutions covering regions such as Taiwan, China and Southeast Asia. Should unfavorable shifts occur in global economic or political conditions, the company’s operations in these markets may be adversely affected. (3) Risks from cyclical fluctuations in downstream industries: The company primarily serves a broad range of downstream manufacturing clients. Fluctuations in the prosperity of these industries may negatively impact the company’s operating performance.