[Heng·Index] (H·Index) is a series of capital market index products compiled and released by Heheng Consulting, which mainly includes three major product lines: specific group development index, industry group development index, and regional group development index. Author | Hehe

[H·Index] (H·Index) is a series of capital market index products compiled and published by Heheng Consulting, which mainly includes three major product lines: specific group development index, industry group development index, and regional group development index.

Author | Heheng Consulting

2012 words in this article, the estimated reading time is 7 minutes

Software development industry belongs to the computer industry and is divided into two fields: vertical application software and horizontal general software. As of October 31, 2022, there were 128 listed companies in the software development industry, and Heheng Consulting used this as a research sample to monitor the development quality of the software development industry from seven dimensions.

The development index of software development listed companies in the second quarter of 2022 was 103.3, a month-on-month decrease of 5.3, falling to the lowest point in the past three years, reflecting that the group of software development listed companies has narrowed its advantages over the A-share listed companies.

Figure 1: Software Development Listed Company Development Index

Data source: Heheng Consulting

According to the dimensions, the software development listed company development index in the second quarter of 2022 has 3 capability dimension indexes greater than 100, and 4 capability dimension indexes less than 100. Among them:

1. R&D capability index, operation capability index, and financial pressure index are higher than the critical value of 100, among which R&D capability index is 200 and financial pressure index is 182.6, far higher than the critical value;

2. Growth capability index, profitability index, investment capability index, upstream and downstream bargaining power index are less than 100, among which the growth capability index, investment capability index, and upstream and downstream bargaining power index are relatively large compared with the critical value.

Figure 2: Performance of various dimensions of software development listed companies in the second quarter of 2022

Data source: Heheng Consulting

In the second quarter of 2022, the index of various dimensions rose 3 month-on-month and fell 1 flat. Among them:

1. Profitability index, operational capacity index, and investment capacity index rose month-on-month, among which the operational capacity index and investment capacity index rose significantly;

2. Growth capacity index, financial pressure index, and upstream and downstream bargaining power index fell month-on-month, among which the growth capacity index fell the most, followed by the financial pressure index;

3. R&D capacity index was 200, which remained the same month-on-month.

Figure 3: Software Development Listed Companies Development Index Sub-item

Data source: Heheng Consulting

The second quarter of 2022 software development listed companies reflects the operation of listed companies in the software development industry with the following main characteristics:

1. Software development listed companies attach more importance to innovation, and their R&D investment is huge compared to A-shares. Data from the 2022 semi-annual report shows that the average R&D expense ratio of software development listed companies is 23.25%, far higher than the average R&D expense ratio of A-share listed companies 5.71%.

2. The growth capacity of listed companies in software development has dropped significantly month-on-month, reaching the lowest point in the past three years. There is a significant gap in the growth rate of the hematopoietic capacity of software development listed companies, the growth rate of core profits and the growth rate of gross profits of A-share listed companies, among which the growth rate of hematopoietic capacity of business activities is the largest compared with A-share listed companies.

3. The profitability of software development listed companies has been slightly enhanced, which has been narrowed compared with A-shares. Further analysis found that the gross profit margin of software development listed companies is much higher than that of A-shares, and the core profit margin is much lower than that of A-shares. Data from the 2022 semi-annual report shows that the average core profit margin of software development listed companies is -6.02%, far lower than the average A-share market value of 5.64%.

4. The operational capabilities of listed companies in software development have improved month-on-month, expanding their advantages over A-shares. Further analysis found that the improvement of the operating capabilities of listed companies in software development originated from the comprehensive improvement of operating asset turnover rate , fixed asset turnover rate and inventory turnover rate , among which the fixed asset turnover rate is much higher than that of A-shares, and the inventory turnover rate is slightly higher than that of A-shares.

5. The investment capabilities of listed companies in software development have improved, but there is still a significant gap compared with A-shares.

6. The financial pressure index of software development listed companies decreased month-on-month and was still far higher than the critical value, reflecting that the financial debt ratio of software development listed companies is far lower than the A-share average.

7. Software development listed companies have declined their bargaining power towards upstream and downstream, and their disadvantages are widening compared to A-shares. Further analysis found that the decline was due to the decline in the ability to occupy downstream customers' funds.

Software Development Listed Company Development Index Preparation Note

Software Development Listed Company Development Index is a comprehensive index reflecting the operating status of listed companies in software development.

Software Development Listed Company Development Index Statistics data are derived from the public data of regular reports of software development listed companies. By surveying 128 software development listed companies listed on the A-share market (data as of October 31, 2022), it is compiled based on the relative operating performance of software development listed companies on A-shares (excluding financial and financial listed companies). It is a comprehensive index reflecting the economic operation status of software development listed companies.

The value range of the software development listed company development index is between 0 and 200: (1) 100 is the critical value of the index; (2) 100~200 is the high-quality range, indicating that the operating quality of software development listed companies is higher or healthier than A-share listed companies; the closer to 200, the higher the quality; (3) 0~100 is the questionable quality range, indicating that software development listed companies have a higher operating quality gap or higher risk than A-share listed companies, and the closer to 0, the lower the quality.

Software development listed companies development index monitoring scope: 128 listed companies in the software development industry.

Monitoring dimension: The software development listed company development index specifically includes seven dimensions: R&D capability, growth capability, profitability, operation capability, investment capability, financial pressure and upstream and downstream bargaining power, and different weights are given according to the importance of different dimensions.

Figure 4: Dimensional index explanation