\u3000\u3000 360 Security Technology Inc(601360) (601360)
Core view
Event: the company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company in 2021 will be about 823-991 million yuan, a year-on-year decrease of about 65.98% – 71.75%. It is estimated that the net profit of non deduction in 2021 will be about 583-701 million yuan, a year-on-year decrease of about 72.48% to 77.11%.
The security business achieved rapid growth, and the proportion of revenue further increased. In 2021, the company will continue to comprehensively promote the “big security” strategy and continue to accelerate the expansion and deepening in the fields of government and enterprise security. While deepening the Internet business and intelligent hardware business, we will accelerate the development of government enterprise security and digital city business. In 2021, the company is expected to realize an operating revenue of about 10.6 billion yuan to 11.1 billion yuan, a year-on-year decrease of about 4.43% – 8.74%, of which the operating revenue of Internet commercialization and value-added service business is about 7.303 billion yuan to 7.5 billion yuan, a year-on-year decrease of about 13.26% – 15.54%; The operating revenue from security business and other businesses was about 1.240 billion yuan to 1.450 billion yuan, with a year-on-year increase of about 53.47% – 79.46%. Due to the change of the company’s revenue recognition method to the final acceptance method in 2021, the final acceptance of hundreds of millions of yuan of completed orders could not be completed within the reporting period, resulting in the corresponding revenue could not be recognized within the reporting period. The proportion of security business revenue also increased from 6.96% in 2020 to 11.17% – 13.68% in 2021.
Security business continues to increase investment, affecting short-term profits. The continuous development of government enterprise security business and the technical reserve for digital security have significantly increased the relevant R & D expenses and expanded the scale of sales personnel. The R & D expenses and sales expenses increased by about 1.2 billion yuan to 1.6 billion yuan year-on-year, with a year-on-year increase of about 26.48% – 35.31%. The company expects to realize a net profit attributable to the parent company of about 823-991 million yuan in 2021, with a year-on-year decrease of about 65.98% – 71.75%, and a net profit deducted of about 583-701 million yuan, with a year-on-year decrease of about 72.48% – 77.11%. The increase of investment has a certain impact on the company’s short-term profits.
The territory of government and enterprise security business continued to expand. With the official release of the “three laws and one regulation” of the network security industry, digitization has become the key direction of governments at all levels and traditional enterprises, and the security demand has been upgraded from traditional network security to digital security. The company’s government enterprise security business and digital city business provide free security services and SaaS services for small and medium-sized enterprises to reduce the digital cost of small and medium-sized enterprises; Provide a complete digital security capability system for enterprises and cities. During the reporting period, the company completed the signing of contracts with 15 core customers (including 2 urban industries and 13 non urban industries); In terms of urban business development, the company will open up 3 new cities and deeply contact 10 cities in 2021. At present, the company has sufficient orders in hand in 2022, and a large number of interested customers are expected to sign contracts. Superimposed with deferred order recognition Revenue of nearly hundreds of millions of yuan, the growth of government and enterprise business is expected to accelerate this year.
Internet business was affected by industry factors and declined slightly. Internet business is affected by factors such as the slowdown in the growth of the industry in which Internet advertising is mainly invested and the intensification of diversified competition in the Internet advertising market. According to the advertising data of the media think tank of the second hand system, the proportion of PC digital advertising traffic in the main position of the company’s Internet commercialization business in all terminals decreased from 12% in 2020 to 8% in 2021, with a year-on-year decrease of about 33%. During the reporting period, the company’s Internet commercialization business revenue decreased by about 15% – 17% year-on-year. Although it had a certain impact on the current operating revenue, it was still better than the overall performance of its industry.
Nezha’s delivery volume exceeded 10000 for three consecutive months. On February 1, Nezha automobile released the delivery volume data of January 2022. Nezha automobile delivered 11009 new cars, with a year-on-year increase of 402%, continuing the strong momentum at the end of 2021. The delivery volume of a single month for three consecutive months reached the highest record. Nezha delivered 69674 vehicles in 2021, a year-on-year increase of 361.7%.
Investment suggestion: it is estimated that the company’s revenue from 2021 to 2023 will be 12.306 billion yuan, 14.847 billion yuan and 17.694 billion yuan respectively, with a year-on-year growth rate of 5.76%, 20.90% and 19.12% respectively; The net profit attributable to the parent company was 1.751 billion yuan, 2.166 billion yuan and 2.648 billion yuan respectively, with a year-on-year growth rate of – 39.89%, 23.70% and 22.28% respectively. The EPS from 2021 to 2023 were 0.25, 0.30 and 0.37 respectively, and the corresponding PE were 48.8, 39.5 and 32.3 respectively. We comprehensively give the company a target market value of 150 billion yuan in 2022, corresponding to a share price of 20.99 yuan, maintaining a “buy” rating.
Risk warning: market competition intensifies; The R & D of new products is less than expected; The strategic advance is less than expected; Economic downside risk.
