On the afternoon of September 9, the Shanghai Stock Exchange announced through the official wechat that CICA Security Technology Co., Ltd. (hereinafter referred to as “CICA security”) was officially listed on the science and Innovation Board of Shanghai Stock Exchange, with the company’s securities code of 688225 SH, the issue price is 30.51 yuan per share.
The opening price of CICA security once rose by more than 30%. After hours data showed that CICA security rose 27.53% to 38.91 yuan, with a total market value of 15.564 billion yuan. AsiaInfo security plans to issue 40.01 million shares in this IPO, raising a total of 1.22 billion yuan.
The prospectus shows that the funds raised by the company are mainly used for cloud security operation service construction projects, intelligent linkage security product construction projects, marketing network and service system expansion projects, 5g cloud security product construction projects, zero trust structure product construction projects, etc.
The parent company has 92.55 million outstanding losses, 6 of the 7 subsidiaries have losses, and the subsidiary AsiaInfo Chengdu contributes almost all of its revenue
AsiaInfo security was founded in November 2014, formerly known as the “network security business group” split after the privatization of the first batch of NASDAQ listed technology enterprises AsiaInfo holdings, founded by Tian Suning and Ding Jian; In addition, there is another “brother enterprise”, AsiaInfo Technology (01675. HK), a company listed on the Hong Kong stock exchange.
AsiaInfo security is mainly engaged in network security business. Its profit mainly comes from the sales of network security products and the provision of professional network security solutions and security services to customers. CICA security claims that it has mastered the core technologies in the fields of terminal security, identity security, cloud security, big data security analysis, Threat Intelligence and so on.
It is reported that in 2015, AsiaInfo technology integrated and separated the network security business of AsiaInfo Technology (China) Co., Ltd. (hereinafter referred to as “AsiaInfo Technology (China)”), AsiaInfo Technology (Nanjing) Co., Ltd. and AsiaInfo Technology (Chengdu) Co., Ltd. (hereinafter referred to as “AsiaInfo Chengdu”). AsiaInfo Technology (hereinafter referred to as “AsiaInfo Technology Co., Ltd.”), a wholly-owned subsidiary of AsiaInfo Technology (hereinafter referred to as “AsiaInfo Technology Co., Ltd.”), transferred its 100% equity of Nanjing AsiaInfo Technology (hereinafter referred to as “AsiaInfo security”).
As a result, CICA Chengdu has become a wholly-owned subsidiary of CICA security and is the main operating entity of CICA security. The main assets of AsiaInfo security (including software copyright, trademark, patent and domain name) are registered in the name of AsiaInfo Chengdu and its main subsidiary Chengdu AsiaInfo Network Security Industry Technology Research Institute Co., Ltd.
In the part of risk disclosure, CICA security confessed that the company has the risk of significant dependence on CICA Chengdu. From 2018 to January June 2021, the operating revenue of CICA Chengdu from outside the CICA security system was 872 million yuan, 1.075 billion yuan, 1.220 billion yuan and 473 million yuan respectively, accounting for 99.89%, 99.78%, 95.68% and 97.34% of the revenue of CICA security respectively. The revenue of CICA security almost came from CICA Chengdu.
According to the application version of the first prospectus of AsiaInfo security, in addition to AsiaInfo Chengdu, AsiaInfo security has seven subsidiaries. By the end of 2020, there are still six subsidiaries that have not made profits. Among them, Nanjing AsiaInfo, the only profitable subsidiary, has no actual operation, and the profits mainly benefit from holding the equity of Chengdu AsiaInfo. The above loss making subsidiaries suffered a total loss of about 103 million yuan from 2019 to 2020.
In addition, as of the end of the third quarter of 2020, there was still an outstanding loss of 92.551 million yuan in the statement of CICA security’s parent company.
Executives became the largest supplier after leaving, and the gross profit margin decreased significantly in the year
The actual controller of CICA security is Tian Suning. Prior to the IPO, Tian shuning held about 54.24% equity of CICA security through CICA Xinyuan, CICA Rongxin, CICA Xinhe, CICA rongchuang and CICA Hengxin. Among them, the largest shareholder is AsiaInfo Xinyuan. ESOP holds 20.7% equity, advanced manufacturing fund holds 5.4% equity, and other shareholders hold about 21%.
It is worth mentioning that the executives of AsiaInfo security have experienced a reshuffle in less than three years, and the general manager has become the largest supplier of AsiaInfo security after leaving.
In April 2017, Wu Jun, then executive director of CICA security, left his post. In 2019, Zhang Fan, the director and general manager of AsiaInfo security, who took over Wujun, resigned here. Before leaving office, Zhang Fan, Tian Suning and he Zheng, the director of AsiaInfo security, jointly established a company with the “AsiaInfo” firm asiainfo.com. The prospectus shows that although Zhang Fan has resigned, he still holds shares through the employee stock ownership platform of CICA security.
In January 2020, he Zheng and Tian Suning transferred their shares of asiainfo.com to Wu Jun. In the same year, asiainfo.com surpassed Dell (China) to become the largest supplier of asiainfo.com security in that year. Asiainfo.com provided technology and services to asiainfo.com security for the subcontracting of Nanjing intelligent network project. Prior to this, Dell was the largest supplier of CICA security for two consecutive years.
Also in 2020, the gross profit margin of CICA security decreased significantly, recording 55.51%, lower than that in 2018. Compared with competitors, the gross profit margin of CICA security is low, or because its revenue source is mainly project revenue rather than standardized product revenue.
Incidentally, in terms of suppliers, in addition to Dell and asiainfo.com, other suppliers with the top five procurement share include Zhejiang jieai Human Resources Co., Ltd., Digital China Group Co.Ltd(000034) (China) Co., Ltd., Trend Micro incorporated, etc.
The company expects to reduce the non net profit by 30% in 2021, strategic cooperation Bank Of Nanjing Co.Ltd(601009) , China Everbright Bank Company Limited Co.Ltd(601818) , JD technology
According to the prospectus, CICA security’s customers are mainly concentrated in telecom operators, government, finance, energy and other medium and large enterprises. Among them, in the financial field, its main products or services include “digital trust and identity security product system”, “endpoint security product system”, “cloud edge security product system”, “network security services” and “advanced threat network protection system”.
The official account of the asiainin security official shows that China’s financial clients include China Industrial And Commercial Bank Of China Limited(601398) , China Import and export bank, Bank Of Communications Co.Ltd(601328) , Taizhou bank, Agricultural Bank Of China Limited(601288) , China Citic Bank Corporation Limited(601998) and Zhejiang rural credit cooperative. Strategic partners include Bank Of Nanjing Co.Ltd(601009) , China Everbright Bank Company Limited Co.Ltd(601818) , JD technology, The Pacific Securities Co.Ltd(601099) insurance, Shunde rural commercial bank and Guangdong rural credit cooperatives.
In terms of sales model, AsiaInfo Security said that for the top large customers in the fields of Finance and telecom operators, they generally adopt the way of direct sales and arrange special sales and business teams to serve them.
As for the differences with Chinese competitors, AsiaInfo security frankly said that from the perspective of product layout and application field, its terminal security products are similar to those of China’s main competitors. The pan terminal security product layout of Qi An Xin Technology Group Inc(688561) (688561. SH) is richer than CICA security, and there are more types of products in terms of mobile terminal security, browser security and Internet of things (IOT) security.
From the perspective of technical characteristics and technical level, Qi An Xin Technology Group Inc(688561) provides comprehensive terminal security solutions, integrates a variety of virus detection engines, is compatible with different operating systems and computing platforms, and pays attention to the balance of various types of capabilities. The technical threshold in the field of terminal security is high and needs to be accumulated and polished for a long time. As a terminal security enterprise, CICA’s security technology route and accumulation are relatively similar to Qi An Xin Technology Group Inc(688561) .
AsiaInfo security mentioned that Sangfor Technologies Inc(300454) (300454. SZ), as a new entrant, has developed terminal security products in recent years, covering a large number of enterprises through agency channels, with rapid sales growth, focusing on technological breakthroughs related to terminal detection response (EDR). From the perspective of customer types, users of terminal security products are widely distributed in various industries, and there is little difference in Chinese customer groups.
AsiaInfo security and Qi An Xin Technology Group Inc(688561) covers more medium and large customers in key industries such as government, telecommunications and finance, Sangfor Technologies Inc(300454) uses a strong channel system to cover more small and medium-sized enterprise customers.
In terms of finance, from January to September 2021, CICA security realized a net profit of 79.3194 million yuan, a decrease of 29.48% over the same period of the previous year; The non net profit deducted was 8.303 million yuan, a decrease of 90.96% over the same period of last year. According to the current operation of the company, AsiaInfo security expects to realize a net profit attributable to the parent company of 165 million yuan to 175 million yuan in 2021, with a year-on-year change of about – 3.16% to 2.71%; It is estimated that the net profit deducted from non-profit is RMB 100 million to RMB 110 million, with a year-on-year decrease of about 21.44% to 28.58%. Combined with the financial data in recent years, the performance growth of CICA security has slowed down.
