\u3000\u3000 Topsec Technologies Group Inc(002212) (002212)
Key investment points:
On February 16, the company released the performance express: in 2021, the company’s revenue was 3.541 billion yuan, a year-on-year decrease of 37.92%; The net profit attributable to the parent company was 413 million yuan, a year-on-year increase of 3.27%; Deduct non net profit of 400 million yuan, down 10.53% year-on-year.
Because the wire and cable business was stripped off in September 2020 and Tongtian technology was stripped off in April 2021 to further focus on the main business, the overall distortion of the company’s performance in 2021 is serious:
(1) excluding the wire and cable business, we can see that the company’s network security revenue increased by 25.03% year-on-year, the net profit decreased by 14.11% year-on-year, and the deduction of non net profit decreased by 4.95%;
Excluding the cable business, the net profit of hecan decreased by 23.05% year-on-year, and the net profit of hecan decreased by 2.05% year-on-year.
In comparison with peers, the company’s revenue growth rate of 44.23% (excluding the network security business caliber on the same day) is higher than that of all comprehensive network security manufacturers except Beijing Abt Networks Co.Ltd(688168) . Moreover, the company’s order growth rate of 48% in 2021 is also higher than the announced order growth rate of Nsfocus Technologies Group Co.Ltd(300369) 40% – 45%, which will bring more guarantee to the performance growth in 2022.
Compared with our previous profit forecast of 3.474 billion yuan and 716 million yuan, the annual revenue slightly exceeded our expectation, but the net profit was significantly lower than our expectation. The decline in profitability has become a common feature of the financial report of the network security industry in 2021. From the perspective of the company, the factors behind it mainly include:
(1) growth of R & D expenses (network security business): a year-on-year increase of 47.54%. The investment direction is to consolidate the basic network security business, layout and improve new directions such as data security, cloud computing, cloud security and security cloud services, situation awareness and emerging scene businesses such as industrial Internet, Internet of vehicles and Internet of things;
(2) increase in sales expenses (network security business): a year-on-year increase of 30.67%, mainly used for Industry deepening, land market sinking and channel expansion;
(3) decline in gross profit margin: the company’s cloud computing business increased by 240.64% year-on-year, and the localization business increased by nearly 10 times year-on-year. These are businesses with relatively low gross profit margin, which has dragged down the overall gross profit margin of the company throughout the year. In addition, the shortage of chips and raw materials was further highlighted in Q4 delivery season, which also brought cost pressure to the company.
From the perspective of the company’s revenue structure, the new direction scenario accounting for 25% increased by 55% year-on-year, and the localization business accounting for 15% increased by nearly 10 times year-on-year. Therefore, we can calculate that the company’s traditional network security business other than Tongtian technology increased by about 10%. In the follow-up, we believe that the growth rate of Xinchuang business will return to a relatively stable growth level. The traditional security business is still the main source of the company’s profits, while maintaining growth. The initial investment and technical layout of the new direction scenario have been basically in place, which will become the most important factor for the company’s revenue growth and profitability in the future.
From a quarterly perspective, the company’s 2021q4 performance was lower than expected. The revenue was 2.151 billion yuan, a year-on-year increase of 11.2%, and the net profit attributable to the parent company was 510 million yuan, a year-on-year decrease of 26.1%. According to the analysis:
(1) affected by the epidemic in 2020, the revenue growth of Listed Companies in the network security industry in the first three quarters was relatively low, the overall performance of Q4 exceeded expectations, and orders were more concentrated and confirmed at the end of the year. From this perspective, the year-on-year performance growth rate in the first three quarters of 2021 will also be distorted to varying degrees, further increasing the unpredictability of Q4.
(2) the gross profit margin of 2020q4 company in a single quarter is 66%, which is significantly higher than the gross profit margin of 63%, 62% and 61% in the previous three quarters. It is estimated that the company’s localization business is 51 million yuan and cloud computing business is 40 million yuan in 2020, which has a relatively limited impact on the gross profit margin. Then, superimposed on the shortage of raw materials in 2021q4, the gross profit margin of the company is facing greater pressure.
Maintain the investment rating of “buy” of the company. Based on the assumption that the company’s chip shortage will be effectively alleviated in 2022, we predict that the gross profit margin of various businesses will return to a relatively normal level in 2022. It is estimated that the company’s EPS will be 0.35 yuan, 0.81 yuan and 1.00 yuan respectively from 21 to 23. Calculated according to the closing price of 14.65 yuan on February 18, the corresponding PE will be 42.05 times, 18.01 times and 14.64 times.
Risk warning: stock price pressure caused by shareholder reduction; Intensified competition in the network security industry; The growth of Xinchuang business was lower than expected.
