Qi An Xin Technology Group Inc(688561) (688561)
Key investment points:
China’s network security leader has excellent technology and market capacity. Qi An Xin Technology Group Inc(688561) was founded in 2014 and focuses on the cyberspace security market. China Electronics has joined the national team of network security with rich market resources. The company attaches importance to talent training, constructs eight R & D platforms, solidifies “know how” and ensures the talent training system. The company has also developed massive network security data resources to prepare for future iterations. The company selected by China Network Security Industry Alliance in 2021 is in the industry leader echelon. The company has maintained rapid growth in revenue since 2017, with a compound growth rate of 71.77% from 2017 to 2020.
The network security industry welcomes the opportunity of upgrading, and laws and policies ensure the industrial environment. China has listed the data as a production factor alongside land, labor, capital and technology and written it into the central document, which fully shows the society’s understanding of the importance of data. The drive brought by the data to the upgrading of the IT industry has also promoted the development of the network security industry. CCIA predicts that the network security industry will maintain a growth rate of 15% in the next three years, and the market scale is expected to exceed 80 billion yuan by 2023. China’s legislative process in the field of network security also reached a climax in 2021, the beginning of the 14th five year plan. In the middle of the year, a number of laws and regulations were intensively issued to point out the way for the construction of the industrial environment of network security.
The financial situation has gradually improved, and the effect of stage transformation has begun to show. Although the company has not yet made a profit, the annual loss in recent three years has remained narrowed. The net profit attributable to the parent company after excluding in the first three quarters of 2021 was -936 million yuan, and the loss narrowed by 7.04% year-on-year. In order to retain the attraction of talents, the company has maintained a high per capita salary. However, due to the company’s transformation to “high-quality development”, the improvement of per capita income is promoting the gradual opening of the profit window.
Profit forecast and rating. It is estimated that the total revenue of the company from 2021 to 2023 will be RMB 5.915 billion, RMB 8.086 billion and RMB 10.530 billion respectively, the net profit attributable to listed shareholders will be RMB -247 million, RMB 228 million and RMB 779 million respectively, and the EPS will be RMB -0.36, RMB 0.34 and RMB 1.15 respectively. As the company’s business is in a period of rapid growth and has not yet been profitable, we select more mature Chinese and foreign comparable companies as references for overall valuation respectively. Among them, China network security company selects CR7 other than Qi An Xin Technology Group Inc(688561) for comparison, and some foreign companies in the top 20 network security suppliers in 2021 selected by esecurityplanet for comparison. Considering the results of the two valuation methods, the reasonable valuation range of Qi An Xin Technology Group Inc(688561) 2022 is 10-12xps, and the corresponding reasonable stock price range is 119.00-142.80 yuan. Maintain a “recommended” rating.
Risk warning: the technology development is less than the expected risk; Risk of intensified industry competition; The policy is less than the expected risk; Macroeconomic development is less than expected risk.
