\u3000\u3 China Vanke Co.Ltd(000002) 268 Westone Information Industry Inc(002268) )
The profitability and operating efficiency of non digital security have improved significantly, and the outbreak of data security is expected to exceed expectations. The company focused on five major businesses: basic security, network security, data security, security applications and security services. In 2021, the company achieved an operating revenue of 2.789 billion yuan, a year-on-year increase of 17.00%; The operating profit was 245 million yuan, a year-on-year increase of 48.14%; The net profit attributable to the shareholders of the listed company was 239 million yuan, a year-on-year increase of 47.79%; The operating capacity has also been greatly improved. The annual sales collection was 4.036 billion yuan, a record high, with a year-on-year increase of 33.35%, and the net cash flow from operating activities reached 676 million yuan. The company takes the lead in the layout of new technologies, products and models of data security, which is expected to further ensure the long-term and rapid growth of the company. Under the background of the formal implementation of the data security law and the personal information protection law, the speed and scale of industrial implementation are expected to exceed expectations.
The trend of Internet and enterprise data security supervision is clear, and the certainty of relevant orders is strengthened. Westone Information Industry Inc(002268) as the only listed company under China’s network security, it is expected to become the most beneficial target of data security, and its performance ushers in an outbreak period. 1) Data security has become the core of Internet regulation, and data security and privacy computing are expected to benefit significantly. Privacy computing is driven by the dual needs of big data fusion application and privacy protection. KPMG expects that its technical service revenue is expected to reach RMB 10-20 billion in 2023, which will leverage the operating revenue space of 100 billion data platform in the long term; 2) In addition to various Internet manufacturers, there is huge potential space for data security in finance, energy, medical and other customs protection industries. The data of customs protection industries such as finance, medical treatment and energy naturally have commercial value and user privacy, and the demand for data security and compliance is urgent; 3) Some data as strategic resources will still be subject to strong supervision Westone Information Industry Inc(002268) ‘s controlling shareholder, China network security, is a network security sub group built by the company’s actual controller, CETC group, according to the needs of national security strategic development. It has natural advantages in supporting national network security strategic tasks and winning customer trust in key fields. As the only listed company of China Network Security, the company has a truly scarce shareholder background, It is expected to significantly benefit from the rapid release of privacy computing demand.
Referring to Internet application software, overseas experience and order charging characteristics, it is expected that the data security charging mode is SaaS mode of charging by number and flow. 1) The first order landed Zhejiang Century Huatong Group Co.Ltd(002602) , the contract amount exceeded the expectation, and the three-year service period was determined at one time, reflecting the urgent demand for data security and compliance, Westone Information Industry Inc(002268) ensuring that Shengqu company establishes and maintains a personal information security and compliance system, the service period is three years, the total contract amount is 120 million yuan (including tax), and the progress and amount exceed the expectation. 2) refer to overseas securitysaas company, We expect that relevant partners may refer to the overseas SaaS service model and charge according to the number of services or traffic. The business model is significantly better than the traditional network security demand, and the volume of data security orders and business model exceed expectations.
Non digital security continued its high boom, and password application became a trend. The company actively launched a new field of “password service cloud platform”. 1) On the policy side, in 2019, China successively promulgated isobao 2.0, password law and other network security industry laws and regulations, and the demand for encryption security is expected to continue to be released. Among them, the new standard of “equal protection 2.0” password is more detailed and clear than “equal protection 1.0”, including strict evaluation standards in password authentication mode, password technology, password national and industry standards; 2) The product and market capacity of the company’s basic civil product security chips have been continuously improved, innovative application solutions for new business and new scenarios such as the Internet of vehicles and the Internet of things have been continuously enhanced, the ability of data security system has been verified and successfully applied in typical application scenarios such as the government industry and the Internet, and the security application business cooperation ecosystem with orange news as the core has been rapidly improved, The ability of security service and actual combat drill has been highly recognized by customers, and the first provincial and municipal integrated government password service platform has been built in China..
The superposition of long-term equity incentive plan and management change is expected to improve business efficiency, continuously improve channel construction, have abundant orders in hand and high certainty of performance support.. The new management of the company has professional and technical background, the equity incentive plan is valid for 10 years, and the total amount of subject shares involved in the granted restricted shares shall not exceed 10% of the total share capital of the company. The first phase of incentive targets are about 335 executives, core technicians and key employees of the company, the company and its holding subsidiaries who have a direct impact on the overall performance and sustainable development, accounting for about 15% of the employees. The superposition of long-term equity incentive plan and management changes may improve the operating efficiency. As the core beneficiary of Xinchuang, according to the disclosure of the annual report, the net cash flow from operating activities reached 676 million yuan. Focusing on the needs of Xinchuang, the company has built a full product system covering chips, modules, platforms, complete machines and systems, such as the “Longxin security module and SDK” and Xinchuang security solutions jointly issued by Longxin Zhongke Westone Information Industry Inc(002268) and significantly benefited from the trend of localization industry.
Maintain the “buy” rating. We estimate that the company’s operating revenue will be 3.010/38.03/4.805 billion yuan in 2021 / 2022 / 2023. Considering the data security market demand, the safety marginal market value in 2022 will be 60 billion yuan, and the potential total market value in 2023 and 2025 may reach 157089 billion yuan and 319593 billion yuan, maintaining the “buy” rating.
Risk warning: competition intensifies risk; The policy strength is less than the expected risk; Risk of slow layout of new fields; Risk of error in key assumptions.
