\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 59 Zhongfu Information Inc(300659) )
Matters:
The company announced in its 2021 annual report that in 2021, it achieved an operating revenue of 1.270 billion yuan, a year-on-year increase of 27.93%, a net profit attributable to the parent company of 117 million yuan, a year-on-year decrease of 51.65%, and EPS of 0.52 yuan. The profit distribution plan for 2021 is: it is proposed to allocate 1 yuan (including tax) for every 10 shares, and the capital reserve will not be converted into share capital.
Ping An View:
The company’s revenue has achieved rapid growth, and the net profit attributable to the parent company is under pressure in the current period. According to the company’s announcement, the company achieved an operating revenue of 1.270 billion yuan in 2021, with a year-on-year increase of 27.93%. The growth rate of revenue slowed down compared with the same period of last year, but still achieved rapid growth. Among them, the revenue of network security products business was 786 million yuan, a year-on-year increase of 36.15%; The revenue of password application product business was 5.6899 million yuan, a year-on-year decrease of 43.30%; The revenue of information security service business was 362 million yuan, a year-on-year increase of 8.83%; Other products and services achieved a revenue of 113 million yuan, a year-on-year increase of 57.34%. In 2021, the company realized a net profit attributable to the parent company of 117 million yuan, a year-on-year decrease of 51.65%, mainly due to the high-speed year-on-year increase of 79.27% in period expenses.
The gross profit margin of the company decreased year-on-year, the expense rate increased year-on-year, and the amount of R & D investment increased significantly. The company’s gross profit margin in 2021 was 64.14%, down 1.94 percentage points year-on-year. The company’s expense rate during 2021 was 57.77%, a significant increase of 16.54% year-on-year, mainly due to: (I) the company’s R & D expenses increased by 94.18% year-on-year; (II) in order to further develop and consolidate the market layout, the company has also increased its investment in marketing; (III) the company’s implementation of the equity incentive plan in 2020 and 2021 will generate a share based payment fee of 45.8 million yuan, and the social security fee will be reduced or exempted by about 24 million yuan in 2020 due to the epidemic. In order to continuously improve the competitiveness of products, the company vigorously increases the R & D investment of products and solutions. The company’s R & D investment in 2021 was 376 million yuan, with a year-on-year increase of 106.29%, and the revenue of R & D investment accounted for 29.59%. We believe that the company’s strong investment in R & D and marketing in 2021 will further enhance the company’s market competitiveness and provide strong support for the return to parent net profit growth in 2022.
The company’s mainframe and network security products business grew steadily, and the data security business developed strongly. The company’s network security products and services mainly include host and network security products, data security products, security supervision platform products and inspection and detection products. Since 2011, the company has been involved in the research and development, adaptive application and product promotion of related products of Xinchuang, actively participated in the ecological construction of Xinchuang industry, and participated in the research and development of related products of Xinchuang organized by the Ministry of industry and information technology in 2012. It is one of the first enterprises to participate in the construction of Xinchuang industry. Benefiting from the development of information innovation industry, the company’s host and network security product business continued to grow in 2021, with a year-on-year increase of 9.05%. Under the background of China’s digital and intelligent development, China’s network security industry is also facing new changes. Industrial digitization has brought about the rapid accumulation of data assets, and the focus of security protection is also shifting to data security. Taking data security as the main line and aiming at the leakage, theft and traceability of important and sensitive data, the company adopts data encryption, data protection, data control and other technologies, combined with business application scenarios, to realize the knowability, controllability and manageability of data assets, forming a data security product system focusing on the security control of data life cycle. In 2021, the company’s data security product business realized a revenue of 105 million yuan, with a year-on-year increase of 161.56%. Data security products business will become an important driving force for the company’s development in the future.
Profit forecast and investment suggestion: according to the company’s 2021 annual report, we adjusted the performance forecast and estimated that the company’s net profit attributable to the parent company from 2022 to 2024 were 170 million yuan (the previous value was 460 million yuan), 228 million yuan (the previous value was 593 million yuan), 318 million yuan (New), and EPS were 0.75 yuan, 1.01 yuan and 1.40 yuan respectively. The PE corresponding to the closing price on March 30 was about 36.4, 27.1 and 19.5 times respectively. In 2021, the company’s revenue achieved rapid growth. Although affected by factors such as R & D investment and market investment, the net profit attributable to the parent company in the current period is under pressure. However, we believe that the company’s strong investment in 2021 will further enhance the company’s market competitiveness. The company’s data security business has performed well and will become an important driving force for the company’s development in the future. Benefiting from the dual promotion of the development of information and innovation industry and the gradual implementation of national network security policies, the company’s future development can be expected. We maintain our “recommended” rating for the company.
Risk tips: (1) the growth rate of network security industry is lower than expected. At present, network security has become China’s national strategy. With the implementation of policies and regulations such as data security law, regulations on the security protection of key information infrastructure, personal information protection law and network security review measures, the sustained and rapid development of China’s network security industry can be expected. However, if the growth rate of the network security industry is lower than expected, there is a risk that the business development of the company’s network security products will not meet the expectations. (2) The company’s R & D Progress of security products based on Xinchuang is lower than expected. With the development of Xinchuang industry, the security and confidentiality requirements based on Xinchuang’s domestic basic software and hardware products will bring new market space for the company’s security and confidentiality business. The company needs to develop Xinchuang based security and confidentiality products, and the company has the risk that the research and development progress of new products is lower than expected. (3) The development of the company’s data security business is lower than expected. At present, the company takes data security as the main line and continues to increase R & D investment. However, if the company’s data security products can not closely follow the needs of customers, there is a risk that the development of the company’s data security business will not meet the expectations.
