\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 59 Zhongfu Information Inc(300659) )
Key investment points
Performance summary: the company achieved a revenue of 1.27 billion yuan in 2021, a year-on-year increase of 27.9%; The net profit attributable to the parent company was 120 million yuan, a year-on-year decrease of 51.7%; The non net profit deducted was 100 million yuan, a year-on-year decrease of 57.6%. In a single quarter, Q4 company achieved a revenue of 650 million yuan, a year-on-year increase of 6.0%; The net profit attributable to the parent company was 110 million yuan, a year-on-year decrease of 49.3%.
Under the high base and the extension of the project cycle, the growth of the company’s revenue slows down and the profit is under pressure in the short term. The company’s revenue in 2021 increased by 27.9% year-on-year, slowing down compared with the high growth rate in 2019 and 2020. The main reasons are: 1) the severe epidemic situation has led to the delay of bidding for some projects and the delay of construction schedule of some winning projects; 2) The supply cycle of Xinchuang equipment is prolonged, resulting in the delay of equipment supply in some bid winning projects. The net profit attributable to the parent company decreased by 51.7% year-on-year, mainly due to the significant increase of the company’s costs. The company continued to increase the R & D investment of products and solutions, and further increased the marketing investment. In addition, the amortization expense of the company’s share based payment is about 46 million yuan and the social security expense reduced by the epidemic is about 24 million yuan, which has affected the company’s profit margin to a certain extent.
The expansion of industry customers and product layout are stable and good, and the business expansion of central enterprise groups has achieved remarkable results. In 2021, the company took data security as the main line and the core needs of the digital reform of central enterprises as the traction, and laid out security products and solutions for multi scene applications in accordance with standards and regulations such as grade protection, commercial password application security evaluation, key information infrastructure protection and so on based on the concept of zero trust security. In 2021, the main business income of special industries, central enterprise groups, finance and other industries totaled 240 million yuan, a year-on-year increase of 36.7%. Among them, the business expansion of the central enterprise group achieved remarkable results, with a revenue of 100 million yuan, a year-on-year increase of 75.8%.
National policies have been issued one after another, data security has become the focus, and the network security industry has entered the fast lane of development. With the introduction of the Internet Security Law and data security investment law in 2017, the Internet Security Law has entered the period of market stability. According to IDC data, China’s network security market expenditure in 2021 was US $10.22 billion. It is expected that the compound annual growth rate from 2020 to 2024 will be 16.8%, and the growth rate will continue to lead the global network security market. At the same time, with the advent of the digital age, data has become an important factor of production, and the problems of weak IT infrastructure and controlled key technologies in China are still prominent, which has brought huge demand for network security products of domestic platforms, in which data security will become the core focus of network security. In the future, data security will be the focus of all walks of life and will become a rapid growth point of the network security industry.
Profit forecast and investment suggestions. It is estimated that the EPS from 2022 to 2024 will be 0.79 yuan, 1.06 yuan and 1.36 yuan respectively, and the net profit attributable to the parent company will reach a compound growth rate of 38% in the next three years. With the country’s increasing emphasis on and vigorous layout of network security, the network security market is broad and the company has rich industry experience. It accelerates the strategic transformation from “confidential security” to “digital security” and continues to increase investment in R & D and market. It is expected that the company’s order volume will increase significantly in 2022, cover it for the first time and give a “hold” rating.
Risk warning: the expansion of financial customers is less than expected, the order risk of key customers and other risks.
