\u3000\u3 China Vanke Co.Ltd(000002) 439 Venustech Group Inc(002439) )
Event overview
On April 7, 2022, the company released its 2021 annual report, realizing an annual operating revenue of 4.386 billion yuan, a year-on-year increase of 20.27%; The net profit attributable to the parent company was 862 million yuan, a year-on-year increase of 7.15%; The net profit deducted from non parent company was 764 million yuan, with a year-on-year increase of 8.74%. The company achieved steady growth in 2021. Meanwhile, the company disclosed its business plan for 2022 in its annual report, which is expected to achieve a 25% revenue growth in the whole year.
The performance is stable, and the profit side is under short-term pressure due to high investment
From the revenue side, the company achieved a year-on-year growth of 20.27% in 2021, which was accelerated compared with 2020. We believe that the company has stepped out of the impact of the epidemic and is expected to optimize the revenue structure and increase the revenue growth rate by virtue of the steady growth of traditional business and the rapid growth of emerging business. From the perspective of the industry track, the network security industry is currently facing multiple drivers such as the implementation of compliance policies such as ISO 2.0 and customs protection regulations, the growth of actual attack and defense demand and the emergence of emerging application scenarios. The industry is expected to maintain a high prosperity in the next 3-5 years and provide favorable support for the company’s business development. As a leading enterprise in the main classic industry sector in the network security industry, the company is also a leading enterprise in the emerging frontier industry sector and a pillar enterprise in the sustainable health business model and health industry ecology. It is expected to continue to benefit from the development of the industry.
In terms of gross profit margin, the company’s comprehensive gross profit margin in 2021 was 65.99%, an increase of 2.12pct year-on-year. On the one hand, the improvement of the comprehensive gross profit margin benefits from the increase in the proportion of the company’s operating services and software revenue, so as to optimize the revenue structure. On the other hand, we believe that the decline in the proportion of the company’s integrated projects may lead to the improvement of the comprehensive gross profit margin. In 2021, the network security industry was challenged by factors such as increased delivery pressure caused by repeated epidemics, elongated payment collection cycle of downstream pan government customers, and rising raw material prices. The company was able to maintain the improvement of gross profit margin, reflecting the company’s strong comprehensive competitiveness and industry position.
From the perspective of cost investment, 2021 is a year of strong strategic investment of the company. According to the disclosure of the annual report, the company’s personnel in 2021 increased by 22.41% compared with the previous year, and the R & D and marketing expenses increased by 35.38% year-on-year, both exceeding the growth on the revenue side, resulting in short-term pressure on the profit side of the company. In terms of R & D, the company focuses on high growth business, innovative business and new track products in mature business, and the marketing investment focuses on the strategy of safety operation center. We believe that the company’s strong investment is a necessary means to maintain market competitiveness. Especially under the background of the rapid rise of emerging security needs and fierce competition in marketing channels and customer projects, it is wise for the company to exchange a strong investment of one or two years for a certain competitive advantage. On the other hand, the share payment generated by the company’s employee stock ownership plan in 2021 is about 76.8 million yuan, which also affects the performance of net profit to a certain extent. This factor is expected to be eliminated in 2022. Therefore, we expect that after strong investment, the expense side of the company is expected to be more stable in 2022, the impact of superimposed share based payment will be gradually eliminated, and the profit growth is expected to be significantly improved compared with 2021.
Emerging businesses focus on data security, cloud security, industrial control security and safe operation
In 2021, the company actively laid out strategic emerging businesses, established a data security headquarters in Hangzhou, and released the data oasis technical framework at the same time. The company achieved an operating revenue of 1.554 billion yuan in data security 2.0 and 3.0, security operation center, industrial Internet Security and yun’an new business segments, an increase of 48% over the same period last year. In addition, the company achieved an increase of more than 300% in the operating revenue of new track products such as EDR (terminal detection and response), full flow detection, deception defense, Xinchuang products and attack surface management. We believe that the company is currently making an in-depth layout around the four emerging tracks of data security, cloud security, industrial control security and safe operation, and is expected to drive revenue growth with the expansion of new business. Specifically:
Data security business: in 2021, the company established a data security headquarters in Hangzhou and released the data oasis technical framework, proposing the evolution path of data security from 1.0 data object security to 2.0 data aggregation security, and then to 3.0 data circulation security. Data security business achieved an operating revenue of 912 million yuan, an increase of 52% over the same period last year, of which data security 2.0 and 3.0 achieved an operating revenue of 312 million yuan.
Security operation center: in 2021, the company continued to provide security operation center construction and security operation services for urban cloud, data center, key information infrastructure, other government agencies and small and medium-sized enterprises around the urgent demand for security operation center business in the construction of smart city. By the end of 2021, the company has built 119 urban safety operation centers. At present, some operation centers of the company are still under construction. According to the disclosure of the annual report, in 2022, the company will continue to work hard in combination with the promotion of the “mayor’s plan”, improve customer value, improve the income of a single operation center, and copy and upgrade the successful operation center model.
Cloud security business: the company has decoupled the software and hardware of basic security products. At present, the company has completed the cloud security atomic capability of 18 types of security products, including security detection, audit management, security defense, vulnerability inspection and cloud native security, so as to fully adapt to the cloud network environment. In addition, the company is also actively laying out cloud SASE (security access service edge). Combined with the strategy of urban security operation center, the company assembles and superimposes corresponding security capabilities on demand to sink the analysis capabilities of data security, application security and cloud threats close to the edge of users with secure access.
Industrial control security and Internet of vehicles security business: in 2021, the company released research reports and scenario based security solutions for petroleum and petrochemical, port, nuclear power, steel and water industries, and was successfully shortlisted as a typical application demonstration case of industrial safety system in 2021. In terms of Internet of vehicles, in 2021, the company participated in the preparation of national standards and documents, including the code for Internet of vehicles network security risk assessment.
Issue a new equity incentive plan to realize the benefit sharing of the core team
On March 2, 2022, the company issued the 2022 restricted stock incentive plan (Draft), which granted 28 million restricted shares, accounting for 3% of the total share capital. The awarding objects are 1110 middle and senior managers and core backbones, covering 17% of the total number of the company. The granting price of restricted stock is 12.24 yuan / share, which is divided into three periods. The performance assessment objectives of the three periods are as follows: Based on the operating revenue or net profit in 2021, the growth of revenue or net profit in 2022 / 23 / 24 will not be less than 20% / 45% / 70% or 25% / 55% / 85%. We believe that the equity incentive plan has a wide coverage and high performance appraisal objectives, which reflects the company’s determination to bind the interests of the core team and the confidence in the healthy development of business.
Investment advice
Venustech Group Inc(002439) as a leading enterprise and leader in China’s network security industry, it is expected to achieve long-term performance growth under the strategy of steady growth of traditional business and accelerated development of emerging business. We expect the company to achieve an operating revenue of RMB 5.500/68.32/8.399 billion in 2022 / 23 / 24, with a year-on-year increase of 25.4% / 24.2% / 22.9%. The net profit attributable to the parent company was 1.093/14.04/1.748 billion yuan, with a year-on-year increase of 26.9% / 28.4% / 24.4%. Maintain the investment rating of Buy-A and give a six-month target price of 28.08 yuan, equivalent to 24 times the dynamic P / E ratio in 2022.
Risk warning: the epidemic situation affects the delivery and payment collection; The demand of downstream customers is less than expected; Industry competition intensifies.
