\u3000\u30 Beijing Telesound Electronics Co.Ltd(003004) 54 Sangfor Technologies Inc(300454) )
Event: in 2021, the company achieved a revenue of 6.805 billion yuan, a year-on-year increase of 24.67%, a net profit attributable to the parent company of 273 million yuan, a year-on-year decrease of 66.29%, and a net profit not attributable to the parent company of 131 million yuan, a year-on-year decrease of 80.66%.
The revenue growth of security business slowed down, and the cloud computing business developed well: 1) network security business, with a revenue of 3.689 billion yuan, a year-on-year increase of 10.15%. The existing products and solutions continued to iterate, and a number of innovative products such as multi cloud security platform MCSP and virtual machine security protection platform CWPP and solutions such as data intelligent classification and classification were released. 2) Cloud computing and it infrastructure business, with a revenue of 2.379 billion yuan, a year-on-year increase of 49.53%, launched hosting cloud services such as exclusive hosts and exclusive clusters, Taiyan big data intelligent platform, and continued to optimize superior products such as super integrated HCI and desktop cloud adesk. 3) Basic network and Internet of things business, with a revenue of 737 million yuan, a year-on-year increase of 42.15%, released new wireless network and Internet of things products such as smart AP and Internet of things integration AP.
Due to the continuous increase of key investment such as R & D and sales expenses, the net profit fell year-on-year: the company’s R & D investment reached another record high. In 2021, the R & D expenditure was 2.088 billion yuan, with a year-on-year increase of 38.34%. The company has maintained the ratio of R & D expenditure to revenue for six consecutive years. In 2021, the sales expense was 2.317 billion yuan, with a year-on-year increase of 27.91%. The expansion of the scale of sales personnel and the market expansion and business implementation of new businesses led to an increase in expenses; The management fee was 392 million yuan, with a year-on-year increase of 44.04%. During the reporting period, the company implemented multiple equity incentive plans, and the share based payment fee increased year-on-year. The overall gross profit margin in 2021 was 65.49%, down 4.49 percentage points from 2020, mainly because the revenue of cloud computing and it infrastructure business with low gross profit margin increased rapidly, the proportion of revenue increased gradually, and the growth of network security business with high gross profit margin was slow. In addition, the tight global chip supply leads to the rise of hardware procurement costs, which also has a certain impact on gross profit margin and profit.
It is optimistic that the company will promote the security business to return to the healthy development track, and the cloud business will maintain rapid growth: the continuous improvement of China’s network security top-level design will continue to promote the further development of China’s network security industry. According to IDC’s prediction, the compound annual growth rate of China’s network security expenditure in the 21-25 years will reach 20.5%. As one of the leading enterprises in the field of network security in China, the company has a number of security products in the top two market share in China, and is optimistic about the steady growth of network security business. According to the research data of China Academy of communications and communications, the proportion of enterprises applying cloud computing in China reached 66.1% in 2019, of which the proportion of hybrid cloud is only 9.8%. China’s hybrid cloud market has great development potential. At present, the company gradually occupies a certain market dominant position in the field of cloud computing, and is optimistic about the rapid growth of cloud business.
Profit forecast, valuation and rating: considering the short-term demand pressure from the network security industry, the company lowered its revenue forecast for 22-23 years to RMB 8.900/11.608 billion, an increase of RMB 15.022 billion over the previous forecast of – 11.29% / – 9.15%; Considering the company’s increasing investment in R & D and market, the forecast of net profit attributable to the parent company for 22-23 years was lowered to 480 / 754 million yuan, which was – 66.99% / – 60.89% compared with the previous forecast, adding 1.012 billion yuan for 24 years. The corresponding EPS in 22-24 years is 1.16/1.81/2.43 yuan respectively, and the corresponding PE is 86x / 55x / 41x,
Optimistic about the development of network security and cloud computing and the company’s market dominant position, and maintain the “buy” rating. Risk tip: the expansion of cloud computing market is less than expected, and the market competition is intensified.
