Since April 21 last year, the first enterprise Beijing Infosec Technologies Co.Ltd(688201) , whose main business is password products, was welcomed by the science and innovation board, another developer of password products Sanwei Xinan Technology Co., Ltd. (hereinafter referred to as “Sanwei Xinan”), recently completed the first round of inquiry on the IPO of the science and innovation board.
self developed cipher chip is expected to be delivered in the first half of the year
III. The main business of weixin’an is the R & D, production and sales of commercial password products. In the prospectus of Sanwei Xinan, the company listed its main products as cipher chip, cipher board, cipher machine and cipher system.
However, from the perspective of revenue structure, cryptographic chip products did not contribute to operating revenue during the reporting period. In the first round of inquiry, the Shanghai stock exchange required Sanwei Xinan to disclose the current development and marketization progress of password chip products, and modify the product disclosure order of relevant chapters of the prospectus materials.
San Wei Xin’an’s first self-developed “cipher chip” xs100 was successfully streamed and packaged as early as December 2020. At present, it is still in the process of mass production and has not been officially introduced to the market. The inquiry Reply of sanweixin’an further shows that the exact time when company’s self-developed cipher chip is expected to be completed and delivered in place in the first half of 2022 .
FPGA, algorithm chip, main control chip and other components are very important to the function realization of the core product of San Wei Xin’an, but they need to rely on outsourcing all year round. San weixin’an said that although FPGA and main control chip are general components and do not involve the company’s core technology from the perspective of technical importance, they seek self-development and mass production because they are mainly imported sources and there are certain hidden dangers in supply chain security.
It is understood that after the mass production of Sanwei Xinan cipher chip products, it will first meet its own needs and replace the imported FPGA and algorithm chips currently used by the company; Secondly, we will actively carry out the market promotion of cryptographic chips, promote the wide application of cryptographic chips in the network information security industry, and become one of the company’s main products.
password business revenue scale is less than Westone Information Industry Inc(002268) half
According to the statistics released by ccid.com, the total market size in 2020 was 46.6 billion yuan, an increase of 33.14% over the previous year. With the release of relevant policies such as the password law, the work plan for password application and innovation and development in finance and important fields (20182022), and the digital economy development plan of the 14th five year plan issued by the State Council, the concept of digital economy security system is proposed. It is estimated that the scale of China’s commercial passwords will exceed 100 billion yuan in 2025.
“The prosperity of the password field is strongly affected by policy factors.” Shen Yong, an expert of whale platform think tank and co chairman of Shanghai Branch of cloud security alliance, said in an interview with the reporter of science and Innovation Board daily that the current international security situation is becoming tense and the confrontation is intensifying, which is the background for the growth of the industry in recent years.
“At present, the state is developing domestic passwords in key industries, and the market opportunities are relatively clear.” For the future growth of password products industry, Shen Yong said that there are two main driving factors. The algorithm replacement of stock system mainly depends on policy requirements, while the incremental market mainly depends on the influence of products. “For example, blockchain is a new scenario in which a cryptographic algorithm is heavily used. As for whose cryptographic scheme is used without regulatory requirements, it depends on the influence of the manufacturer.”
Hou Dapeng, an expert of whale platform think tank and chief engineer of CETC pseudo security company, said that the long-term growth of the track in the future mainly comes from the growth of the overall network security sector. However, he also believes that the limited added value of password product technology is an important factor limiting the industry to break through the growth ceiling.
On the whole, the commercial cipher industry is relatively scattered and has not yet formed the advantage of industrial cluster. It is understood that the main enterprises in China’s commercial password industry include Westone Information Industry Inc(002268) , Jiangnan Tian’an, Shandong yuweng, etc. Except for Westone Information Industry Inc(002268) , the other two are non listed companies.
In terms of market share, Westone Information Industry Inc(002268) as China’s first password enterprise listed in 2008, the market share is only 1.27%; 3. The failure rate of Xinan is 0.41%.
According to the data disclosed in the annual report of Westone Information Industry Inc(002268) 2020, the revenue of password products in that year was 593 million yuan, accounting for 24.87% of the total operating revenue. In addition, security integration and operation services accounted for 55.43%. In 2020, the revenue and net profit of Sanwei Xinan were 2024837 million yuan and 523702 million yuan respectively; From 2018 to 2020, the company achieved a compound growth rate of 39.53% in revenue and 110.27% in net profit.
and several Xin’an enterprises are mutual suppliers and customers
The reporter of science and Innovation Board daily noted that under the market opportunity, Sanwei Xinan has established a high-quality customer base. After sorting, the classification mainly involves government affairs, finance, communication and Internet, information security and other fields.
Information of three non Xin’an customers mentioned in the prospectus
One of the more noteworthy formats in the password field is that enterprises mainly engaged in password products and traditional information security enterprises are often customers and suppliers to each other.
Specifically, during the reporting period, Sanwei Xinan mainly purchased the authentication server system from Boya Zhongke and sold the hardware platform in the password machine; It mainly purchases Huawei servers, Topsec Technologies Group Inc(002212) Internet behavior management system, Jilin University Zhengyuan Information Technologies Co.Ltd(003029) srq05 electronic certificate authentication system from Jilin University Zhengyuan Information Technologies Co.Ltd(003029) and sells password boards and password machines; It mainly purchased servers from Wuzhou technology and sold password boards. During the reporting period, Wuzhou technology changed from a major supplier to a major customer.
As customers of cooperative manufacturers, on the one hand, the average unit price and gross profit rate of products are lower than those of end customers, and then the customer structure will affect the revenue capacity of sanweixin’an (the gap between the gross profit rate of the two customers will expand to 11% in the first half of 2021); On the other hand, the network information security products or system requirements of end customers in the industry are still mainly purchased from downstream integrators, that is, three non Xin’an partner customers, and less directly purchased from upstream password product manufacturers.
This means that enterprises like sanweixin’an, which prefer the upstream of the industrial chain, will face more complex multi stakeholder relationships when the end customers coincide with the partners’ customers. The Shanghai Stock Exchange also focused on this in its inquiry.
Sanwei Xinan replied that with the information it currently has, it is difficult to comprehensively analyze the coincidence between the end customers corresponding to the cooperative manufacturers and the end customers directly facing the company. However, according to industry practice, the network information security products or system requirements of end customers are generally purchased through integrators, and some innovative requirements will be purchased from upstream password product manufacturers. “Therefore, the company’s end customers are less overlapped with the end customers of partners.”
“Even if there is a small amount of overlap, the company and partner manufacturers generally serve different projects or different needs in projects of end customers. They will not compete on the same end customer or the same project, but more form complementarity and provide differentiated products and services for end customers.”
According to Hou Dapeng’s industry observation, at present, there is more cooperation between the two types of manufacturers, and the competition is not obvious.
Shen Yong believes that “firstly, safety products should pay attention to their own safety; secondly, the two sides should cooperate to form a joint force and create a better overall safety scheme to improve user acceptance and reduce the threshold.”
