\u3000\u3 Guocheng Mining Co.Ltd(000688) 561 Qi An Xin Technology Group Inc(688561) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company’s operating revenue was 5.809 billion yuan, a year-on-year increase of 39.60%; The net profit attributable to the parent company lost 555 million yuan, with a year-on-year increase of 65.91%. In the first quarter of 2022, the company achieved a revenue of 659 million yuan, a year-on-year increase of 44.52%; The net profit attributable to the parent company lost 480 million yuan, with a year-on-year decrease of 10.41%, which is basically in line with market expectations.
Key investment points
Revenue continued to grow at a high rate and there were abundant orders on hand: in 2021, the company’s operating revenue was 5.809 billion yuan, a year-on-year increase of 39.60%; The net profit loss attributable to the parent company was 555 million yuan, with a year-on-year increase of 65.91%, which was mainly due to the fact that the share based payment expenses generated by the company’s 2020 restricted stock incentive plan in 2021 were 256 million yuan more than those in 2020, and the social security relief expenses of the company due to the epidemic in 2020 were 179 million yuan. Excluding the above factors, the net profit loss in 2021 narrowed significantly year-on-year, with a loss reduction rate of more than 40%. As of March 30, 2022, the company’s orders on hand exceeded 2.3 billion yuan, and the new orders in 2022 exceeded 900 million yuan, with a year-on-year increase of more than 65%. There were abundant orders on hand, and the revenue in 2022q1 maintained a high growth trend.
The advantages of new track products are obvious: in 2021, the revenue of new track products accounted for more than 70% of the revenue of safety products and services, and the market share and competitiveness of many new track products continued to lead the industry. In 2021, the overall revenue of situational awareness products was nearly 1.2 billion yuan, with a year-on-year increase of more than 30%. The revenue of terminal security (including cloud server and virtualization terminal protection) products exceeded 800 million yuan, with a year-on-year increase of more than 30%; The company’s terminal security products have achieved more than 50 million commercial deployment in government and enterprise customers, and the market share has ranked first in China for four consecutive years. The revenue of data security and privacy protection products exceeded 1.1 billion yuan, with a year-on-year growth rate of more than 50%.
Business quality is expected to continue to improve: the company continues to promote the “high-quality development” strategy and continues to reap results. The gross profit margin has increased for four consecutive years, reaching 60% in 2021. In terms of products, the gross profit margin of the company’s security products is 77.02% (year-on-year + 4.78pct), the gross profit margin of security services is 60.13% (year-on-year -3.15pct), and the gross profit margin of hardware and other businesses is 5.9% (year-on-year + 1.76pct). After deducting share based payment expenses, the R & D expense rate, sales expense rate and management expense rate decreased by 1.38, 2.90 and 2.21 percentage points respectively. In 2022, the company will continue to implement the development strategies of “Olympic”, “internationalization”, “LEGO” and “service”. With the mass production of R & D platform and the organizational adjustment of legionnaization, the company expects that the R & D expense rate will decrease significantly in 2022, and the operation quality is expected to continue to improve.
Profit forecast and investment rating: considering the continuous promotion of the company’s equity incentive plan, we will reduce the EPS from 0.45/0.90 yuan to 0.09/0.38 yuan in 20222023. It is expected that the EPS will be 0.58 yuan in 2024, and the current market value corresponding to PE is 493 / 117 / 78 times respectively. As the leader of China’s network security industry, the company continues to promote the “R & D platform” strategy. With a comprehensive product system and strong security service ability, the performance is expected to continue to maintain rapid growth and maintain the “buy” rating.
Risk tip: the promotion of network security industry is not as expected; The growth of product and service business was lower than expected.
