\u3000\u3000 Westone Information Industry Inc(002268) (002268)
Event: Westone Information Industry Inc(002268) signed the entrusted service contract for personal information security compliance service project with Zhejiang Century Huatong Group Co.Ltd(002602) sun Shengqu information, which will provide Shengqu with personal information security compliance services and ensure that Shengqu can establish and maintain a personal information security compliance system. The service period is three years, and the total contract amount is 120 million yuan (including tax).
The strategic cooperation between the company and Zhejiang Century Huatong Group Co.Ltd(002602) represents the beginning of the implementation of data security in the field of games and IDC, and the promotion of the industry continues to accelerate. 1) In the field of game data: the two sides jointly promote the protection of personal information in the game business scenario and the implementation of minor game supervision policies, create a more comprehensive and reliable security solution for the game industry, ensure the security of the game master station and payment, and improve the privacy and security protection ability of game data. 2) IDC Supercomputing Center: Based on the large supercomputing centers under Zhejiang Century Huatong Group Co.Ltd(002602) , we will jointly study the security operation capability based on cloud and big data architecture, and provide customers with sustainable security risk situation awareness and adaptive protection capability; Jointly build cloud security solutions to provide passwords and security protection capabilities for important information systems such as government and state-owned enterprises on the cloud; Cooperate to establish the data security framework of Supercomputing Center, help enterprises realize the ability of discovery, classification, monitoring, storage, encryption or destruction, and provide third-party secure storage services for important data of government and enterprises.
Internet and enterprise data security supervision has become stricter, relevant orders have increased, and the certainty has been strengthened. Westone Information Industry Inc(002268) as the only listed company under China netsecurity, is expected to become the most beneficial target of data security and privacy computing. 1) Data security has become the core of Internet regulation, and data security and privacy computing are expected to benefit significantly. Privacy computing is driven by the dual needs of big data fusion applications and privacy protection. KPMG expects that its technical service revenue is expected to reach RMB 10-20 billion in 2023, which will leverage the operating revenue space of 100 billion data platform in the long term; 2) In addition to various Internet manufacturers, there is a huge potential space for data security in finance, energy, medical and other customs protection industries. The data of customs protection industries such as finance, medical treatment and energy naturally have commercial value and user privacy, and the demand for data security and compliance is urgent; 3) Some data as strategic resources will still be subject to strong supervision. China network security, the controlling shareholder of Westone Information Industry Inc(002268) , is a network security sub group built by the company’s actual controller, China Electronics Technology Group, according to the needs of national security strategic development. It has natural advantages in supporting national network security strategic tasks and winning customer trust in key fields. As the only listed company of China network security, the company has a truly scarce shareholder background, It is expected to significantly benefit from the rapid release of privacy computing needs.
The superposition of long-term equity incentive plan and management change is expected to improve operating efficiency. The new management of the company has professional and technical background, the equity incentive plan is valid for 10 years, and the total amount of subject shares involved in the granted restricted shares shall not exceed 10% of the total share capital of the company. The first phase of incentive targets are about 335 executives, core technicians and key employees of the company, the company and its holding subsidiaries who have a direct impact on the overall performance and sustainable development, accounting for about 15% of the employees. The superposition of long-term equity incentive plan and management changes may improve the operating efficiency.
Channel construction has been continuously improved, Xinchuang has abundant orders and high certainty of performance support. Westone Information Industry Inc(002268) is the core beneficiary of Xinchuang. According to the disclosure in the annual report, in 2020, it won the bid of more than 2 billion, ranking in the forefront of the market, and the net cash flow from operating activities reached 620 million yuan, a year-on-year increase of 736.15%. Focusing on the needs of Xinchuang, the company has built a full product system covering chips, modules, platforms, complete machines and systems, such as Longxin Zhongke jointly Westone Information Industry Inc(002268) released “Longxin security module and SDK” and Xinchuang security solutions.
Maintain the “buy” rating. We expect the company’s operating revenue to be RMB 3.010/38.03/4.805 billion in 2021 / 2022 / 2023, and the net profit attributable to the parent company to be RMB 352 / 511 / 765 million. Considering the data security market demand, the safety margin market value in 2021 will be RMB 60 billion, and the potential total market value in 2023 and 2025 may reach RMB 157.089 billion and 319.593 billion, maintaining the “buy” rating.
Risk warning: competition intensifies risk; The policy strength is less than the expected risk; Slow layout of new fields and risks; Key assumptions error risk.
