\u3000\u3 China Vanke Co.Ltd(000002) 212 Topsec Technologies Group Inc(002212) )
Event: on April 29, 2022, Topsec Technologies Group Inc(002212) released the annual report for 2021. Affected by the stripping of wire and cable business and the transfer of equity of Tongtian technology subsidiary, the annual operating revenue was RMB 3.351 billion, a year-on-year decrease of 41.24%. In terms of products, basic network security products, big data and situational awareness products and services, basic security services, cloud computing and cloud security achieved 2.252 billion yuan, 389 million yuan, 431 million yuan and 276 million yuan respectively, with a year-on-year increase of 14.63%, 20.77%, 19.33% and 53.38%. Excluding the impact of Tongtian technology, the revenue reached 3.313 billion yuan, a year-on-year increase of 36.42%, and the amount of new orders increased by 48.09% year-on-year. The net profit attributable to the parent company was 238 million yuan, a year-on-year decrease of 52.59%; Net profit deducted from non parent company was 176 million yuan, a year-on-year decrease of 59.78%. The business model continues to improve. The company provides monthly and annual security knowledge (including threat intelligence information) for sold security products, and provides cloud detection and protection for customers or partners based on day, month, year and traffic. The company realizes the company’s operating revenue with the security capability subscription model, and the proportion of subscription business profit increases from 5.3% in 2017 to 8.5% in 2021. According to the performance express, 22q1 company achieved a revenue of 378 million yuan, a year-on-year increase of 42.80%; The net profit attributable to the parent company was -647359 million yuan, with a significant year-on-year loss reduction.
High investment in equity incentives, R & D and sales costs will affect profits in the short term and create long-term competitiveness. In 2021, the company’s R & D expenses increased by 47.35% year-on-year. The R & D expenses are mainly used to consolidate the basic network security business, layout and improve the technologies and products of new directions such as data security, cloud computing, cloud security and security cloud services, situational awareness and emerging scene businesses such as industrial Internet, Internet of vehicles and Internet of things. The sales expenses increased by 33.56% year-on-year, mainly for the deep cultivation of the industry, the sinking of the land market and the expansion of channels. The number of sales personnel increased by 15.89%, and the number of channel sales personnel accounted for 10.91% of the number of sales personnel, laying a good foundation for further market coverage. In 2021, the accrued cost of equity incentive was 137 million yuan, accounting for 59.40% of the net profit attributable to the parent company, of which the equity incentive cost of core technicians was 611766 million yuan, accounting for 44.78% of the current equity incentive cost of the company.
Firewall is the largest single sub market in the network security market, and the basic business is stable. IDC predicts that by 2025, China’s network security related expenditure is expected to rise from US $10.26 billion in 2021 to US $21.46 billion, with an annual compound growth rate of about 20.5%, ranking first in the world. In 2021, H1 firewall products accounted for 64.41% (utmfw34.87% + utm27.13% + traditionalfw2.41%) of China’s IT security hardware segment market, which is the largest single sub market. In 2021, Topsec Technologies Group Inc(002212) firewall ranked first in the market for 22 years with 22.5% market share. Firewall and VPN naturally need to comprehensively consider security and network performance. With the continuous iteration of it upgrading, it is easy to produce scale effect, and the basic firewall business of the company is expected to maintain steady growth. R & D strength is in a leading position, and new fields such as cloud security, data security and industrial Internet security drive high revenue growth. In 2021, Topsec Technologies Group Inc(002212) security cloud service revenue increased by 36.21% year-on-year; Cloud computing revenue was 138 million yuan, a year-on-year increase of 244.02%; Big data and situational awareness products and services amounted to 389 million yuan, a year-on-year increase of 20.77%; Industrial Internet business revenue increased by 689.77% year-on-year; Data security revenue was 201 million yuan, a year-on-year increase of 192.68%. 1) In the field of next-generation firewall, launch new generation firewall, financial firewall, smart firewall, sd-wan firewall and other new products integrated with AI technology; 2) In the field of data security, build and release a full range of products centered on data to form a security product and consulting service system covering the data life cycle; 3) In the field of industrial Internet, based on the “behavior baseline” of production process, the white list strategy is the core judgment basis, and the blacklist strategy is the core concept of auxiliary verification means, covering comprehensive solutions on the regulatory side, enterprise side, platform side and public service side; 4) Cloud computing and distributed storage are integrated into the cloud, which has achieved an effective breakthrough in the field of “IPS 212 cloud and distributed cloud computing”; 5) In the field of Internet of things, with the Internet of things security management center as the core, build a safe, credible and compliant integrated Internet of things security defense system in depth from the six dimensions of cloud, data, application, network, boundary and end; 6) In the field of Internet of vehicles, relying on the leading technology and evaluation system in the field of network security, and taking the in vehicle network security as the core, the company released vehicle gateway and other products, and the cooperation with Baic Bluepark New Energy Technology Co.Ltd(600733) was smooth; 7) In the field of localization, a full range of Topsec Technologies Group Inc(002212) Kunlun products have been launched, covering many subdivided fields such as security protection, security access, security detection, data security, industrial control security, cloud security, terminal security and so on.
Maintain the “buy” rating. Considering that the epidemic disturbs the government’s demand, we predict that the company’s operating revenue from 2022 to 2024 will be RMB 4.272/53.03/6.504 billion, with a corresponding growth rate of 27.5% / 24.1% / 22.7%, and the net profit attributable to the parent company will be RMB 504/6.63/865 million. Considering the steady growth of the company’s revenue and profit restoration, we will maintain the “buy” rating.
Risk warning: competition intensifies risk; The policy strength is less than the expected risk; Slow layout of new areas risks.
