CICA security (688225)
Core view
In 2021, the growth rate of revenue increased. In 2021, the company realized a revenue of 1.667 billion yuan (+ 30.82%), and the revenue growth showed an accelerated trend. The net profit attributable to the parent company was 179 million yuan (+ 4.88%), deducting 95 million yuan (- 32.15%). The net cash flow from operating activities was 144 million yuan (- 29.76%); The inventory and contract liabilities remain at the average level over the years. In 2022q1, affected by the epidemic, the growth rate of the company slowed down. In the first quarter, the revenue was 285 million yuan (+ 9.85%), and the net profit attributable to the parent was -78 million yuan, deducting the net profit not attributable to the parent was -94 million yuan. The profit side decreased greatly, mainly due to the increase of personnel and the rigidity of expenses.
The overall gross profit margin decreased and the gross profit margin of safety products increased. The overall gross profit margin of the company in 2021 was 53.35% (- 2.16pct), which was mainly affected by the rapid growth of low gross profit products. The revenue of cloud virtualization software is 156 million yuan (+ 197.17%), and the gross profit margin is 12%; The safety service revenue was 48 million yuan (+ 600.21%), and the gross profit margin was 16.83%. Among them, the revenue of the company’s core business network security products was 1.463 billion yuan (+ 20.41%), and the gross profit margin was 58.95%, an increase of 1.51pct. The company has 2840 employees (+ 26.45%) in 2021.
The “strong standard product” strategy worked, and the endpoint security increased significantly. The company achieved a year-on-year growth of 72.7% in revenue from advanced and standardized products such as cloud and security threats, compared with that of the previous year. The proportion of revenue from standardized products increased rapidly. In 2021, the proportion of standardized products was 46.50%, up 11.21 percentage points from 35.29% in 2020. The company’s endpoint security products inherit the trend technology, and the product power and market share are in the leading position in the industry. In 2021, the revenue of endpoint product system increased by 50.01%, and the gross profit margin increased from 75.75% to 78.86%, driving the gross profit margin of the whole product system.
The non operator industry is expanding rapidly, and the leading security software is developing to XDR. The company started with the operator industry, with stable advantages and market share, and maintained stable growth. In 2021, the revenue of non operator industries such as finance, energy and manufacturing increased rapidly, with a year-on-year increase of 64.07%, and the proportion of revenue increased from 33.07% to 41.48%. The company is a leader in identity and digital trust software market, terminal security software market, EDR, cloud host security market and other security software fields. For many software products of the company, customers have adopted the purchase method of purchasing service period and subsequent fee after the expiration of service period, and the relevant income is stable and sustainable. Renewal of old customers is a business model with obvious characteristics of the company, and it is also the driving force for the rapid growth of the company’s revenue. With the adoption of the strategy of “platform + product + service”, under the continuous development of situation awareness and soar, the company takes the lead in promoting the development of XDR, which is in the industry.
Risk tip: the epidemic situation repeatedly affects the normal operation rhythm of the company, and the industry competition intensifies
Investment suggestion: for the first time, give a “buy” rating. It is estimated that the operating revenue from 2022 to 2024 will be 21.14/26.40/32.28, with growth rates of 27% / 25% / 22% respectively, and the net profit attributable to the parent company will be 209 / 279 / 352 million yuan, corresponding to 40 / 28 / 22 times of the current PE. As a leader in the field of security software and operators, the company has a good business development and model. It is covered for the first time and is rated “buy”.
