\u3000\u3 China Vanke Co.Ltd(000002) 212 Topsec Technologies Group Inc(002212) )
Core view
Profits declined in 2021. As the company has stripped off its cable business, taking the network security business as a comparable standard, the company’s revenue in 2021 was 3.352 billion yuan (+ 18.33%), the net profit attributable to the parent company was 238 million yuan (- 52.59%), and the net profit not attributable to the parent company was 176 million yuan (- 59.78%); The net cash flow from operating activities was 183 million yuan (- 53.11%). At the beginning of 2021, the company spun off its integrated subsidiary Tongtian technology. After excluding the impact, the company realized a revenue of 3.313 billion yuan (+ 36.42%), and the amount of new orders increased by 48.09% year-on-year. In 2021, the company’s share based payment expense was about 148 million yuan, which also led to a decline in profits. According to the revised announcement of the performance express, the company reduced its revenue by about 190 million, resulting in a significant decrease in profit. The reason is that some recognized revenue is reduced based on the principle of prudence for the overdue bills receivable of individual customers who have fulfilled the contract. At present, all the overdue payments of customers have been recovered, and it is expected that the revenue of this part of the contract can be recognized in 2022.
In the first quarter, the revenue maintained a high growth, and the gross profit margin rebounded significantly. In 2022q1, the company achieved 378million yuan (42.80%), and its revenue maintained rapid growth, excluding the part of reducing revenue in the 2021 performance express amendment announcement. The first quarter was dominated by product delivery, and the company’s gross profit margin increased to 67.64%. Its sales and R & D expenses increased by 30.06% and 37.92% year-on-year, lower than the revenue growth. Therefore, the loss of the company in the first quarter narrowed, with the net profit attributable to the parent company of – 65 million yuan (+ 32.14%), deducting the net profit not attributable to the parent company of – 71 million yuan (+ 27.04%).
In 2021, the gross profit margin decreased and the cost investment increased. In 2021, the company’s gross profit margin was 59.41%, with a year-on-year decrease of about 5.40pct. Among them, the revenue of basic security products accounted for the highest proportion, and the gross profit margin decreased by 5.67pct. It is expected that it is mainly due to the rising cost of raw materials such as chips and the rapid growth of business such as Xinchuang integration, which laid the foundation for the follow-up Xinchuang security product scheme and reduced the gross profit margin of the company’s products; The gross profit margin of cloud computing and cloud security products decreased by 20.93pct and gradually returned to the normal level of the industry. At the same time, the company further increased investment, with R & D expenses increasing by 47.35% and sales expenses increasing by 33.56% year-on-year.
The government and the financial industry grew rapidly, and the company adhered to the higher goal of the employee stock ownership plan. In terms of products, the revenue of the company’s basic security products is 2.252 billion yuan (+ 14.63%), the revenue of big data and situational awareness products is 389 million yuan (+ 20.77%), the revenue of basic security services is 431 million yuan (+ 19.33%), and the revenue of cloud computing and cloud security products is 276 million yuan (+ 53.38%). In terms of industry, the government increased by 91.26%, finance by 69.90%, medical care by 69.34%, politics and law by 61.60%, operators by 59.63% and education by 45.69%. After the announcement, the net profit of the parent company is still reduced to 6.25 billion yuan, although the net profit in 2021 is still included in the net profit of the parent company according to the original performance appraisal plan, which is still reduced to 6.2 billion yuan in 2021.
Risk tip: the epidemic situation repeatedly affects the normal operation rhythm of the company, and the industry competition intensifies.
Investment suggestion: maintain the “overweight” rating. It is estimated that the operating revenue from 2022 to 2024 will be 45.54/57.87/71.94, with growth rates of 36% / 27% / 24% respectively, and the net profit attributable to the parent company will be RMB 622 / 738 / 929 million, corresponding to the current PE of 18 / 15 / 12 times, maintaining the “overweight” rating.
