\u3000\u3 China Vanke Co.Ltd(000002) 212 Topsec Technologies Group Inc(002212) )
Event: Topsec Technologies Group Inc(002212) released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved an operating revenue of RMB 3.352 billion (a year-on-year decrease of 41.24%), a net profit attributable to the parent company of RMB 230 million (a year-on-year decrease of 42.52%), and a deduction of non net profit of RMB 154 million (a year-on-year decrease of 65.57%); In 2022q1, the company realized an operating revenue of 378 million yuan (a year-on-year increase of 42.80%), a net profit attributable to the parent company of -65 million yuan (a year-on-year increase of 32.14%), and a deduction of non net profit of -71 million yuan (a year-on-year increase of 27.04%).
From the same perspective, the company's revenue increased significantly in 2021; The main reasons for the decline in profits were the decline in gross profit margin and the increase in R & D and sales expenses. In September 2020, after the company completed the sale of major assets, it no longer engaged in wire and cable business, and its main business focused on the field of network security. Due to the continuous R & D investment in network security business, the competitiveness of core products has been improved, and the marketing strategy of industry deep cultivation and channel expansion has achieved remarkable results. In 2021, the revenue increased by 18.33% year-on-year. Excluding the influence of Tongtian technology, the original holding company, the revenue was 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 main reasons for the decline in profit in 2021 (the following are the caliber of network security business): 1) the gross profit margin in 2021 was 59.92%, down 5.89 PCT year-on-year. The decline in gross profit margin was due to the rise in the price of raw materials and the increase in the proportion of information innovation business and cloud computing business with lower gross profit margin in revenue; 2) In 2021, the expenses increased by 35.12% year-on-year, of which the R & D expenses and sales expenses increased by 47.35% and 33.56% year-on-year respectively.
In 2022q1, the gross profit margin increased significantly and continued to increase R & D investment. In 2022q1, the gross profit margin was 67.64%, an increase of 7.69 percentage points over the same period of last year. The R & D expenses and sales expenses were 203 million yuan and 175 million yuan respectively, an increase of 38.10% and 29.63% over the same period of last year. The company's 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. In 2021, the number of R & D personnel of the company reached 3159, accounting for 50.39%, and the R & D investment was 1.027 billion yuan, a year-on-year increase of 34.42%.
The integration of Xinchuang into the industry has accelerated, and the company's Xinchuang business has accelerated growth. In 2021, the first year of the 14th five year plan, with the successful demonstration in the field of Party and government, the information and innovation industry has accelerated to telecommunications, finance, energy, transportation, water conservancy, education, medical treatment and other industries, the market space of information and innovation has been rapidly released, and the proportion of network security in the information and innovation market has further increased. By 2021, the company's Topsec Technologies Group Inc(002212) Kunlun series domestic products based on domestic software and hardware had 53 models and 168 models (15 categories and 18 models of Xinchuang security products were newly released in 2022q1), keeping the lead in the number of categories and models in the shortlist of Xinchuang products. At present, products and solutions have been applied on a large scale in 23 industries such as party and government, finance, energy and transportation. In 2021, the company's localization business realized a revenue of 560 million yuan, accounting for more than 15%, with a year-on-year increase of nearly 10 times.
New directions and new scenes continue to make efforts, and the marketing side continues to expand. On the product side, aiming at new directions, new scenes and new technologies, the company continues to conduct in-depth technical research in the fields of data security, cloud computing, big data, edge computing, cloud security, next-generation Internet security, Internet of things security, Internet of vehicles security and so on. In 2021, the revenue of new direction and new scene business accounted for about 26.66%, with a year-on-year increase of 55.53%, of which the industrial Internet security business increased by 689.77%. On the marketing side, in 2022q1, the company added 18 regional offices, 64 headquarters and regional industry marketing divisions, 156 gold and silver brand partners, including 65 industry gold and silver brands, and continued to promote the implementation of the strategy of "industry wide marketing and region wide coverage".
Investment suggestion: as a leading enterprise in the field of network security in China, the company actively makes efforts on the product side and sales side. We estimate that the operating revenue of the company from 2022 to 2024 will be RMB 4.432 billion, RMB 5.677 billion and RMB 7.203 billion respectively, the net profit attributable to the parent company will be RMB 636 million, RMB 785 million and RMB 997 million respectively, and the EPS will be RMB 0.54, RMB 0.66 and RMB 0.84 respectively. Maintain the "buy" rating.
Risk tip: the promotion of new products is not as expected, the industry competition is intensified, and the economy is affected by the epidemic.
