Incident: The company released its 2021 annual report, achieving revenue of 610 million (+37.4%), net profit of 80 million (+39.7%), net profit of +33 million (-27.7%) after deducting non-net profit of +0.3 million (-27.7%), of which Q4 achieved revenue of 323 million (+20.2%) in a single quarter, achieved net profit of 103 million (+12.9%), and achieved net profit deductions of 77 million (-13.0%). Furthermore, the company released its 22Q1 quarterly report, achieving revenue of 137 million (+87.6%), net profit of -56 million (-134.0%), and net profit of -63 million (-119.9%) after deducting non-net profit.
Core product revenue grew rapidly. By product, the company's revenue from PKI security application products and general safety products reached 200 million and 280 million respectively in '21, with year-on-year growth rates of 5.3% and 33.0% respectively, all achieving steady growth. Additionally, revenue from PKI infrastructure products reached 130 million, an increase of 187% over the previous year. The company is actively developing markets. Products and services have entered industries and fields such as government, defense, finance, central enterprises, etc., and continues to build a strong market development system.
The decline in net profit was due to higher operating costs and higher cost rates for the period. The company's consolidated gross margin in 2021 was 51.7%, a year-on-year decrease of 3.4 pct. Meanwhile, the fee rate for the period was 45.5%, an increase of 3.4 pct over the previous year. Among them, the sales, management, and R&D expenses rates were 10.0%, 18.4%, and 17.4% respectively, up -0.3 pct, 3.4 pct, 0.1 pct, 0.1 pct, and 0.1 pct, respectively.
Continue to cultivate advantageous fields and actively explore and expand emerging scenarios and fields. Based on PKI technology, the company focuses on the field of network information security. The product range covers PKI systems and security applications, and has formed a complete information security product system. The company continues to deepen its advantageous fields. The defense, political, legal, and government industries have forged major coordination, stabilized the dominant position in the industry, and expanded the planning and construction business of China, Taiwan and electronic platforms as national ministries, departments, and central enterprise headquarters, laying the foundation for the company to continue to expand the PKI-centered cybersecurity market in the “new scenario, new business format, new model, and new demand” environment.
Adjusting the revenue growth rate, gross margin and expense ratio, we forecast the company's net profit to the mother in 22-24 to be $0.87/105/125 million respectively (the original forecast was that net profit to the mother in '22 would be 158 million). According to the PE level of comparable companies in 22 years, the company was given 40 times PE in 22 years, and the corresponding reasonable stock price was 14.80 yuan, maintaining the purchase rating.
Risk warning
Policy implementation falls short of expectations; risk of worsening competition within the industry, etc.
