Incident: The company released its 2022 semi-annual report. 2022H1 achieved revenue of 834 million yuan, an increase of 8% over the previous year; the net profit of the mother was 216 million yuan, a decrease of 2661% over the previous year.
Looking at a single quarter, 2022Q2 achieved revenue of 508 million yuan, a decrease of 4% over the previous year, and achieved net profit of -101 million yuan, a year-on-year decrease of 324%.
The Q2 growth rate declined due to many factors such as the epidemic, and is expected to gradually pick up in the second half of the year. In the first half of the year, due to the impact of the epidemic in Shanghai, Beijing, Shenzhen and other places, the repayment progress of some customers slowed, putting some pressure on revenue recognition. On the profit side, on the one hand, the company increased its new products and strategic layout, but since R&D and market investment were proactive and mismatched with the uniform expenditure of expenses, it had a certain impact on profits; on the other hand, factors such as rising raw materials and the rapid growth of operating expenses such as personnel led to a decline in gross margin. However, at the same time, the growth rate of the company's new orders in the first half of the year was higher than the revenue growth rate. It is expected that in the second half of the year, with the gradual release of new orders and the gradual implementation of data security policies, the company's revenue and profit growth will gradually pick up in the second half of the year.
Channel strategy transformation and emerging security arrangements continue to advance. 1) Channel transformation: In 2022, the company entered the channel strategy 2.0 era. From the two dimensions of industry and customers, the company will continue to optimize the mainstream channel structure behind it and continue to expand its business scale; 2) Product research and development: The company actively promoted business layout in emerging fields such as cloud security, data security, security services, and security management. Among them, security products and security services achieved revenue of 533 million yuan and 289 million yuan respectively in the first half of the year, with year-on-year growth rates of 2% and 24% respectively. At the same time, the company released a number of major products or upgrades during the reporting period, such as Green Alliance SD-WAN Firewall, Green League Next Generation Secure Cloud Desktop System, Green League Mobile Security Management System, and Green League Code Security Audit System.
Investment advice: We are optimistic about the firm promotion of the company's channel strategy. We expect to achieve revenue of 30.98/3.882 billion yuan in 22/23, maintaining the company's rating as “highly recommended”.
Risk warning: risk of increased competition in the industry; risk of channel expansion falling short of expectations; risk of policy implementation falling short of expectations.
