Incident Overview
On June 19, Sanwei Xinan issued the “Asset Acquisition Notice”. The company plans to use its own capital of 151 million yuan to acquire 66.93% of Guangzhou Jiangnan Keyou's shares, for a total of 207.498 million shares. After the transaction is completed, Jiangnan Keyou will become a holding subsidiary of the company.
Enrich the cryptographic system product matrix to further expand the downstream financial sector. Judging from the financial situation, Jiangnan Keyou's operating income in 2022 was 118 million, net profit was 0.2 million yuan, and net assets were 076 million yuan. Overall, the financial situation was relatively good. Judging from the product layout, according to Jiangnan Keyou's official website, its main products are cryptographic machines and cryptographic systems, including host security equipment, terminal security modules, cryptographic service infrastructure, key management systems, host operation and maintenance audit systems, and database operation and maintenance audit systems. Looking at the downstream sector, Jiangnan Keyou's cryptographic solutions are mainly used in financial fields such as banking, insurance, and securities. Cryptographic applications in important industries such as finance occupy a dominant position and enjoy a good reputation in the industry. We believe that this acquisition will further expand the product matrix of its cryptographic system business and help the company to further expand financial sector customers with a stable supplier ecosystem, combine the company's own cryptographic chip and cryptographic board business to maximize business synergies.
The commercial secret industry has a full chain layout, and self-developed chips have achieved revenue
The company has now formed a full chip - board - complete machine - system commercial secret product layout, which is expected to benefit the core from the accelerated growth of the commercial secret industry. The revenue of the company's cryptographic boards, cryptographic machines, and cryptographic systems in 2022 was 0.46/1.28/143 million yuan respectively, an increase of -40.22%/7.85%/143.69% over the previous year. Among them, 1) Cryptographic system revenue is growing rapidly, mainly due to the expansion of the company's system products in securities and other fields, and the overall progress of the company's downward expansion of the system business is progressing smoothly. 2) In terms of self-developed chips, the company's first self-developed cryptographic security chip, the XS100, was successfully mass-produced in mid-2022, and achieved revenue of about 6.41 million in the IoT field that year, which is expected to be accompanied by continued expansion of downstream IoT terminals. In addition, the company's self-developed chips are gradually being installed in self-developed cryptographic boards and complete machines, which is expected to continuously optimize product costs and consolidate competitive advantages.
Investment advice
The company is a scarce vertical integration manufacturer in the confidential industry. The company has strong R&D strength. Starting with the board/machine field, which has high barriers in the commercial secret industry, brings cost and performance advantages to self-developed chips, and expands the system downward to open up growth space. We believe the company is expected to enjoy the dividends brought by the accelerated development of the industry in the short, medium, and long term. Furthermore, the company's high-performance self-developed chips have opened up the IoT market and built a second growth curve, and performance is expected to grow rapidly. We estimate that the company's operating income from 2023 to 2025 will be 482/676/874 million yuan, respectively, and net profit from the mother's mother will be 1.67/222/276 million yuan, respectively. Maintaining the buy-A investment rating, the target price for 12 months is 97.50 yuan, which is equivalent to a dynamic price-earnings ratio of 50 times that of 2024.
Risk warning: The implementation of the policy fell short of expectations, industry competition intensified, and the implementation of cryptographic chips fell short of expectations.