The company focuses on password technology and provides comprehensive commercial secret products and solutions for security. Since its inception, the company has focused on password technology innovation and password product research and development, sales and services, to provide comprehensive commercial password products and solutions in the field of network information security, while the company's main products are in a leading position in the market. The company's products are mainly divided into four parts, namely, password board, password machine, password system and password chip, which are being commercialized. On the whole, the company's products are widely used in many key industries, including finance, securities, electric power, telecommunications, oil, railway, transportation, e-commerce, etc.; at the same time, it is also used in customs, public security, taxation, water conservancy, quality supervision, medical security and other government departments. The company's ownership structure is clear and stable, the performance growth is good, and the gross profit margin increases steadily. In terms of overall revenue, the company's overall revenue from 2018 to 2022 was 104 million yuan and 1. 5% respectively.

3.4 billion yuan, 202 million yuan, 270 million yuan and 340 million yuan, with year-on-year growth rates of 28.8%, 50.7%, 33.7% and 25.7% respectively from 2019 to 2022. The company's R & D expense rate and sales expense rate continue to rise, and the return net profit increases steadily, and the growth rate is expected to accelerate. The company is gradually developing to the business model of serving both manufacturer customers and end customers, forming a two-wheel drive business model under the combination of indirect demand and direct demand.

The company takes the Dongfeng of Shang Mi racetrack, focusing on data security, and is expected to usher in sustained and rapid development. At present, commercial secret has formed an industry-wide chain, with cryptographic hardware accounting for the largest proportion. China's existing commercial password products have reached more than 3000 yuan, covering password chips, password boards, password machines, password systems and other industrial chains. By 2021, the proportion of password hardware, password service and password software accounted for 74.5%, 18.9% and 6.6%, respectively. China's commercial secret industry is developing at a high speed and has a broad space for development in the future. Policy, compliance and Xinchuang three-board axe effectively promote the application of commercial secret industry in multi-business fields. At the same time, with the continuous emergence of new technologies and new scenarios, the application of commercial passwords is being integrated into the industrial Internet, vehicle networking, smart cities and other fields, and different fields put forward differential requirements for password products and related adaptive devices. in particular, emerging fields will have higher requirements for password function and performance. With the increasing importance of data security, the underlying technology and working principle are inseparable from cryptographic technology in the whole life cycle of data security.

The core technology of the company highlights the advanced nature, and the product + sales system is gradually complete. The vertical and horizontal layout of the company's products, from the password chip to the password system, the matrix distribution is clear. The cipher card is in the leading industry, adapting to the extensive needs of different scenes. From a detailed point of view, the company's cipher card is divided into basic cipher card, commercial cipher card and professional cipher card. According to product functions and application scenarios, the company cipher machine can be divided into server cipher machine, financial data cipher machine and industry application cipher machine, with a wide range of application scenarios and industry-leading comprehensive indicators. The company password system includes key management, identity authentication system and cloud password service platform. The company independently develops chips to achieve technological breakthroughs, drive the second growth curve, or become another core focus. The chip development strategy focuses on cloud computing and big data security, as well as the security of the Internet of things. The company is gradually developing to the business model of serving both manufacturer customers and end customers, forming a two-wheel drive business model under the combination of indirect demand and direct demand, so as to effectively expand key industry customers.

Investment suggestion: we estimate that the company's income from 2023 to 2025 will be 457 million yuan, 609 million yuan, respectively, and the net profit of returning to the mother will be 1.46 million yuan, 1.93 million yuan, respectively, and the corresponding PE will be 45.7 percent, 34.6 million, 25.8 respectively. Considering the high growth of the company's performance, high technical barriers and the advantage of card position in the industry, we give the company a "buy" rating for the first time.

Risk hints: business promotion is not as expected; competition in the industry is intensified, resulting in a decline in corporate profitability; policies fall short of expectations; profit forecast results are based on many assumptions and may be less than expected; the public information used in the research report may lag behind or not be updated in a timely manner.