In the first half of the year, the company's increase in expenses and investment affected profits in the short term. Emerging tracks such as data security and cloud security opened up room for the company to grow. With policy support, the commercial intelligence industry is expected to accelerate development and maintain a “highly recommended” investment rating.
Incident: The company released the 2023 semi-annual report. In the first half of the year, the company achieved operating income of 104 million yuan, YoY +10.08%; realized net profit of 0.1 million yuan, YoY -29.14%; achieved non-net profit of 0.09 million yuan, YoY +0.56%; 23Q2 achieved revenue of 67 million yuan, YoY +0.83% in a single quarter; realized net profit of 0.14 billion yuan, YoY -40.82%; achieved non-net profit of 103 million yuan.
Continue to increase investment in R&D and actively lay out emerging race tracks. The company's revenue growth rate slowed in the first half of the year, mainly due to downstream demand recovering less than expected; achieving a gross profit margin of 70.92%, down 4.01 pct from the same period last year. In terms of expenses, the company's sales/management/R&D expenses ratio for the first half of the year respectively increased by 5.96/1.90/3.52 pct compared to the same period last year. The main reason is that the company attached great importance to R&D investment, actively laid out new tracks to open up space for growth, and affected profits in the short term. In the field of data security, the company's homomorphic encryption machine, multi-party computing platform and other products have passed testing by an authoritative third party and obtained pilot applications; on the Xinchuang password side, the company has done extensive performance optimization work on Xinchuang cryptographic products, which can currently fully meet the functional and performance requirements of cryptographic products in credit creation; in the field of cloud security cryptography, the company leverages its advantages in password virtualization and other fields to form cooperation with cloud vendors such as HUAWEI CLOUD, Tianyi Cloud, and Inspur Cloud to launch cloud cryptographic services; in the IoT field, the company will launch 3 IoT chips and edge IoT devices in 23 years; The company will launch a variety of IoT terminal security chips in the second half of the year.
The merger and acquisition of Jiangnan Keyou strategically lays out finance, and is optimistic about speeding up the development of the commercial secrets industry under policy impetus. On June 19, the company acquired 66.93% of Jiangnan Keyou's shares with its own capital of 150 million yuan. Keyou's cryptographic applications in important industries such as finance occupy a leading position, which will help the company achieve a strategic layout in the financial sector. Since this year, national policies relating to commercial passwords have been continuously introduced. On April 14, the State Council revised and passed the “Regulations on the Administration of Commercial Passwords”, which have been implemented since July 1, 2023. On June 9, the State Cryptographic Administration researched and drafted the “Administrative Measures on Commercial Password Testing Agencies (Draft for Comments)” and the “Administrative Measures for Commercial Password Application Security Assessment (Draft for Comments)” and solicited comments from the public. The “Regulations on the Administration of Commercial Passwords” systematize, improve and refine the commercial password management system. It is expected that password construction for related industries will be completed quickly to accelerate the development of the industry.
Maintain a “Highly Recommended” investment rating. The commercial cryptographic industry ushered in a golden period of development, the innovation market entered a period of industry promotion, and the company actively laid out emerging tracks to open up room for growth. The company's net profit for 2023-2025 is expected to be 130/175/235 million yuan, maintaining the “highly recommended” rating.
Risk warning: Policy implementation falls short of expectations, industry competition intensifies, and costs rise