Zhongxin Secco 1H23 revenue increased by 108.5% over the same period last year, in line with market expectations: revenue of 310 million yuan, an increase of 108.5% over the same period last year, a net profit of 73.8 million yuan, and a net profit of 48.5 million yuan after deducting non-profit. In the second quarter alone, the revenue was 94.8 million yuan, up 57.4% from the same period last year, down 56.0% from the previous year, and the net profit was 14.8 million yuan from the same period last year, turning losses into profits over the same period last year, down 75.0% from the previous quarter, in line with market expectations.

Trend of development

Income is growing rapidly. Product dimension, 1H23 broadband network / mobile network / network content security / big data operation / data and network security revenue increased respectively compared with the same period last year

199.3% Universe 50.4% Universe 45.4% Universe 247.9% Universe 468.1% to 200 million Yuan / 50.81 million Yuan / 20.67 million Yuan / 4.08 million Yuan / 1.39 million Yuan. According to the company announcement, the rapid growth of the company's product revenue is mainly due to the gradual recovery of downstream demand, the increase of demand in overseas markets, and the efforts of domestic and foreign markets to promote project signing and implementation. In the downstream customer dimension, the revenue of 1H23 government / operator / other industries is from-1.9% to 80.59 million yuan / 210 million yuan / 21.81 million yuan respectively compared with the same period last year. In terms of gross profit margin, 1H23's overall gross profit margin increased to 83.6% year-on-year, and that of broadband / mobile network products increased by + 7.9ppt/-6.8ppt to 93.4% and 65.3% respectively compared with the same period last year. In the second quarter alone, the gross profit margin increased by 13.7ppt to 75.4% compared with the same period last year, a month-on-month decline of 11.8ppt.

The net profit has been steadily repaired. 1H23's homing net interest rate increased by 94.7ppt to 23.8% compared with the same period last year, and the homing net interest rate increased by 99.9ppt to 15.6% compared with the same period last year, with a month-on-month decline in 11.8ppt. At the cost level, the total 1H23 fees (sales, R & D and management) increased by 2.3% to 250 million yuan compared with the same period last year, and sales / R & D / management expenses increased by + 15.4% compared with the same period last year, respectively. 4.4% to 94.2 million yuan / 110 million yuan / 36.6 million yuan The total 2Q23 fees increased by 9.6% year-on-year to 130 million yuan, and sales / R & D / management expenses increased by + 31.2% to 48.4 million yuan / 59.3 million yuan / 18 million yuan respectively compared with the same period last year. The 1H23 of cash flow of operating activities narrowed 10.4 per cent to-130 million yuan from the same period last year, and expanded 14.4 per cent to-65.8 million yuan in the second quarter alone, narrowing 4.2 per cent from the previous quarter.

Expand data security based on core products. The company continues to optimize the data security management platform and build a sound data security product and service system. At the same time, upgrade data security public service platform, database firewall, database audit and so on. According to the company announcement, the company's data security products have been promoted in finance, operators, government affairs, health care and other industries.

Profit forecast and valuation

The earnings forecast for 2023X 2024 will remain unchanged, and the current stock price will correspond to 41.3 pm E in 2024, with an outperforming industry rating and 49.0 yuan list price, and 36.8 times Pmax E in 2024, which has 33.8% upside compared to the current stock price.

Risk

Downstream customer demand is not as expected, overseas business expansion is not as expected, and new business expansion is not as expected.