The company's cloud computing business showed impressive growth in the first half of the year. The defense and power industries, which are advantageous fields, maintained relatively rapid growth, and Xinchuang continued to advance, maintaining a “highly recommended” investment rating.
Incident: The company released its semi-annual report for 2023. In the first half of the year, the company achieved operating income of 70 million yuan, YoY -25.79%; net profit of 14 million yuan, compared to 118 million yuan for the same period last year; net operating profit of 023 million yuan, compared to 112 million yuan for the same period last year; net operating cash flow of 46 million yuan, compared to -45 million yuan for the same period last year. In a single quarter, 23Q2 achieved operating income of 36 million yuan, YoY -45.82%; net profit to parent -- 103 million yuan, compared to $23 million for the same period last year; net operating profit - $19 million; net operating cash flow - 39 million yuan; net operating cash flow - $39 million, compared to -02 billion yuan for the same period last year.
The growth rate of cloud computing revenue is impressive, and it is optimistic that annual revenue will grow relatively rapidly. Q2 The company's revenue declined, mainly because the procurement and bidding process fell short of expectations. Furthermore, the company's revenue fluctuated greatly seasonally. With the acceleration of various bidding processes such as Xinchuang in the second half of the year, it is optimistic that revenue will continue to grow relatively rapidly throughout the year. By product, 23H1's operating system business achieved revenue of 33 million yuan (YoY -3.14%). This is mainly due to some industry customers planning to conduct centralized procurement and tenders for operating systems and other products this year, and procurement progress was delayed in the first half of the year; the information security business achieved revenue of 07 billion yuan (YoY -83.98%), mainly because customer units delayed the acceptance of some of the company's projects due to internal management issues and failed to confirm revenue; the cloud computing business achieved revenue of 26 million yuan (YoY +55.12%), mainly for electricity and other keys There is strong demand for cloud-based transformation of user information systems in the industry.
Continue to increase investment in market expansion and product development. The company's revenue recognition was mainly concentrated in the second half of the year, while cost recognition was relatively balanced, so the net profit loss for the first half of the year was 14 million yuan. 23Q2 The company achieved a gross profit margin of 74.78% (down 3.75pct from the previous year), mainly because the cloud business, which has a relatively low gross margin, has achieved relatively rapid growth, and has maintained a high overall profitability. Q2 Sales/management/R&D expenses were 0.18/0.08/022 million yuan, YoY +30.38%/+29.20%/+37.75%, respectively. The main reason was that the company continued to increase investment in market expansion, technological innovation, product development, etc., and expenses increased rapidly year-on-year during the corresponding period.
Benefiting from innovation and innovation in the defense and power industries, seize the opportunity to shut down CentOS. The company's two major areas of advantage, defense and power, have entered the “Xinchuang 2.0” era. The company actively participated in the construction of new power systems, operating systems and cloud computing businesses were further expanded in the power industry, and 23H1 achieved +61.39% of the revenue of the power industry. The company is seizing the server operating system CentOS migration and credit creation opportunities to provide products and services to dozens of high-quality customers in new industries, including China Mobile, a financial information company, and a multi-rail transit group. Facing the development trend of cloud transformation in various industries, the company is promoting cooperation with cloud vendors such as HUAWEI CLOUD and Tianyi Cloud. Operating system products have already been listed on HUAWEI CLOUD Cloud stores (joint products) and Alibaba Cloud shopping malls, and joined the Tianyi Cloud central enterprise SAAS community program. In addition, the company has further expanded the business of data security storage system products in the commercial cryptographic market, and strengthened key market development for users of information systems and critical information infrastructure protected at level 3 and above. There are typical application cases in tobacco, education, and government.
Maintain a “Highly Recommended” investment rating. Net profit for 23-25 is expected to be 135/176/233 million yuan. The company's 23H1 cloud computing revenue is growing at an impressive rate, and innovation in defense and power innovation in advantageous fields is accelerating, and seizing the opportunities for CentOS to be suspended. Maintain the “Highly Recommended” rating.
Risk warning: industry expansion falls short of expectations, competition intensifies, policies fall short of expectations.