Event: green League Science and Technology released a semi-annual report for 2023, the company realized revenue of 712 million yuan, down 14.66% from the same period last year; realized net profit of-415 million yuan, down 91.72% from the same period last year; and realized deduction of non-net profit of-430 million yuan, down 92.44% from the same period last year. From the perspective of 2023Q2 alone, the company achieved revenue of 383 million yuan, down 24.59% from the same period last year; realized net profit of-234 million yuan, down 132.21% from the same period last year; and deducted non-net profit of-242 million yuan, down 123.23% from the same period last year.

Revenue is under pressure in the first half of the year, and future performance is expected to improve. 2023H1 achieved revenue of 712 million yuan, down 14.66% from the same period last year. In terms of industry, the revenue of finance / telecom operators / energy and enterprises / government, institutions and others respectively reached 1.23 million yuan, down 8.71%, 14.76%, 9.57%, 21.67% respectively. 2023H1 maintains the steady growth of orders in key industries such as operators and head finance, continues to make efforts in education, enterprises and other customers, and strives to overcome the pressure from the government, transportation and energy industries. the total amount of newly signed orders is basically the same as last year, but limited by the external market environment and customer funds, the contract execution cycle has been lengthened. And from the point of view of the order structure, the proportion of service contracts has increased compared with the same period last year and the whole of last year, resulting in a longer cycle for some orders to be recognized as income, affecting the rhythm of revenue recognition. In terms of products, revenue from security products and security services reached RMB 359 million, down 32.53% and 6.45% respectively, while revenue from third-party products and services totaled 82 million yuan, up 556.10% from the same period last year. Due to the seasonal distribution of the company's sales business, there are few new orders and realized sales revenue in the first half of the year, while the company's R & D, market and other inputs have pre-characteristics, and relatively uniform expenditure in the year, resulting in uneven seasonal distribution of revenue and profits. The company's annual sales performance is usually reflected in the second half of the year, especially Q4, we believe that the company since Q3 orders are expected to begin to increase, looking forward to the second half of the year, performance is expected to pick up and achieve smooth repair.

The gross profit margin of core products is stable, and the growth rate of the three major expenses is slowing down. On other important financial indicators, during the 2023H1 period, the company's gross profit margin was 50.71%, down 9.27pct from the same period last year. From a product point of view, the gross profit margin of security products / security services / third-party products and services is 62.32%, 49.78% and 2.99% respectively, down 0.40pct/6.91pct/15.62pct from the same period last year. Affected by the decline in gross profit margin of some third-party products and security services, the company's sales gross profit margin is lower than that of the same period last year, but through supply chain management and strict control of delivery cost rate. The gross profit margin of the company's core products remains stable. On the cost side, the sales expenses / management expenses / R & D expenses of 2023H1 Company are RMB 1.02pm, an increase of 14.91%, 9.16% and 7.16% respectively over the same period last year. The company promotes comprehensive budget control, focusing on improving the cost-efficiency ratio and input-output ratio, and the cost growth has slowed down compared with the same period last year and the whole of last year.

Breakthroughs have been made in many directions and SaaS revenue has increased. The company continues to innovate its security service capabilities and has made breakthroughs in cloud services, intelligent networking vehicles, data classification and classification, security operations and other areas. The company focused on improving the safe delivery rate and automation capability. In the first half of the year, SaaS service revenue increased by 25%. The attack surface management service won the bid for key units such as Shanghai Agricultural and Commercial Bank of China to meet the needs of customers' cyclical + automated full asset inventory, and successfully broke the ice in overseas markets. In the field of intelligent network-connected automobile, three services of intelligent network-connected automobile safety system consultation, threat analysis and risk assessment, and safety test force design were released in the first half of the year, helping the rapid growth of vehicle networking business.

New data security products are released and new security solutions are constantly developed. In the field of data security, 2023H1 has released two new products, Green Alliance data safe and Green Alliance data security inspection system, with a data security capability coverage of more than 60%. At the same time, it has formed data security solutions for nine sub-industries, such as tobacco and banking, as well as privacy computing "Digital Lake" solutions based on Green Alliance data safes. In the field of cloud security, the company's orders reached 185 million yuan in the first half of the year, an increase of 20% over the same period last year, winning a number of industry cloud security benchmarking projects. The company's cloud workload protection platform integrated with cloud security centralized management system, cloud native security and SASE was shortlisted for Gartner CWPP Innovation Insight report. T-ONECloud Zhianyun won the industry's first CCRC data security certification and achieved the landing of the government industry and operator industry, with a 148% year-on-year increase in the number of users in the first half of the year. For industrial Internet security, a new Green Alliance industrial network security compliance assessment tool is launched to quickly locate risks for regulators, Guanji customers, system integrators and so on.

Profit Forecast: we estimate that the EPS of 2023-2025 is 0.20 Universe 0.44 per cent, and corresponding to 2023-2025, the PE is 15.83 times of 50.97 plus 23.38 per cent respectively.

Risk tips: downstream customer demand is not as expected, the progress of related technology research and development is not as expected, and competition in the network security industry is intensified.