Event: on August 30, the company released its semi-annual report of 2023, with revenue of 262 million yuan in the first half of 2023, an increase of 22.45% over the same period last year, a net profit of-32 million yuan and a loss of 24.87% over the same period last year.

The growth of business income is good, and the growth rate of integrated business H1 such as security ecology is relatively fast, which affects the overall gross profit margin in the short term. In 2023, H1, on the basis of reducing costs and controlling fees, the company continued to promote business transformation, increasing investment in talent introduction, business development, product research and development, technological innovation, etc., resulting in performance pressure. According to the business composition: in 2023, the revenue of network security products is 161 million yuan, an increase of 4.3% over the same period last year; the company focuses on the compliance application under the new commercial password specification, and develops commercial password intelligent supervision service platform products; research and development of V2X integrated card with V2X password calculation, management and communication chip module integration, layout of vehicle networking inter-vehicle security kernel. 2) the revenue from network security services is 73 million yuan, an increase of 39.9% over the same period last year. The company has made great efforts to strengthen the password security construction of government systems and large enterprises, continued to develop in the government, military and other industry markets, and continued to increase the coverage of regional business. Expand the scope of network security services. 3) the ecological revenue of network security is 28 million yuan, an increase of 279.2% over the same period last year. The substantial growth of the company's security integration business has affected the gross profit margin to a certain extent. In 2023, the gross profit margin of H1 company was 56.1%, down 9.0 percentage points from the same period last year.

The construction of digital factor market will lead to the expansion of security market and help the company to grow in the future. From the release of policies such as "20 articles of data" and "overall layout Plan for Digital China Construction" to the appointment of the director of the State data Bureau and the issuance of the "interim provisions on Accounting treatment of Enterprise data Resources", the importance of market construction of data elements has been raised to an unprecedented level. According to the data of the Research Institute of Shanghai data Exchange, the market size of data elements in China will reach 81.5 billion yuan in 2021, and the compound growth rate of market size is expected to exceed 25% from 2021 to 2025. Based on password technology, the company has formed a password-driven data security product system. With the construction of the data element market, the scale of the relevant security market is expanded, which is expected to provide strong support for the company's future performance growth.

The policy promotes the accelerated development of the information innovation industry, and the military industrial orders are gradually expanding. In the first half of 2023, the company paid attention to the business development of cloud security services, signed a cooperation agreement with Huawei Cloud Computing Technology Co., Ltd., and changed secret assessment to winning a number of provincial and municipal "government cloud" projects. Successfully signed Shenzhicheng national password resource pool pilot construction project, national version library project and so on. We will continue to promote the landing of projects in the Xinchuang market and government market, and further increase market investment in electronic license, electronic bills, mobile payments and other businesses, so as to increase market influence. In the military industry and army, the company continues to increase investment in independent research and development, achieving a breakthrough in multi-model projects. With the continuous improvement of the digital and information level of national defense construction, the company's military business is expected to grow rapidly.

Profit forecast: taking into account macroeconomic factors and the deferred impact of some of the company's business, the 23-25 net profit forecast for homing is reduced to 1.95Uniqure 282Plus 383 million (adjustment range-22.6% Uniqure 15.3% Universe 8.5%); EPS for 23-25 is 1.06Universe 1.532.07, corresponding to PE 22x/15x/11x, maintaining the "Buy" rating.

Risk hint: the market competition intensifies, and the development of the network security industry is not as expected.