Overview of events
On October 26, Sanwei Xinan released its third quarterly report for 2023. In the first three quarters of 2023, the company achieved operating income of 236 million yuan, an increase of 37.35% over the same period last year, a net profit of 39.6981 million yuan, an increase of 33.24% over the same period last year, and a net profit of 32.3854 million yuan, an increase of 35.54% over the same period last year.
The company Q3 achieved high growth in both revenue side and profit side performance.
In the first three quarters of 2023, the company achieved revenue of 236 million yuan, an increase of 37.35% over the same period last year; from the perspective of Q3 alone, the company achieved revenue of 133 million yuan, an increase of 70.30% over the same period last year. In the first three quarters of 2023, the company achieved a net profit of 39.6981 million yuan, an increase of 33.24% over the same period last year. In terms of Q3 alone, the company achieved a net profit of 29.5588 million yuan, an increase of 90.88% over the same period last year. The high increase in the company's performance is mainly due to 1) the gradual promotion of the commercial secret policy to stimulate the demand of the industry; 2) the company's new products are gradually put into the market, and the gradual replacement of self-developed chips brings cost-side optimization; 3) the company continues to increase market development in specific industries and fields to achieve better results. 4) the merger scope of the company has increased the newly acquired Jiangnan Keyou. On June 29, the company completed the acquisition of Jiangnan Keyou, which currently accounts for 66.9349% of its shares. In 2022, the operating income of Jiangnan Keyou is 118 million, the net profit is 22 million, the net asset is 76 million, the financial situation is good.
The acquisition of Jiangnan Keyou is expected to achieve business coordination.
From the product layout, according to Jiangnan Keyou official website, its main products are password machine and password system, including host security equipment, terminal security module, password service infrastructure, key management system, host operation and maintenance audit system, database operation and maintenance audit system and other password-related products.
From the downstream field, Jiangnan Keyou's password solution is mainly used in banking, insurance, securities and other financial fields, the password application in finance and other important industries occupies a dominant position, and enjoys a good reputation in the industry. We believe that this acquisition will further expand the product matrix of its cryptographic business and help the company to further expand its suppliers' ecologically stable financial customers, combined with the company's own cryptographic chip and cipher card business. give full play to business synergy.
With frequent secret comments on relevant policies, the prosperity of the commercial secret industry is expected to continue to pick up on May 24, the revised version of the Commercial password Administration regulations was officially announced (decree No. 760 of the State Council) and formally implemented on July 1, 2023. This policy highlights the importance of the key industry, which is the main payer of network security, and the demand for secret review is expected to be guaranteed. In addition, on June 9, the State Secret Bureau drafted the measures for the Administration of Commercial password testing institutions (draft for soliciting opinions) and the measures for the Administration of Security Evaluation of Commercial password applications (draft for soliciting opinions). In the short term, secret reviews of relevant policies are frequent, and the prosperity of the industry continues to rise.
In the long run, commercial secret, as the base of AI, data elements and data security, has a wide range of applications and broad space.
Investment suggestion
The company is the only two manufacturers in the commercial secret industry to achieve vertical integration, with scarcity. The company has strong R & D strength, starting from the high-barrier board / machine field in the commercial secret industry, upward self-research chip brings cost and performance advantages, and downwards expand the system to open up the growth space. we believe that the company is expected to enjoy the dividend brought by the accelerated development of the industry in the short / medium / long term. In addition, the company's high-performance self-developed chips to open the Internet of things market, build a second growth curve, performance is expected to grow at a high speed. We estimate that the operating income of the company from 2023 to 2025 will be RMB 502max 7.10 / 915 million, respectively, and the net profit of return to the mother will be RMB 1.45max 1.96pm 247 million respectively. Maintain a buy-An investment rating with a 12-month target price of 58.80 yuan, equivalent to a dynamic price-to-earnings ratio of 30 times in 2024.
Risk hint: the policy landing is not as expected, the industry competition is intensified, and the password chip landing is not as expected.