Main points of investment
Event: the company released the third quarter report of 2023, the revenue in the first three quarters of 2023 was 1.648 billion yuan, an increase of 12.63% over the same period last year, of which Q3 realized revenue of 644 million yuan, an increase of 10.32% over the same period last year. In the first three quarters, the net profit was-248 million yuan, an increase of 40.85% over the same period last year, of which Q3 realized a net profit of-36 million yuan, an increase of 83.09% over the same period last year. In the first three quarters, the deduction of non-net profit was-264 million yuan, an increase of 42.38% over the same period last year, of which Q3 deducted non-net profit of-41 million yuan, an increase of 81.16% over the same period last year.
Revenue from new businesses such as cloud computing, Xinchuang and cloud security has maintained rapid growth, and gross profit margins have improved significantly. The overall business of the company maintained growth. Security products, security services, cloud computing and cloud security products increased by 13.49%, 7.65% and 42.22%, respectively, while big data and situational awareness products decreased by 19.58%. Among them, thanks to the remarkable results of the company's channel expansion strategy, new business still maintained high growth. In the first three quarters, cloud computing revenue increased by 35.83% compared with the same period last year, Xinchuang revenue increased by 185.73%, and cloud security revenue increased by 45.46%. At the same time, the company's Q3 gross profit margin increased 20.77pct compared with the same period last year, mainly due to the increase in the proportion of high-margin business.
Personnel structure continues to optimize, reduce costs and increase efficiency to drive the continuous improvement of management quality. On the expense side, the comprehensive expense rate fell by 11.17pct in the first three quarters of 2023 compared with the same period last year. The main reason is that, on the one hand, the company continues to strengthen its personnel optimization strategy, and the rate of R & D expenses has decreased by 7pct compared with the same period last year; on the other hand, the decline in share payment fees has led to a decline in the rate of management expenses 3.24pct compared with the same period last year. At the same time, the company's operating quality has further improved, and the relevant financial data such as accounts receivable, sales refund, net cash flow of operating activities and other related financial data have been improved, of which the net cash flow generated by Q3 operating activities is 112 million yuan, from negative to positive.
Tianwen big model, AI firewall and other AI+ security products have been released to further enable security services. In September, the company released the Tianwen model, which fine-tuned the knowledge of the network security industry and Tianrongxin's products, and applied it to provide security knowledge analysis services such as intelligent Q & An and threat intelligence. improve the efficiency of customer support while reducing the workload of manual customer service, in order to provide fast and convenient solutions. At the same time, the company has launched a TopASK intelligent customer service question answering system based on the Tianwen model, which will further strengthen the detection ability, classification and protection ability, vulnerability mining and protection in the future.
Investment suggestion: as the pioneer and industry leader of the domestic firewall market, the company is expected to continue to benefit from policies such as AI regulation, information innovation, data security and so on. To maintain the profit forecast, it is estimated that the company's income for 23-25 years will be 42.71 billion yuan, 5.390 yuan, 6.872 billion yuan, respectively, and the net profit will be 3.83 million yuan, 501 billion yuan, and maintain the company's "buy" rating.
Risk tips: business progress is not as expected; downstream customer demand is not as expected; organizational structure adjustment is not as expected