Events:

The company released a 23-year third-quarter report that in the first three quarters of 2023, the company achieved revenue of 343 million yuan, an increase of 10.10 percent over the same period last year; net profit of-12 million yuan, down 122.51 percent; and non-return net profit of-13 million yuan, down 125.62 percent from the same period last year.

Comments:

2023Q3 achieved revenue of 165 million yuan in a single quarter, an increase of 17.15 percent over the same period last year, maintaining steady growth; net profit of 16 million yuan, down 46.64 percent from the same period last year; and deducting 15 million yuan of non-return net profit, a decrease of 47.87 percent over the same period last year. The decline in profits is mainly due to the increase in costs during the acquisition of Universal Technology and the implementation of employee incentive programs.

Due to the impact of universal mergers and acquisitions and depreciation of fixed assets, the expense rate increased during the third quarter. In terms of expenses, the company's R & D expenditure in the third quarter was 48 million yuan, an increase of 45.04% over the same period last year, accounting for 28.97% of the revenue. Sales expenses totaled 28 million yuan, up 33.73 percent over the same period last year, while administrative expenses totaled 14 million yuan, down 17.80 percent from the same period last year.

With the release of commercial password industry standards in the securities industry, the company is expected to benefit from the improvement of financial innovation and transformation.

The China Securities Association recently issued to securities firms the guidelines for the launch of Commercial password applications in the Securities Industry (draft for soliciting opinions) to further guide securities institutions to standardize the launch of commercial password applications, including self-examination of commercial password applications in information systems, online implementation, and emergency management, so as to facilitate regulators to evaluate the password applications of various industry institutions.

Acquire universal science and technology to enhance the company's competitiveness in the military and military fields. In the first half of the year, the company completed the acquisition of 80% of Universal Technology, adding data security products such as cross-network isolation switching, terminal security control and data security archiving, and enriching data security product functions and solutions. We believe that the acquisition of Universal Technology will help to enhance the competitiveness of the company's products in the military and military industries, and is expected to further promote the performance of the company.

Profit forecast and valuation analysis:

Taking into account the impact of the follow-up consolidation of the company's Universal Technology and the increase in expense rate during the company period, we downgrade our previous profit forecast. We estimate that the company's 23-25 revenue of 7.96pm 9751,219 million (the original forecast of 841pm 1.071pm), and the homing net profit of 1.80330,302 million yuan (the original forecast of 221,01pm 379 million), maintaining the "buy" rating.

Risk hints: market competition intensifies, financial innovation falls short of expectations, and technological development falls short of expectations.