Incident: The company released a report for the first quarter of 2024. During the reporting period, it achieved operating income of 1,035 million yuan, a year-on-year decrease of 14.66%; net profit loss due to mother of 489 million yuan, an increase of 18.64%; net profit loss after deducting non-return to mother of 512 million yuan, an increase of 19.65%.
Performance is under pressure, and expenses are strictly controlled. The company released a report for the first quarter of 2024. During the reporting period, it achieved operating income of 1,035 million yuan, a year-on-year decrease of 14.66%; net profit loss to mother of 489 million yuan, an increase of 18.64%; net profit loss after deducting non-return to mother of 50,000 yuan, which increased 19.65%, putting pressure on performance; gross margin was 58.18%, a decrease of 3.93 percentage points over the same period last year; sales expenses were 636 million yuan, a decrease of 4.84% year on year; and R&D expenses were $532 million, a year-on-year decrease of 8.17%. In terms of cost ratios, sales/management/ R&D expenses were 61.48%/8.74%/51.373%, respectively, all down from the same period last year.
The “AI First” strategy has been strengthened, and product competitiveness continues to improve. During the reporting period, the company released an upgraded version of Secure GPT 3.0, a self-developed AI computing power platform, a new paradigm of security construction 2.0, a new EDS storage version, and SKE container engine. The release of these products reflects Convinced's increased investment in AI and cloud-enabled innovation. The aim is to provide users with simpler and safer digital solutions through technology upgrades and new product launches. The upgraded version of Secure GPT 3.0 achieved a significant improvement in the detection rate of targeted phishing attacks, reaching 91.4%, far exceeding traditional solutions. This achievement not only shows the progress of convinced AI technology applications, but also provides users with a more efficient and secure network environment. In addition, the company also launched a self-developed AI computing power platform, which marks a further strengthening of the company's independent research and development capabilities and helps promote the company's technological innovation and application expansion in the AI field. At the same time, the launch of the new paradigm of security construction 2.0, as well as the release of the new EDS storage version and the container engine SKE, are all product updates and optimizations focused on improving user experience and meeting market needs. For Convinced, the release of these products is not only a concrete expression of the implementation of its “AI First” strategy, but also helped the company maintain its leading position in fierce market competition, while also bringing users richer and more advanced product choices, and promoting technological progress and development of the entire industry.
Investment advice: We expect the company's 2024-2026 revenue to be 81.84/90.83/10.362 billion yuan, and the company's 2024-2026 EPS will be 0.58/0.75/1.02 yuan, with corresponding price-earnings ratios of 95.11X/73.69X/ 53.91X, respectively. As a leading network security and cloud computing company, the company's performance growth rate will gradually recover as the downstream boom recovers, giving it a “careful recommendation” rating.
Risk warning: the risk that downstream enterprises will not be as prosperous as expected; the risk that market space is limited.