云基础设施和企业端业务具备韧性。分产品来看，1H24 公司云计算及IT 基础设施业务板块中，含超融合在内的SDDC 产品线、存储和托管云产品收入保持正增长，但由于桌面云收入下滑，该板块收入同比下滑4%至11.1 亿元；占公司收入比52%的网络安全业务由于AF、AC 等成熟产线收入下滑，叠加近年新培育的XDR、MSS 等战略业务规模较小的影响，同比下滑约7%；基础网络及物联网业务收入同比下滑24%。分行业来看，1H24 公司企业/政府及事业单位/金融及其他客户收入分别同比+2.5%/-15.9%/-18.2%至13.8/10.7/2.6 亿元，公司渠道触达更广的企业端收入有相对韧性。Convinced that 2Q24's net profit loss narrowed year on year, which is basically in line with market expectations, and Convinced announced 1H24 results: revenue -7.7% year over year to 2.71 billion yuan, net loss to mother increased by about 40 million yuan to 0.59 billion yuan year on year, and net loss after deducting non-net profit loss increased by about 70 million yuan to 0.65 billion yuan year on year.
In the second quarter of a single quarter, revenue was -2.8% to 1.67 billion yuan, and the decline narrowed month-on-month; net loss to mother narrowed by 40 million yuan to 0.1 billion yuan year-on-year, and after deducting non-net loss, it narrowed by 20 million yuan to 0.14 billion yuan year-on-year. Net profit loss for 2Q24 narrowed year on year, which was basically in line with market expectations.
Development trends
Cloud infrastructure and enterprise-side businesses are resilient. By product, in the cloud computing and IT infrastructure business segment of 1H24, revenue from SDDC product lines, storage and managed cloud products, including hyperconvergence, maintained positive growth, but due to the decline in desktop cloud revenue, the revenue of this sector fell 4% year on year to 1.11 billion yuan; the cybersecurity business, which accounts for 52% of the company's revenue, was reduced by revenue from mature production lines such as AF and AC, compounded by the smaller scale of strategic businesses such as XDR and MSS, which were newly cultivated in recent years, falling about 7% year on year; revenue from basic network and IoT businesses fell 24% year on year. By industry, the revenue of 1H24's enterprises/government and institutions/financial and other customers was +2.5%/-15.9%/-18.2% compared to 1.38/1.07/0.26 billion yuan, respectively. The company's corporate revenue reaching a wider range of channels is relatively resilient.
Cost reduction and efficiency improvements continue to advance, and there is plenty of cash on hand. 1H24's gross margin declined due to fluctuations in revenue structure. The company continued to promote cost reduction and efficiency. The total three fees for 1H24 decreased by 7.4% to 2.53 billion yuan; the total three fees for 2Q24 decreased by 8.5% to 1.27 billion yuan, and the R&D/sales/management expenses ratio was -5.5/+0.5/+0.2 to 37.5%/6.0%/32.7% year on year, respectively. In 1H24, the company's net operating cash flow outflow increased by 0.69 billion yuan to 0.98 billion yuan over the same period last year, mainly due to the company's advance inventory preparation. The company's cash reserves are relatively abundant. Our estimates show that the company had about 7.8 billion yuan in cash as of the end of 2Q24. We believe that in the midst of fluctuations in the external environment, sufficient cash on hand is expected to protect the company's long-term steady growth.
Continue to delve deeper into segmented fields and wait for demand to recover. Since 2022, downstream customers have been cautious about investing in cybersecurity budgets as a cost item, and the short-term market size growth rate has slowed, and the company has continued to further develop segmented racetracks. According to IDC, the company maintains the largest market share of AC, VPN, and hyperconverged products across the network. Looking ahead, the company continues to improve product competitiveness, expand more XaaS and cloud-based business scenarios, and iteratively upgrade its security business around “security effects” while evaluating and implementing channel strategies. We believe that the company continues to refine its internal skills amid fluctuations in the macroeconomic environment, which is expected to consolidate future growth.
Profit forecasting and valuation
Maintain the outperforming industry rating, keep profit forecasts basically unchanged, and reduce the target price by 22% to 60 yuan (based on 3.1/2.9 x 2024/25e P/S). The current stock price corresponds to 2.3/2.1x 2024/25e P/S, with 36% upward space.
risks
The recovery in customer demand fell short of expectations, and the expansion of new products fell short of expectations.
