Incident: The company released its 24-year report. During the reporting period, it achieved revenue of 0.698 billion (+0.29%), net profit to mother of 0.276 billion (+32.56%), and deducted non-net profit of -0.286 billion (+32.12%). According to this calculation, Q2 achieved revenue of 0.417 billion yuan (+15.96%) in a single quarter, net profit to mother of 0.075 billion (+65.68%), after deducting non-net profit of 0.082 billion (+63.89%).

The Q2 revenue growth rate has recovered, and the electricity, central state-owned enterprises, and telecommunications sectors are growing faster. Looking at downstream customers, revenue from the power industry grew the fastest, increasing by more than 150% over the same period last year, while revenue from central state-owned enterprises and the telecommunications sector all increased by more than 60% compared to the same period last year. In addition, the 2024Q2 single quarter order volume for the public security, oil and gas industries also achieved rapid growth.

The gross margin remained stable, and the cost reduction and efficiency increased significantly. The company's consolidated gross margin for the first half of 2024 was 55.15%, up 1.23 pct year-on-year. Furthermore, the total cost rate for the period was 97.44%, a year-on-year decrease of 31.21pct. Among them, the sales expense ratio, management expense ratio, and R&D expense ratio were 49.80%, 9.59%, and 35.67%, respectively, down 14.55 pcts, 4.93 pcts, and 12.65 pcts year-on-year respectively, mainly due to the reduction in the company's employee remuneration and share payments in the current period.

Strategies for emerging products such as data security and MSS continue to advance. In the first half of the year, the company's new data security products integrated the ability of the Everbrain · Security Platform Large Model, and revenue increased 150% year-on-year, and continued to maintain leading competitiveness. Xinchuang security products increased 80% over the year, and commercial cryptographic revenue increased by more than 100% compared to the same period last year. At the same time, the company's customer stickiness increased, and repurchase revenue and subscription revenue continued to grow. The company's MSS contract amount increased by nearly 20% compared to the same period last year.

By reducing the revenue growth rate, gross profit margin, and adjusting the cost ratio level, we forecast the company's 24-26 revenue of 2.251, 2.466, and 2.717 billion yuan, respectively (the original 24-25 forecast was 3.298 and 4.169 billion yuan, respectively). According to the comparable company's PS level for 24 years, the company was given 2 times PS for 24 years, and the corresponding reasonable stock price was 44.02 yuan, maintaining an increase in holdings rating.

Risk warning

The risk that policy implementation falls short of expectations;

The risk of increased competition in the industry

Risk of revenue falling short of expectations due to poor promotion of new products