Incident Overview

The company recently released its three-quarter report for 2024. In the first three quarters of 2024, the company achieved revenue of 0.819 billion yuan, an increase of 13.78% year on year, and achieved revenue of 0.317 billion yuan in Q3, an increase of 14.01% year on year. In the first three quarters of 2024, the company achieved net profit of 0.092 billion yuan, a year-on-year increase of 37.73%, and achieved net profit of 0.04 billion yuan in Q3, an increase of 45.76% over the previous year.

The company's revenue side continued to achieve double-digit growth, maintained steady growth, profit margins continued to improve year-on-year, and the overall business trend was improving.

Various industry lines are expanding steadily, and the quality of operations continues to improve

On the revenue side, the company achieved revenue growth of 13.78% in the first three quarters of 2024. By industry, due to factors such as national trillions of treasury bonds, there was a marginal improvement in government demand, and the company's early investment results were gradually reflected; in the financial industry, the company fully grasped the business opportunities of domestic substitution, and served many leading customers in the financial market with excellent product stability, leading business processing capabilities, and rich operating experience.

On the profit side, the company's comprehensive gross margin for the first three quarters of 2024 was 67.23%, down 1.1 pct year on year. We think this is probably mainly due to changes in the company's revenue structure. The sales/management/R&D expense ratio for the first three quarters of 2024 was 37.66%/4.02%/24.70%, a change of -3.01/+0.16/ -1.94pct compared to last year. In terms of cash flow, the company's cash inflow for the first three quarters of 2024 to provide services was 0.982 billion yuan, an increase of 41.96% year on year, and the net operating cash flow was 0.122 billion yuan, which was significantly corrected from last year. On the one hand, the company's good cash flow shows that the company has strengthened repayment and improved operating quality. On the other hand, it has further enhanced the company's resilience to risks and achieved steady operation of the business.

Actively lay out the AI security and computing network business. The trend of load balancing localization is obvious. Judging from the expansion of the company's new business, the company invested earlier in AI security research, including model security and the impact of AI on attack and defense. In particular, in terms of security operations, AI has clearly improved processing efficiency and capabilities. In terms of computing power scenarios, the company has increased investment in computing power networks, computing power platforms, etc. based on deep understanding of underlying communication technology and deep technical accumulation, covering scheduling, management platforms, security, and connectivity devices related to computing power networks in the computing power network scenario. The company continues to strengthen collaboration with business partners and actively promote project implementation.

In terms of load balancing business, localization substitution is gradually being scaled up, and localization substitution in electricity, finance, operator and other markets is progressing in depth. In the operator market, the company is actively promoting the collection and implementation of projects related to load balancing equipment; in the electricity market, Xinchuang load balancers, firewalls, etc. are being promoted; the company has added services such as Everbright Bank and Industrial Bank in the financial industry this year, and sales of domestic load equipment have continued to increase.

Investment advice:

Dipu Technology focuses on the field of cybersecurity and application delivery. It is a leading manufacturer in the domestic cybersecurity industry. Currently, the company focuses on high-value customers such as operators, finance, electricity and energy, and is gradually expanding to other customers such as government enterprises. We expect the company to achieve operating income of 1.232/1.475/1.773 billion yuan and net profit to mother of 0.177/0.237/0.299 billion yuan in 2024/25/26. The investment rating of increasing holdings is maintained, and a 6-month target price of 25.76 yuan is given, corresponding to a dynamic price-earnings ratio of 70 times that of 2025.

Risk warning: downstream customer demand falls short of expectations; technology development falls short of expectations.