Incident: The company released its 2024 three-quarter report. In the first three quarters, it achieved operating income of 0.143 billion yuan, +7.55% year over year; net profit to mother -0.035 billion yuan; and gross profit margin of 75.32%, +3.38pct year-on-year. Single Q3 revenue was 0.048 billion yuan, YoY +19.91%, net profit to mother - -0.016 billion yuan. The net profit loss due to mother is mainly a seasonal characteristic of the company's three fees to increase investment combined with revenue. Sales costs/management costs/R&D expenses for the first three quarters were +24.48/27.95/25.5% year-on-year, and sales rates/management rates/R&D rates were +8.56/2.96/5.24 pct, respectively. The high cost increase is mainly due to the company continuing to increase investment in R&D, strengthen sales network construction, optimize layout, continue to expand the scale of R&D expenses and sales expenses, and increase in personnel costs.

The cybersecurity industry is developing steadily, and the company's basic cybersecurity products have a leading edge. From 2019 to 2023, China's cybersecurity scale grew from 47.8 billion yuan to 69.4 billion yuan, and CGAR was 9.77%, showing a steady growth trend. The company accounted for 5.9% of the 2023 web application firewall hardware market, ranking 5th; the 2023H1 response and orchestration software market accounted for 7.8%, ranking 3rd. Business scenario security: From 2020 to 2023, the company's business scenario security growth rate was nearly 40%. The company has developed a variety of standardized products in the fields of public safety, power and energy, fintech, operators, education, and critical information infrastructure, and will continue to contribute benefits to the company in the future.

The scale of the online space map industry is growing rapidly, and the company is a leader in online space maps. In 2023, China's cyberspace map is nearly 2 billion yuan. IDC predicts that the industry will maintain a high growth rate of nearly 50% in the next few years. Shengbang Security has been selected for the IDC Cyberspace Map report for 3 consecutive years. The company's technical capabilities, products and solutions related to cyberspace maps have been further successfully implemented in the cyber security work of key organizations such as public safety, operators, and electricity and energy markets. The construction and official launch of the Global Cyberspace Asset Surveying and Mapping Platform (DayDayMap) was completed this year, and the platform continues to drain the company.

The company acquired Tianyu Yunan to create the third largest growth pole for satellite internet security. China's satellite internet market is expected to reach 40.4 billion yuan in 2024, with a CAGR of 11.23% in 2021-2025.

The company aims to increase the satellite Internet security order scale to 1 billion yuan within the next 3 years, establish a Starnet security product line, focus on key business directions such as satellite Internet surveying and mapping, satellite communication encryption, satellite communication vulnerability analysis and security reinforcement, and create overall solutions.

Profit forecast: The company's net profit for 2024/2025/2026 is expected to be 0.061/0.085/0.111 billion yuan, +44.24%/39.05%/29.82% year-on-year, giving it a “buy” rating.

Risk warning: Industry development, company business progress, profit forecasts and valuations fall short of expectations.