Event: The company released its three-quarter report on October 31, 2024. 2024Q3 achieved operating income of 0.048 billion yuan, a year-on-year increase of 19.91%; net profit due to mother -0.016 billion yuan; net profit after deducting non-return to mother -0.019 billion yuan; and gross profit margin of 73.49%, an increase of 3.33 pcts year-on-year. In the first three quarters of 2024, the company achieved operating income of 0.143 billion yuan, a year-on-year increase of 7.55%; net profit due to mother -0.035 billion yuan; net profit after deducting non-attributable net profit of -0.043 billion yuan; and gross profit margin of 75.32%, an increase of 3.38 pcts year-on-year.

Network authentication+satellite security+military IT built a strong inflection point in performance. The company publicly stated on the investor trading platform on October 11 that the company has mature technology and products in trusted identity access gateways and trusted identity service platforms, and can play a role in business scenarios such as network authentication; according to an exclusive interview with the Financial Services Association on October 16, the company's vice president Yuan defined the company as the dual role of a “provider” and “supporter” of network data assets to provide customers in various industries with products and solutions in terms of data technology, data applications and data security; the company strategically acquires satellite communication encryption manufacturer Tianyu Yunan to jointly develop satellite security In the field, various innovative products and solutions, including the DayDayMap global cyberspace asset surveying and mapping platform and satellite internet security solutions, have been released, reflecting a profound layout in the field of satellite security; products such as cyberspace maps are aimed at special industries, and events such as the establishment of an information support force are expected to open up a second business growth curve.

The shareholding plan may demonstrate management's confidence in the inflection point of performance. The company set a specific performance assessment target in the draft employee stock ownership plan on September 19, that is, based on 2023 revenue, the 2024 revenue growth rate will reach 30% or more. This target value (Am) is 30%, and the trigger value (An) is 21%. It shows the company's management's confidence in the company's future development. By setting specific performance goals and establishing incentive and restraint mechanisms, employees are motivated to ensure the continuous growth of the company's performance.

Investment suggestions: The unified “online certification” system is expected to trigger a complete change in the personal information authentication logic, and substantially reinvent the identity authentication market: trusted authentication devices+hosting platforms are expected to be 0 to 1. We expect Shengbang Security's 2024-2026 revenue to be 0.381, 0.503, and 0.68 billion yuan respectively, and EPS will be 0.81, 1.26, and 1.90 yuan respectively. The market value corresponding to PE on November 1, 2024 will be 43X, 28X, and 19X respectively, maintaining the “recommended” rating.

Risk warning: Uncertain external environment; technology research and development falling short of expectations; industry competition heightens risk.