Revenue and net profit to mother grew steadily in the first three quarters. The company's revenue for the first three quarters was 0.819 billion yuan, +13.78%, net profit to mother 0.092 billion yuan, +37.73%, net profit after deducting 0.081 billion yuan, +33.3%; gross profit margin 67.23%, -1.1 pct, net profit margin 11.28%, +1.96pct.

Net profit to mother increased sharply in a single quarter in the third quarter. Q3 revenue 0.317 billion yuan, +14.01%, net profit to mother 0.04 billion yuan, +45.76%, net profit after deducting 0.035 billion yuan, +34.59%; gross profit margin 65.14%, -4.54pct, net profit margin 12.73%, +2.77pct.

Safety products are widely used in all walks of life. Anti-DDoS products and solutions have been widely used in key information infrastructure industries such as government, operators, finance, etc., and industry scenario-based customization and implementation have been completed according to the actual needs of different industries. According to IDC 2023 data, the market share of the company's hardware anti-DDoS products ranks third in the domestic market.

The performance of network and application delivery products is outstanding. The “Self-Secure Optical Network Solution” was launched. The box-type stand-alone unit surpassed 300G, and the maximum frame-type machine can reach 800G throughput. It is in a leading position in the industry. 2024Q1 load balancing products rank second in the market share of application delivery in China.

AI provides data security support. It provides quantitative indicators for key control measures mapped to the IPDRR framework, and uses AI-based data security automation tools and platforms to provide data security support.

The power business is expanding steadily. Long-term and close cooperation has been established with China Grid, China Southern Power Grid and major power generation groups, and domestic application delivery products have been deployed on a large scale in the China Grid headquarters data center and grid province.

Cost rates are continuously optimized. 24Q3 sales, management, finance, and R&D expenses rates were 36.68%, 3.63%, -3.85%, and 23.36%, respectively, -1.97pct, +0.11pct, +0.40pct, and -1.82pct, respectively.

Profit forecasting and investment advice. We expect the company's revenue for 2024-2026 to be 1.222 billion yuan, 1.458 billion yuan, and 1.728 billion yuan, and net profit to mother will be 0.163 billion yuan, 0.207 billion yuan, and 0.263 billion yuan respectively, corresponding to EPS of 0.25 yuan, 0.32 yuan, and 0.41 yuan respectively. Referring to comparable company valuations, the 2025 PE range is 55-65x, and the corresponding reasonable value range is 17.60 yuan to 20.80 yuan, giving a “superior to the market” rating. We believe that the huge amount of data transmission brought about by the development of AI and data elements will drive an increase in demand for cybersecurity, while also placing higher demands on cybersecurity technology. As a leading enterprise in the field of cybersecurity hardware technology and cybersecurity AI, the company is expected to benefit deeply.

Risk warning. Competition in the industry intensified, and market demand fell short of expectations.