Guardian Connect: A leader in the cryptographic security market. Westgate was founded in 1998 and listed on the Shenzhen Stock Exchange in 2008. It is a well-known domestic comprehensive provider of cryptographic products, network security products, security operation and maintenance services and industry security solutions. It is a leader in the domestic cryptographic security market. CLP NetSecurity holds 35.43% of the shares. CLP Telecom is the actual controller, and the company's shareholding structure is clear. Comrade Qing Yu is the chairman. The main members of the board of directors all have professional backgrounds in information security and have good judgment and execution ability on industrial development.
The implementation of laws and regulations, the high growth of new application scenarios, and cybersecurity incidents are driving demand in the commercial cryptographic market, and the general application of cryptography has become a trend. 1) On the policy side, in 2019, China successively promulgated network security industry laws and regulations such as Wait Insurance 2.0 and the “Cryptographic Law”, and demand for cryptographic security is expected to continue to be released. Among them, the new standard for “equivalence 2.0” cryptography is more detailed and clear than “equal assurance 1.0”. It clarifies strict evaluation standards in terms of cryptographic authentication methods, cryptographic technology, cryptographic country and industry standards, etc., and the introduction of the “Cryptographic Law” makes it clear that cryptography is the core technology and basic support for network and information security, and domestic substitution is trending. In December 2020, the State Cryptographic Administration issued 26 cryptographic industry standards, including the “Trusted Computing Trusted Cryptographic Module Interface Specification”, which has been implemented since July 1, 2021. Policy compliance has been promoted by strong policy compliance Whether to spend; 2) Passwords are ubiquitously applied in new scenarios such as cloud computing and the Internet of Things, and the transformation of services into a trend. Cryptographic technology protects applications such as cloud computing, big data, artificial intelligence, and the Internet of Things. Cryptographic services cover a wide range of governments, enterprises, organizations and the public, and ubiquitous applications are becoming a trend. As a leading provider integrating cryptographic algorithms, cryptographic technology, cryptographic products, and cryptographic services, Gueston is expected to stand out from the ubiquitous trend; 3) Frequent security incidents such as data breaches and cyber attacks are expected to increase the proportion of network security investment in IT spending. A multi-factor resonance is expected to drive the crypto industry boom.
As the only listed company under China NetSecurity, the company has scarce platform value along with the transformation of institutions and the promotion of policies to expand and strengthen state-owned enterprises. China Electronics Technology Network Information Security Co., Ltd. (China NetSecurity), the controlling shareholder of the company, is a cybersecurity sub-group that China Electronics Group, the actual controller of the company, focuses on according to the development needs of the national security strategy. It has a natural advantage in supporting the country's cybersecurity strategy tasks and winning the trust of customers at the top level in key fields. It has strong technical strength and innovation capabilities, and can provide strong support for the continuous improvement and innovation of the company's business, technology, products and other capabilities. As the only listed company of China NetSecurity, the company has scarce platform value.
The company has advantages in strategic planning and execution, product competitiveness and channel construction. The company's main management all have professional backgrounds in network security technology. The company actively promotes product development strategies based on ubiquitous cryptography, intelligent attack and defense, and security services, and insists on independent innovation and high-intensity R&D. It has built a full product system covering chips, modules, platforms, complete machines and systems. At the same time, they continue to participate in the formulation of national standards and major industry standards, and the product competitiveness is strong. Through the five major regional marketing centers in North China, East China, South China, Western China, and Sichuan, and more than 20 offices, combined with the shareholder background of the network security national team, the comprehensive advantage in entering into the password security needs of government customers and large enterprises at all levels is remarkable.
Maintain a “buy” rating. We expect the company's revenue to be 2,09/2,763 million yuan in 2020/21, and net profit of the mother to be 169/231 million yuan, maintaining the “buy” rating.
Risk warning: Competition increases risk; policies are not as strong as expected; risk of slow deployment of new fields.