Events:
The company issued the "KuaiBao announcement of 2020 results" after the close on February 25, 2021.
Comments:
Continue to increase investment in R & D and market, since the second half of the year, customer demand has gradually recovered and released. In 2020, the company achieved operating income of 725 million yuan, an increase of 7.53% over the same period last year, and a net profit of 60.3095 million yuan, down 33.76% from the same period last year. In 2020, the main reasons for the slowdown in revenue growth and the decline in net profit compared with the same period last year are: 1) due to the influence of COVID-19 's epidemic, customer demand in the lower reaches of the network security industry has been delayed or reduced, market competition has intensified, and gross profit margin has declined compared with the same period last year; 2) the company has obtained a reduction in value-added tax rebates for software products and government subsidies for science and technology projects compared with the same period last year; 3) the company has adopted corresponding price competition strategies to consolidate and enhance market competitiveness 4) the company continues to increase investment in product research and development, marketing system construction and market promotion. Since the second half of 2020, with the domestic epidemic situation gradually under effective control, the resumption of production and work in various industries has been promoted in an orderly manner, and the demand of downstream customers has been gradually restored and released.
Actively carry out transformation and upgrading, continue to expand the product line, and lay out in advance for future growth in 2020, the company continues to increase investment in product line expansion, marketing system expansion, brand promotion, strategic cooperation and so on. the aim is to lay a solid foundation for future performance growth and make a good layout in advance. At present, the company's main source of revenue is the border security product line, including next-generation firewalls and IDS/IPS.
With the expansion of the product line, the proportion of border security products is declining year by year; the cloud security product line is growing rapidly, accounting for 3.51%, 4.23% and 5.29% of revenue from 2017 to 2019, respectively. At the same time, the company is actively laying out emerging areas such as situational awareness and security services, which is expected to gradually open up the company's growth space.
Issue equity incentive plan to further enhance employee cohesion and team stability, on December 3, 2020, the company released the 2020 restricted Stock incentive Plan (draft). The company intends to grant 4.5055 million restricted shares, accounting for about 2.50% of the total share capital, with a grant price of 21.06 yuan per share. The number of incentives granted for the first time (senior executives and backbone personnel) does not exceed 184, accounting for about 16.96% of the company's total employees at the end of 2019. The assessment target at the company level is that the growth rate for 2021-2024 will not be less than 25%, 50%, 75% and 100%, respectively, based on the operating income value in 2020. According to estimates, the impact of the amortization of incentive expenses on 2021-2025 is 25.4988 million yuan, 16.9394 million yuan, 9.3311 million yuan, 445.40 yuan and 839 million yuan respectively.
We believe that the company's incentive plan assessment system is comprehensive and operable, which will further enhance staff cohesion, effectively stimulate the enthusiasm of the management team, and improve business efficiency.
Investment advice and profit Forecast
With the landing of policies such as Insurance 2.0, the network information security industry has ushered in a high growth cycle, and the company is expected to fully benefit from the medium-and long-term development process. With reference to KuaiBao announcement, the company's operating income forecast for 2020-2022 is adjusted to 7.25,9.54 (0.61), 12.05 (0.58) million yuan, and the home net profit forecast is adjusted to 0.60 (0.43), 1.10 (0.19), 1.45 (0.18) million yuan, and EPS is 0.33,0.61, 0.80 yuan per share.
At present, the PE TTM of the computer (Shenwan) index is 66.7times, considering that the company's current income is small and there is more room for growth in the future. at the same time, the company is actively carrying out transformation and upgrading, raising the company's 2021 target PE to 75 times, corresponding to a target price of 45.75 yuan, maintaining a "buy" rating.
Risk hint
COVID-19 's repeated epidemic situation has affected the input of downstream customers; the landing of policies such as equal insurance 2.0 is lower than expected; the research and development and marketing of new products are lower than expected; the competition in the industry is intensified, and the profitability of the industry is declining.
