Research and development continues to be invested, and product capabilities are constantly being strengthened. Under the product leadership strategy, the company's R&D investment has accounted for about 25% of sales revenue over the years, and the 2020Q1-Q3 R&D expenditure rates were 30.96%, 27.59%, and 24.55%, respectively. For broadband network products, product application awareness capabilities have been improved, a 5G protocol basic information base of a certain scale has been formed, and network security functions such as QoE and anti-DDoS have been further enriched.
For mobile network products, situation awareness products based on broadband wireless signals have been launched to meet the specific needs of different industries. Aiming at big data operation products, improve data centers and business centers, and further expand market applications to fields such as digital intelligence government, digital intelligence auditing, and digital intelligence enterprises. For network content security products, strengthen collaboration with broadband network products, optimize and improve the overall solution for network content security, and improve the cost performance ratio of the solution. For industrial internet security products, new breakthroughs were made in core technology in the first half of 2020. The reliability of front-end collection products was further improved, wireless access functions were added to meet the application of more business scenarios. At the same time, the industrial control asset feature library and industrial control protocol feature library were richer, and DPI capabilities were further improved; back-end business system function modules were continuously enriched, and anomaly monitoring and security event traceback functions were further improved, simplifying product deployment and upgrade methods, enhancing product competitiveness.
Overseas demand is prominent. Internet security and management have become the focus of attention of customers in overseas markets, and demand and budgets are constantly increasing. The company's mature capabilities of broadband network products, such as application sensing, in-depth inspection, and on-demand screening, have been accepted and recognized by overseas customers, further stimulating market demand. The company has formed independent sales channels and mature sales strategies in overseas markets. Currently, the company's network content security products have received orders for more than ten national system construction projects. 2020H1 accounts for 44% of overseas business revenue (2019H1 is 2%). In the future, the company will continue to increase investment in existing market resources, cooperate with the launch of new solutions for mobile network products, network content security products, and big data operation products, actively carry out foreign cooperation and deep channel construction, and strive to form stable revenue and scale breakthroughs in the international market.
The operation of big data has become a new bright spot for the growth of the industrial line. According to CIDI's consultancy research, China's big data industry was affected by many favorable factors such as the macroeconomic policy environment, technological progress and upgrading, and the popularization and penetration of digital applications. The overall scale reached 538.62 billion yuan in 2019. In 2019, big data applications in the four major industries of the Internet, government, telecommunications and finance continued to be popular, accounting for nearly 80%; industrial big data has great potential for future growth, and some star application scenarios have been formed, but the market still needs to be cultivated continuously. The size of China's big data industry is expected to reach 807.06 billion yuan by 2021. The sales revenue of the company's 2020H1 big data operating products was 74 million yuan (+696.13% year-on-year), accounting for 21.72% of revenue (2019H1 was 2.77%).
Profit forecasts. As a leader in network visualization, Sino-Singapore Syke's growth has not changed. In the future, the company will maintain its leading edge in the front-end of network visualization and continue to expand vigorously in the back-end market; at the same time, it will use its mature R&D capabilities and product design capabilities to optimize and derive existing products and expand to a wider range of other markets. We expect the total revenue of Sino-Singapore Syke in 2020-2022 to be 954 million (+5.5%), 1,233 million (+29.2%) and 1,615 million (+31.0%) yuan, with net profit attributable to the mother of 225 million (-18.8%), 313 million (+30.5%) and 417 million (+33.3%) yuan (+33.3%). Referring to comparable company valuations, the company was given a reasonable valuation PE range of 30-38x in 2021, with a reasonable value range of 53.78-68.12 yuan, “superior to the big market” rating.
Risk warning. Market competition heightens risks, and downstream government & operator markets monitor the risk of investment fluctuations.