Event: according to the 2020 annual report, the annual operating income was 950 million yuan, an increase of 5.5% over the same period last year; the net profit belonging to the shareholders of the parent company was 250 million yuan, down 16% from the same period last year; it was in line with expectations. At the same time, it was announced that the quarterly report for 21 years showed that the operating income was 186 million yuan, an increase of 21% over the same period last year; the net profit returned to the mother was 12.4 million yuan, down 61% from the same period last year; in line with the previous forecast and in line with expectations.
The prosperity of the industry is negatively affected by the epidemic, and the superimposed high equity incentive costs further suppress the performance release.
Affected by the epidemic, the network security control industry has been negatively affected in the implementation of project bidding, so the expected online letter contract in the market has been postponed. The epidemic also affects the relevant budgets of the control and control departments, and the number of orders taken by companies in the industry in the past 20 years is also lower than expected. not only that, because it is in the early stage of the 14th five-year Plan, there is still uncertainty in the prosperity of public security and other fields. therefore, 2021 is the trough of the industry.
In the past 20 years, the company awarded restricted stock when the stock price was high, so a higher equity incentive fee was confirmed. according to the previous disclosure data and annual report data, the company's equity incentive fee in the year 20 to 24 is about 0.6x1.30.9shock 0.410 million yuan, thus further suppressing the performance release, and now the stock price has fallen more, close to the restricted stock grant price (36.11 yuan / share).
The long-term growth logic of the industry remains unchanged, benefiting from the post-5G cycle. The long-term growth logic of network visualization remains unchanged, and it still benefits from the demand for network construction brought about by traffic and the increase in protocol complexity brought about by the increase in the number of network applications. Among them, the broadband network will benefit from the construction of 5G carrier network and the increase of data volume, as well as the continuous expansion of international export bandwidth. In terms of mobile network, 21 years will be a year of rapid penetration of 5G, as a post-cycle product is expected to enter a rapid growth period in 22 years, replicating the growth path of 16 years and 18 years. A few days ago, the outline of the 14th five-year Plan of the people's Republic of China for National Economic and Social Development and the long-term goals for 2035 was released to the public. In the chapter of "speeding up Digital Development and Building a Digital China", we will strengthen network security protection, strengthen network security infrastructure construction, and enhance network security threat detection, monitoring and early warning, emergency command, and attack traceability. We believe that during the 14th five-year Plan period, the pace of investment in network management and security by public security, Internet communications and other relevant departments is expected to accelerate, and companies in the industry will benefit significantly.
The company's own logic continues to verify: front and rear extension, multi-sector expansion. After years of continuous hard work, the company's management team continues to verify its own logic. Sales have changed from distribution to direct sales, with the proportion of direct sales rising from 74% to 84% in 1820. Products extend from front-end to back-end, and the proportion of web content security and big data operating products increased from 10.37% to 21.28% in 1820. The field of business extends from online messaging and public security to security and industrial enterprise applications.
Maintain the "buy" rating: maintain the net profit forecast of RMB 31.45 billion for 21 years and RMB 500 million for 23 years, corresponding to PE 24X/16X/14X. Valuations already have a margin of safety, maintaining a "buy" rating.
Risk hints: the fluctuation risk of government procurement cycle, the influence of project acceptance cycle fluctuation, and the equity incentive cost suppresses performance release.
