Events:
The company released its annual report in 2022, with an operating income of 658 million yuan (up 25.44% over the same period last year), a net profit of 164 million yuan (up 6.36% over the same period last year), and a net profit of 156 million yuan (up 8.8% over the same period last year). The company realizes gross profit of about 71.5% and net profit of about 25% for the whole year.
In terms of Q4 alone, the company achieved operating income of 347 million yuan (up 30.12% over the same period last year), net profit of 110 million yuan (up 4.69% over the same period last year), and net profit of 106 million yuan (up 2.96% over the same period last year).
Comments:
Excluding the disturbance of non-business side factors, the company's actual profit growth rate is better than the market expectation. The company's operating expenses (sales + R & D + management + finance) in 2022 increased by 20.48% compared with the same period last year, which is lower than the revenue growth rate of 25.44%. Basically continued the trend that the growth rate of income in 2021 is faster than that of expenses, and the production ability is further revealed.
At the profit level, we believe that the company's apparent net profit is disturbed by many factors, and the actual business operation-side profit performance is better than the market expectation. Specifically:
The proportion of bad debt loss of accounts receivable increases (the turnover efficiency of the company's accounts receivable is still in the normal range), resulting in an increase of credit impairment loss by about 18 million yuan.
Other income decreased by 13 million yuan (mainly government subsidy, historical year); the company's new office building was not put into use, and depreciation increased by about 10 million yuan for the whole year; if the above non-business side factors were excluded, the company's adjusted net profit for 2022 was 205 million yuan, corresponding to a year-on-year growth rate of 40%, exceeding market expectations.
The leading position of the financial industry is maintained, the new business is developed smoothly, and the growth space is expected to open to sub-sectors. In 2022, the company achieved revenue of 4.45,1.38 and 74 million yuan respectively in the financial, corporate and government sectors, an increase of about 49%, 10% and-20% respectively over the same period last year. Among them, the rapid growth in the financial sector is mainly due to the improvement of demand downstream under the multiple drivers of digital transformation, Xinchuang construction and national secret transformation, while the company has a leading advantage in the financial sector, and revenue growth has benefited more; the government sector has declined due to the impact of government budget cuts, but the company has achieved rapid growth in key industries such as Renshe, transportation, telecom operators, hospitals, central enterprises and so on.
In terms of new business, the company's cloud security business grew by 83% in 2022 compared with the same period last year, and maintained a good growth momentum with the improvement of cloud computing applications. At the same time, the company released a number of new products, such as security authentication gateway, data encryption and decryption service system and password module software, secret evaluation toolbox and traffic choreography, to further enrich the product matrix.
In addition, the company announced that it intends to acquire 80% of the stake in Universal Technology, the subject of military cyber security, lay out the military industry, broaden the business boundary, and submit a registration draft of the merger and reorganization report to the Shanghai Stock Exchange on April 14, 2023, which is expected to be landed this year.
Performance expectations are expected to improve in 2023
We believe that the company's performance in 2023 is expected to continue to improve, revenue and profit is expected to maintain a high growth, mainly based on the following considerations:
The acquisition of Universal Technology is expected to land within this year, and the company will merge in 2023: according to the company announcement, Universal Science and Technology is required to commit to achieve net profits of not less than 2950 yuan, 3650 yuan and 45 million yuan respectively from 2023 to 2025. At the same time, considering that the revenue of Universal Technology from January to October in 2022 is 68.12 million yuan, and the annual income is expected to be close to 100 million yuan, the acquisition landing is expected to increase revenue and increase profits for the company.
The scissors gap between revenue and expenses is expected to continue, accelerating the release of profits: the company's per capita income from 2019 to 2022 is 50 yuan, 71 yuan and 730000 yuan respectively. We expect the company's per capita income to further increase in 2023, taking into account the continued advantages of the company's product strategy; at the same time, we believe that the company's expense growth rate is expected to continue to be lower than that of income growth, and profits may accelerate.
Revenue contribution from new products and recovery of government-side demand: the company's new products launched in 2022 are expected to contribute more revenue in 2023, while government-side demand is expected to recover with the promotion of secret review.
Considering that the company is better than the market expectation after deducting non-business factors in 2022, and the downstream demand boom is expected to be maintained in 2023, without taking into account the impact of the merger brought by the acquisition of Universal Technology, we forecast that the operating income of the company from 2023 to 2025 is 8.34,10.56 and 1.338 billion yuan respectively, and the return net profit is 2.31,3.05 and 396 million yuan respectively. With reference to the closing price on April 17, 2023, the current price corresponds to 2023-2025 PE times 31-24-18, with a "buy" rating.
Risk hints: new business development is not as expected; the acquisition of Universal Technology is not as expected; the policy of secret review is not as expected; the recovery of government customers' budgets is not as expected; market competition is intensified.