Event: according to the company's 2023H1 performance report, 2023H1 realized revenue of 178 million yuan, up 4.28% over the same period last year; realized net profit of-28 million yuan, down 209.86% from the same period last year; and realized deduction of non-net profit of-28 million yuan, down 236.44% from the same period last year. 2023Q2 achieved an income of 126 million yuan, an increase of 18.45% over the same period last year, a net profit of 5 million yuan, a decrease of 82.20%, and a deduction of 5 million yuan for non-net profit, a decrease of 78.21% over the same period last year.
Strong growth in government business, the acquisition of universal enhanced data security product line. In terms of business, the income of customers in the financial industry reached 101 million yuan, a decrease of 14.18% compared with the same period last year. The decline in revenue narrowed quarter-on-quarter, mainly due to the high base in the first half of the year due to the peak of password procurement in the financial industry last year. At the same time, the revenue of the government industry reached 39.82 million yuan, a sharp increase of 84.24 percent over the same period last year, thanks to the resumption of procurement by the data Bureau, public security, medical, tobacco, water conservancy and other departments and the strong demand for password products. The decline in the company's first-half net profit compared with the same period last year is mainly due to increased recruitment efforts in the second half of last year, an increase in the number of employees, an increase in employee compensation and the implementation of equity incentives, resulting in a 48% increase in expenses during the period. In the first half of the year, the company completed the acquisition of Universal Technology, integrating management, products, R & D and sales, and added three categories of products: cross-network isolated switching, terminal security control and data security archiving, which greatly enriched the company's data security product line.
Commercial password and data security products are expected to usher in a high boom in the second half of the year. Industry Xinchuang has recently ushered in the landing of a number of major projects and industrial policies, and a new round of Xinchuang will be officially launched in the second half of the year. Password products are widely used in financial, medical and other industries, and the purchase volume of related products is expected to increase significantly in the second half of the year. At the same time, since the promulgation of the password Law in 2020, the security evaluation of commercial password applications has also begun to advance rapidly, and has reached a peak this year. According to the requirements of secret evaluation, both new and built systems need to be evaluated annually, which has greatly boosted the prosperity of the cryptographic industry. In the future, the application scenarios of passwords in health care, education, transportation, energy and other industries will also be broadened.
Investment suggestion: the company is a leading commercial password manufacturer in China, and based on its own password technology advantages, launched a variety of products such as identity security, communication security and data security, and is expected to continue to benefit under the catalysis of commercial password policy.
We estimate that in 23-25, the realized income will be 8431,068,000,000 yuan, respectively, and the net profit will be 2.23pm, 294cm, 393m, covering the company for the first time and giving the company a "buy" rating.
Risk hint: the risk of increasing competition in the industry; the landing of industry policies is not up to expectations; downstream demand is not as expected.