Reserve R&D and high-end talents, causing short-term fluctuations in net profit. In 2023, H1 achieved operating income of 178 million yuan, an increase of 4.28%; net profit for the same period was 277.997 million yuan, a year-on-year decrease of 209.86%. The main reason was to reserve high-end talents in technology research and development, product planning, program promotion, etc., and the company increased recruitment efforts in the second half of last year; at the same time, in order to retain high-quality talents, increase employee remuneration and implement equity incentives, resulting in a 48% increase in expenses during the period. At the same time, the company continued to increase investment in R&D, with R&D expenses of 884.752 million yuan, an increase of 63.40% over the previous year, accounting for 49.74% of revenue.

The company is committed to providing security protection for a large number of users, high concurrency and high traffic scenarios, and its revenue is dominated by the financial industry. In financial business systems that serve hundreds of millions of people, such as online banking, mobile banking, and electronic payments, the company's products and solutions support business visits from hundreds of millions of users. At major banks and institutions, such as the four major banks, they have withstood the impact of large business volumes such as year-end accounts, Double 11 shopping festival, and Spring Festival red envelopes to ensure the continuous and stable operation of customer business systems. Currently, corporate revenue is dominated by the financial sector, accounting for 67.6% in 2022.

The high base put pressure on the financial industry to grow. The quarterly revenue decline narrowed, the data bureau, public security, tobacco and other departments had strong demand for passwords, and revenue was growing rapidly. In 2022, the central bank intensively introduced policies requiring the financial industry to speed up the transformation of domestic passwords. The revenue growth rate of the corporate finance industry is growing rapidly, and the base is high. In 2023, the business demand and project progress of customers in the H1 financial industry gradually recovered, with revenue falling 14.18% year on year and narrowing the quarterly revenue decline; with the recovery of procurement and demand from data bureaus, public security, medical, tobacco, water conservancy and other departments, the government industry achieved revenue of 39.8229 million yuan, an increase of 84.24% over the same period last year; procurement demand from customers in the enterprise industry increased, achieving revenue of 37.332 million yuan, an increase of 18.34% over the same period last year.

It can be expected that the acquisition of Universal Science and Technology will be completed to open up the military industry market. In 2023, H1, the company completed the acquisition of Universal Technology and actively promoted the integration of Universal Technology, integrating the four aspects of management, product, R&D, and sales. On the product side, the integration of product management systems has been completed, and integrated solutions for multiple industries and scenarios are being developed; on the sales side, product sales policies have been initially formulated, phased training has been received, and the promotion of both parties' products and plans has begun. After the acquisition, the company added three categories of products, including cross-network isolation and exchange, terminal security control, and data security archiving, greatly enriching the data security product line. We believe that Pushi Technology has deep experience in the field of military and military cybersecurity, and that after the company's merger and acquisition, it is expected to take advantage of Universal Technology's sales channel advantages to open up space for the military market to grow.

Profit forecast: We predict that the company's revenue growth rate from 2023-2025 will be 21.85%, 22.70%, and 22.24%, respectively, and the return net profit growth rate will be 23.85%, 28.95%, and 31.45%, respectively.

Risk warning: Competition is intensifying, Xinchuang's bidding falls short of expectations, and policy promotion falls short of expectations.