Event: the company issued a semi-annual performance forecast, the company expects revenue growth of 95% in the first half and a net profit of-35 million to-45 million yuan, a loss of 66% 74% less than that of the same period last year.

Q2's revenue and profits continued to rise in a single quarter, and new contracts were signed to boost subsequent growth. According to the performance forecast disclosed by the company, it can be calculated that H1 income is 844 million yuan, and the median return net profit is-40 million yuan. It can be estimated that Q2 single-quarter income is about 561 million yuan, a growth rate of 50%; and home net profit is 36 million yuan, a growth rate of 110%. The main reasons for the high performance of H1 include: the company closely follows the development trend of the network security industry, focusing on the three key businesses of security chips, commercial passwords and security services, among which: 1) the extensive layout of security SE; 2) the rapid development of e-government and new infrastructure; 3) the positive and strong business development of Xinchuang; 4) major breakthroughs in the Internet information industry. The product structure has been further optimized, the comprehensive gross profit margin has increased significantly, and indicators such as newly signed contracts, sales revenue and payback have all increased significantly. According to the company's quarterly report for 2021, the cash payment for the purchase of goods and services was 822 million yuan, an increase of 66.40% over the same period in 2019, which also verified the company's strong orders and operations from another point of view, laying a foundation for high growth for the whole year.

Stock incentives hit the ground, and the governance structure also reflects significant marginal changes. In December 2020, the company announced the stock incentive plan and the first phase implementation plan: it is proposed to grant 8.38 million shares to a total of 335 executives, core technicians and key employees at a price of 11.42 yuan per share. Combined with the recent changes in corporate governance structure, it is necessary to understand the equity incentive from the perspective of strategic significance. It reflects that under the background of the "three-year Action Plan for State-owned Enterprise Reform (2020mur2022)", China Wangan and China Dianke Group bind the company's core management and technical team through a long-term incentive mechanism internally, and send a positive signal to the outside world. reshape the company's image in the industry and capital market The above is the implementation of the three-year action plan for the reform of state-owned enterprises, the improvement of the modern enterprise system with Chinese characteristics, and the formation of a scientific and effective corporate governance mechanism; equity incentives for the next 10 years (divided into 5 batches), basically locked in the company's business performance growth target in the next 5-10 years.

The policy promotes the prosperity of the industry, and the company is expected to take the lead in profitability. On July 12, 2021, the Ministry of Industry and Information Technology issued the three-year Action Plan for the High-quality Development of Network Security Industry (2021-2023) (draft for soliciting opinions). It is pointed out that by 2023, the technological innovation capability of network security will be significantly improved, the basic capability and comprehensive strength of the industry will continue to be enhanced, and the scale of network security industry will exceed 250 billion yuan, with an annual compound growth rate of more than 15%. It also requires that key industries such as telecommunications account for 10% of the expenditure on IT informatization. Security applications in key industries have been accelerated in an all-round way. At the same time, the new evaluation standard of isoinsurance 2.0 in 2021 has changed from the previous addition method to the deduction method, and the standard has become more stringent. In addition, the measures for Network Security Review (revised draft for soliciting comments) further strengthen the data security review of domestic companies and the detailed rules for overseas listing applications. The company's leading enterprise in the field of passwords, currently focusing on security chips, commercial passwords and security services, is expected to fully benefit from the improvement of the prosperity of the industry and the focus on data security.

Profit forecast and investment rating: based on the high-profile demeanor of the industry, we maintain the company's EPS of 0.26,0.36,0.47 yuan and PE of 98,72,55 times respectively from 2021 to 2023, maintaining the "buy" rating.

Risk hint: the intensification of competition in the industry leads to the decline of product gross profit margin, the promotion of commercial density is not up to expectations, and so on.