On October 28, Qi Anxin (688561.SH) released its third quarterly report for 2022. The financial report shows that the company achieved operating income of 3.192 billion yuan in the first three quarters (January-September), a year-on-year increase of 19.34%. The gross profit margin in the first three quarters was 61.17%, an increase of nearly 4 percentage points over the first half of this year. It is worth noting that, from the perspective of customer scale, nearly 70% of Qi Anxin’s revenue in the first three quarters came from large customers with more than 1 million, of which the revenue generated by customers with more than 5 million accounted for 31.52% of the company’s main business revenue.
Revenue in the first three quarters reached 3.192 billion yuan
With the epidemic and international turmoil, cyber security incidents are increasing day by day and security threats are diverse. Capital Securities predicts that the network security industry will maintain a growth rate of more than 15% in the next three years, and the market size will exceed 100 billion yuan by 2024. Compared with the global market, the proportion of my country’s network security expenditure is relatively low, and the market potential is huge.
As a leader in network security, Qi Anxin’s overall profitability has improved. The company’s performance in the first three quarters has maintained a steady growth trend, achieving operating income of 3.192 billion yuan, a year-on-year increase of 19.34%. The gross profit margin in the first three quarters was 61.17%, an increase of nearly 4 percentage points over the first half of this year.
CITIC Securities believes that with the implementation of the policy and the strong investment of Guan Jiqiang, the network security industry will enter the boom recovery cycle in the second half of the year, and the performance of core companies is expected to accelerate. Since the third quarter, the downstream demand of the network security industry has gradually recovered, orders of tens of millions have been placed intensively, and key industries such as operators and energy have made outstanding investments in network security. With the accelerated pace of order signing and delivery, downstream demand is expected to continue to recover in the fourth quarter and next year, and the performance of cybersecurity companies is expected to improve.
Strong demand for network security construction of major customers
The report of the 20th National Congress of the Communist Party of China emphasized: “Promoting the modernization of national security systems and capabilities, and resolutely safeguarding national security and social stability.” In the digital age, network security is related to personal security, corporate security, and even national security. It can be seen from the data disclosed in Qi Anxin’s third quarterly report that major customers have increased their investment in network security construction and demand is very strong. Nearly 70% of the company’s revenue comes from large customers with more than 1 million, of which the revenue generated by customers with more than 5 million accounts for 31.52% of the company’s main business revenue.
From the perspective of customer structure, the company’s enterprise-level customer revenue accounted for 64.48% of the company’s main business revenue in the first three quarters, an increase of 8 percentage points compared with the revenue in 2021. The amount of enterprise-level customer revenue increased by more than 35% over the same period last year. %. Among them, the revenue growth of customers in key key industries has been particularly significant. The energy industry has increased by more than 50%, the operator has increased by nearly 45%, and the financial industry has increased by nearly 35%. The revenue from customers in the three major key industries accounted for more than 40% of the company’s corporate-level customer revenue.
As the exclusive cybersecurity sponsor of the Beijing Winter Olympics and Winter Paralympic Games, Qi Anxin has achieved “zero accidents” in the cyber security of the Winter Olympics and Winter Paralympic Games. It provides a sample sample and useful reference for cybersecurity assurance of major events.
Rapid growth of new track products, R&D platform mass production scale effect
Digital transformation has changed the information environment of customers, and also brought new security threats and security requirements. The protection objects extend from the original cloud network and other infrastructure to data and applications. Qi Anxin’s third quarterly report shows that the company’s new track business maintained rapid growth in the first three quarters, the data security business grew by over 45%, and the actual combat situational awareness category grew by over 30%.
In terms of expenses, the growth rate of the three fees has dropped significantly year-on-year, and the mass production effect of Qi Anxin’s R&D platform has emerged. The growth rate of sales expenses in the first three quarters decreased by 13.78 percentage points year-on-year; the growth rate of administrative expenses decreased by 18.35 percentage points year-on-year; the growth rate of research and development expenses decreased by 34.34 percentage points year-on-year. The total growth rate of the three fees decreased by 22.81 percentage points compared with the same period last year, and the total revenue of the three fees decreased by 5.66 percentage points compared with the same period last year. In the long run, with the continuous rapid growth of the company’s business scale and the continuous decline in the proportion of the three major expenses to revenue, the company’s operating conditions will open up a new situation.
According to IDC data, the total investment in hardware, software and services related to cybersecurity is expected to reach US$151.95 billion in 2021, and it is expected to increase to US$223.34 billion in 2025, with a five-year CAGR of 10.4%; It is estimated that in 2025, the scale of China’s cybersecurity expenditure will be 21.46 billion US dollars, and the five-year CAGR will reach 20.5%, ranking first in the world in terms of growth rate. Qi Xiangdong, chairman of Qi Anxin, said that the company will continue to increase the company’s original and leading technological innovation, speed up the development process, and make every effort to escort the country and society.
Beijing News Shell Finance reporter Luo Yidan
Edited by Song Yuting
Proofreading Liu Baoqing