On April 26, Tianrongxin Technology Group (002212) released the first quarter of 2022 performance express, the reporting period of rapid order volume, operating income of about 378 million yuan, an increase of 42.80% over the same period of the previous year, gross profit margin increased by 7.69 percentage points over the same period of the previous year. Under the accumulation of technology in the network security industry for many years, Tianrongxin has continuously expanded its business margins, and the new security business has opened the second growth curve for the company and entered a new stage of development.
After the initial investment, Tianrongxin has completed the comprehensive layout of the three major businesses of network security, big data and cloud services, especially in the new directions and new scenarios such as data security, cloud computing, industrial Internet security, Internet of Things security and Car Networking security, and some of the large new orders in the previous year achieved revenue in the reporting period, the operating income in the first quarter increased, and the total R&D expenses, sales expenses and management expenses increased by 23.58% year-on-year. The proportion of revenue decreased by 18.02 percentage points from the same period of the previous year, and the net profit loss attributable to the shareholders of the listed company was significantly reduced compared with the same period of the previous year.
The rapid growth of Tianrongxin's new security business is justified, and on March 5, 2022, Premier Li Keqiang of the State Council mentioned "strengthening network security, data security and personal information protection" in his government work report. Compared with "strengthening network security, data security and personal information protection" in the government work report of the two sessions in 2021, this year's change to the word "strengthening" is enough to reflect the further improvement of the attention paid at the national level.
In the first quarter of this year, both at the national level and in the industry and region, they responded positively and closely issued a series of supporting implementation rules. The equity market is paying more and more attention to the development of the network security industry, and Tianrongxin, as a leading company in the industry, has received more than 200 investment institutions this year.
The importance of cybersecurity in the context of the Russian-Ukrainian conflict
Cyberattacks have become part of modern warfare, especially in the military conflict between Russia and Ukraine. According to media reports, in February this year, a number of military websites and banking websites such as the Ukrainian Ministry of Defense and the Armed Forces were shut down by large-scale cyber attacks. Ukraine's security services said the attack was very powerful and a distributed denial-of-service attack. The attack led to the rollout of at least 10 websites, including Ukraine's Ministry of Defense, Ministry of Foreign Affairs, Ministry of Culture and Ukraine's two state-owned banks Privatbank and Oschadbank. The attack made it impossible for Ukrainian banks to use mobile apps and online payments, causing tensions in Russia and Ukraine.
In 2021, the size of China's IT security hardware market reached US$3.77 billion, an increase of 15.2% year-on-year and an increase of 9.1% over last year. With the promulgation of the Data Security Law, the Information Protection Law, and the Regulations on the Security Protection of Critical Information Infrastructure in 2021, the mainland cybersecurity industry will continue to maintain strong demand in 2022. In the context of the epidemic, the industry can still grow steadily, which shows that the market's judgment of the industry is still too conservative.
The development of the network security industry is worth looking forward to, and a number of innovative businesses of Tianrongxin have entered a period of rapid development
In the long run, the development of the network security industry is still worth looking forward to. IDC predicts that cybersecurity-related spending will reach $21.46 billion by 2025.
By 2025, security hardware is still expected to be the largest product type for cybersecurity, and security software will be the fastest growing submarket. In 2025, the network security hardware market will reach 9.45 billion US dollars, with a five-year compound growth rate of 18.4%, and continue to become the largest (accounting for more than 40%) primary sub-market in the network security industry; network security software will become the fastest growing primary sub-market with a scale of 5.90 billion US dollars and a five-year compound growth rate of 23.9% in 2025; the network security service market will reach 6.11 billion US dollars in 2025, with a five-year compound growth rate of 20.8%.
The size of China's IT security hardware market reached $3.77 billion in 2021. Among them, the firewall market based on the UTM platform is the largest, with a market size of nearly 1.22 billion US dollars, and the international authoritative agency IDC officially released the "Tracking Report on China's IT Security Hardware Market in the Fourth Quarter of 2021", and Tianrongxin Firewall Products ranked first with a market share of 22.5%. So far, Tianrongxin Firewall has ranked first in the market for 22 consecutive years, and ranked first in the overall market share of firewall products (including UTM Firewall, UTM and Tradedit Firewall). Tianrongxin has certain first-mover advantages in localization, big data analysis, cloud security, security cloud services and security operations, data security, industrial Internet security, Vehicle Networking security, Internet of Things security and other fields, and is the most complete security company in China, with a product structure of "one super and many strong".
In a market with many competitors, good management is very important.
The company has been increasing research and development efforts, layout of new products, the future growth of related business will exceed expectations. The company has a sound R & D system, adhere to independent research and development, independent innovation, take pre-research first, demand-led, platform support, unified planning, distribution and implementation. Outstanding achievements have been made in emerging fields such as cloud security, situational awareness, and industrial Internet security. Since 2019, the channel marketing strategy has been carried out, the business expansion has further sunk to the prefectural and municipal levels, and the coverage of small and medium-sized customers has been expanded. In terms of industry direct sales, the company implements different management models for different industries, implements headquarters vertical management for telecommunications, tobacco, customs and other industries, and implements sub-vertical management promoted by headquarters coordination in finance, energy, education, health, transportation and other industries. In addition to the traditional advantageous industries, there are new growth points.
Tianrongxin, which opens the second growth curve, is worth looking forward to
From 2021 to today, Rongxin has achieved fruitful results under the multi-faceted business layout: Tianrongxin's next-generation firewall successfully won the bid for "The Second Batch of Framework Bidding Projects for Main Network Protection, Plant and Station Automation and Security Equipment of China Southern Power Grid Corporation in 2021"; Tianrongxin Terminal Threat Defense System (TopEDR) successfully won the bid for "China Telecom IT General Software (2021) Centralized Procurement Project - Antivirus Software (Desktop Version)" with the first comprehensive ranking; and Tianrongxin Kunlun Series Terminal Threat Defense System successfully won the bid" A rural commercial bank in Guizhou Province Xinchuang terminal security protection project "......
From the perspective of institutional valuation, it is expected that the net profit attributable to the mother of Tianrongxin in 2021-2023 will be 435/5.88/796 million yuan, epS will be 0.37/0.50/0.68 yuan respectively, comparable companies will average 28.08 times PE in 2022, and according to 28.08 times PE, the reasonable market value of Tianrongxin is 16.511 billion yuan, and the corresponding price is 13.92, which is currently seriously undervalued. The data of the first quarter came out, with the rapid development of various new businesses, the opening of the second growth curve of Tianrongxin, the company's value or gradually discovered by the market.
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