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Zhongxin Sec (002912) 2018 Annual Report Comments: High downstream demand boom makes it a high-speed business growth

Zhongxin Sec (002912) 2018 Annual Report Comments: High downstream demand boom makes it a high-speed business growth

This report reads: As a leader in the network visualization industry, the company will greatly benefit from the growth of downstream demand, meanwhile, its business will continue to grow, and its performance will grow rapidly, with a promising future.

Investment Highlights: Maintain “Overweight” rating and raise target price to 122 yuan.

The company achieved revenue 北京夜网 in 20186.

9.1 billion, an annual increase of 38.

85%; Deduction of non-net profit1.

97 ppm, a 59-year increase of 59.

69%; In Q1 2019, it realized revenue of 97.42 million yuan, an annual increase of 8.

21%; budget 6.12 million yuan, profit 2.27 million yuan in the same period last year, in line with market expectations.

Due to the booming downstream demand, the company is raised to 2 in 2019-2021.

71 (+0.

03) / 3.

68 (+0.

03) / 5.

05 yuan, giving the industry an average of 45 times PE in 2019, raising the target price to 122 yuan, maintaining the “overweight” rating.

Focus on R & D and innovation to ensure core competitiveness.

The company’s R & D expense ratio in 2018 was as high as 24.

17%, an increase of 0 from the previous year.

31 units; the number of R & D personnel accounts for 58.

96%,无锡夜网 an increase of 3 units over the previous year.

Continuously expanding research and development will help maintain the technological advantages of the company’s products and improve core competitiveness.

A leader in the network visualization industry, downstream demand has driven high performance.

Broadband network products achieved revenue in 20183.

810,000 yuan, an increase of 49 in ten years.

35%; mobile network products achieve revenue 2.

1.5 billion, an annual increase of 15.

88%.

With the successive release of network security policies, the overall planning of the development of the big data industry, the continuous improvement of national network infrastructure construction, and the in-depth promotion of 5G trials and deployments, there is a strong demand for new network visualization infrastructure products and transformation and upgrading.

As the leader of the network visualization industry, the company’s performance is expected to continue to grow rapidly.

The initial business growth is high, and the prospects are promising.

The company’s largest business expenditure continues to grow. In 2018, the content of network content security products achieved revenue of 54.36 million yuan, an annual increase of 133.

2%; Big data operating products achieved revenue of 17.37 million yuan, an annual increase of 243.

93%; future prospects are promising.

Risk reminders: 1) risk of policy changes; 2) intensified industry competition.