event: Qianxin released its semi-annual report in 2023, with the company achieving revenue of 2.483 billion yuan, up 26.15 percent from the same period last year; net profit of -0.88 billion yuan, up 3.26 percent from the same period last year; net profit after deduction of -0.979 billion yuan, up 7.09 percent from the same period last year; and net cash flow from operating activities was -1.399 billion yuan, up 6.04 percent from the same period last year. In 2023Q2 alone, the company achieved revenue of 1.557 billion yuan, up 19.01 percent year-on-year, net profit of 0.347 billion yuan, up 19.19 percent year-on-year, and non-net profit of 0.346 billion yuan, up 22.96 percent year-on-year.

revenue in the first half of the solid growth, enterprise customers bright performance. 2023H1 achieved revenue of 2.483 billion billion yuan, up 26.15 percent year-on-year. From the industry structure of revenue, enterprise-level customers became the main engine of growth in the first half of the year, enterprise-level customers, government customers, public security and law department accounted for the main business revenue ratio: 68.71 percent, 22.14 percent, 9.15 percent. The revenue growth rate of enterprise-level customers exceeded 36%, especially in key related industries: the combined revenue generation of energy, finance and operators accounted for more than 30% of the company's main business revenue, up more than 45% from the same period last year, showing strong demand for network security products and services from customers in key information infrastructure industries. From the volume distribution of revenue, the growth rate of revenue generated by customers above the million level exceeded 40%, and the proportion of revenue increased from 63.95 to 71.79, reflecting the company's remarkable achievements in the expansion of the large customer market, and the advantages are becoming more and more obvious.

in the first half of the year, the company's single-customer revenue increased by nearly 25% compared with the same period last year, and the customer re-purchase rate was nearly 50%. the company also achieved good results in expanding new customers. 2023H1 company's single-customer output increased by 63% compared with the same period last year. In terms of products, the company's data security category achieved revenue of 0.58 billion yuan, an increase of more than 40% year-on-year; the terminal security category achieved a total revenue of 0.339 billion yuan, an increase of more than 41% year-on-year.

The three major expense rates have declined, and human efficiency has increased significantly. Other important financial indicators, the company in the 2023H1 period have a better performance, 2023H1 period, the company's gross margin of 60.97, higher than the level of the same period last year. On the expense side, 2023H1 Company's sales expenses/management expenses/research and development expenses were 11.80/3.22/0.968 billion yuan respectively, up 19.29/-5.32/6.65 respectively year-on-year, of which the decrease in management expenses was mainly due to the decrease in management salaries and the decrease in equity incentive amortization expenses during the reporting period. The company's three major cost growth rates have declined to varying degrees, three fee growth rate decreased by 1.56pct/8.94pct/11.76pct year-on-year, a total growth rate of 10.42 percent, down 6.50 percent from the same period last year.

the proportion of the three major expenses in revenue also declined steadily. the proportion of sales expenses, management expenses and research and development expenses in operating income decreased by 2.73pct/4.31pct/7.13pct respectively. the total proportion of the three major expenses in revenue was 99.53, down 14.18 percentage points from the same period last year. In terms of human efficiency, the company's per capita income exceeded 250000 yuan, up nearly 28% from the same period last year.

focus on network security industry, has formed a clear ladder + step by step jump product system. According to the "2023 China Cyber Security Market and Enterprise Competitiveness Analysis Report" released by the China Cyber Security Industry Alliance (CCIA) in June 2023, the company has been ranked first in the "Top 50 Competitiveness of China's Cyber Security Industry" for three consecutive years. At the same time, The company's market share in the field of network security has reached 9.83, and its industry position has been further enhanced, data security, terminal security, situational awareness, threat intelligence and cloud security and other important segments ranked first. The company has gradually formed a four-tier product ladder based on market share (absolute advantage products, market first products, market leading products, high growth potential products), which together become an important driving force for the company's performance growth. Among them, the absolute advantage product refers to the strong product with market share far ahead of other similar products, high customer recognition, relative bargaining power in the market, and even has become a "synonym" in a field. 2023H1's absolute advantage products account for more than 50% of overall revenue.

big model era, and actively expand AI + security products. With the landing of large models of many companies, AI + security has gradually become a hot area, and the company has also laid out the field. In August 2023, the company officially released industrial-grade Q-GPT safety robots and large model guards. The operating efficiency of a robot is about equal to 70 safety experts. Based on the annual salary of safety experts in 300000 yuan, each Q-GPT safety robot can generate about 20 million yuan of operating benefits each year. With the continuous growth of computing power, the future operating benefits are expected to continue to improve.

earnings forecast: we expect EPS to be 0.43/0.75/1.00 yuan in 2023-2025, corresponding to PE of 127.03/72.52/54.47 times in 2023-2025.

risk warning: downstream customer demand is less than expected, network security industry competition intensified.