Sangfor Technologies (300454) 西南证券·2024-09-04 03:00Investment Rating - The report assigns a "Hold" rating for the company, marking its first coverage [1][3]. Core Insights - The company reported a revenue of 2.71 billion yuan for H1 2024, a year-on-year decline of 7.7%, with a net profit attributable to shareholders of -590 million yuan, down 6.9% year-on-year. The decline in revenue has slowed in Q2 2024, with a revenue of 1.67 billion yuan, a decrease of 2.8% year-on-year, and a net profit of -100 million yuan, an increase of 27.1% year-on-year [2][15]. - The cybersecurity business experienced a slight decline, while the cloud computing business saw an increase in its revenue share. In H1 2024, the cybersecurity business generated 1.4 billion yuan, down 7.3% year-on-year, accounting for 51.7% of total revenue. The cloud computing business generated 1.11 billion yuan, down 4.4% year-on-year, but its revenue share increased by 1.4 percentage points to 40.9% [2][16]. - The company is positioned as a leader in the cybersecurity industry, leveraging its early market entry and brand influence. It has been actively investing in AI technologies to enhance its product offerings, including the launch of the upgraded security GPT 3.0 and AI computing platform in 2024 [10][14]. Financial Analysis - The overall gross margin for H1 2024 was 61.3%, a decrease of 3.1% year-on-year, primarily due to the increased proportion of lower-margin cloud computing business. The gross margin for the cybersecurity business was 78.2%, down 1.2% year-on-year, while the cloud computing business had a gross margin of 42.6%, down 5.3% [2][17]. - The company has successfully reduced its three expense ratios by 7.4% year-on-year, with the sales expense ratio at 46.7%, down 1.3% year-on-year [17]. Earnings Forecast and Valuation - The company is projected to achieve revenues of 7.31 billion yuan, 7.75 billion yuan, and 8.72 billion yuan for the years 2024, 2025, and 2026, respectively. The net profit attributable to shareholders is expected to be 200 million yuan, 240 million yuan, and 370 million yuan for the same years, with corresponding EPS of 0.48, 0.58, and 0.88 yuan [3][23]. - The company's PE ratios are forecasted to be 97, 79, and 52 for the years 2024, 2025, and 2026, respectively, which are below the industry average, supporting the "Hold" rating [3][24].