China's military-grade communication equipment supplier: Colling Information, pre-IPO market capitalization of 1.503 billion

• The market value before the listing was 1.503 billion yuan, according to PE (94.9892 million yuan in 2020 net profit after deduction of non-attributable mother) = 15.82 times; PS (20 years revenue of 888.9514 million yuan) = 1.69

First, the basic situation of the company

• Zhuhai Colling Information Technology Co., Ltd
• 22-year listing: Established on December 29, 1999, it was changed to a joint-stock company on April 11, 2016
• Actual controller: Feng Zhifeng

(1) The basic situation of the main business

The company is engaged in military telecommunications network communication equipment, environmental protection Internet of Things application products and network and information security products research and development, production and sales of high-tech enterprises, and can provide users with comprehensive solutions. Based on consolidating national defense communication security and helping social public safety, the company is committed to creating a safe and credible information network and deeply mining data applications for defense and government and enterprise users.

(2) The basic situation of the main products

1. Main products and services

The company's main business includes military telecommunications network communication equipment, environmental protection Internet of Things applications, network content security and cyberspace endogenous security, and the various services overlap and differ in core technologies, application fields, and customer groups, as follows

2. Main products

• 1) In the military telecommunications network communication equipment business, the company's main products include program-controlled switching and packet switching system equipment, as well as special application products, applied to military telecommunications core networks, access networks and other special networks. In the competitive negotiation and procurement of program-controlled switching system equipment of national defense unit B in 2018 and 2020, the company is one of the two selected enterprises, with the largest number of selected product models, and covers the core network and access network of military telecommunications network, which is the main supplier of communication equipment for our military telecommunications network.
• 2) In the environmental protection Internet of Things application business, the company integrates the use of communication, data and network security and other related technologies to serve the environmental protection industry, in the field of environmental quality monitoring, pollution source monitoring, can provide services for regulators Based on the overall solution of the Internet of Things system, improve the application value of environmental protection Internet of Things data in the field of government ecological environment decision-making and comprehensive governance.
• 3) In terms of network content security business, the company actively engages in related technical research in the network content security business by virtue of more than 20 years of technical accumulation in the field of communications, so as to help social public safety. Since 2006, the company has been engaged in the development of telecommunications network content security products, is one of the earliest enterprises in China to carry out anti-fraud and harmful content prevention of telecommunications networks, is the core supplier of a number of national prevention system construction projects, products and solutions are applied to all 13 international customs bureaus and 12 provincial communications administrations in the construction of harmful information prevention systems, and have played an active role in the application of harmful information prevention such as telecommunications fraud.
• 4) In terms of endogenous security in cyberspace, shanghai Hongshen, a subsidiary of the company, participated in the research of the National High-tech Research and Development Plan (863 Plan) related to mimetic defense technology as a project support unit in 2009, and the company and its subsidiaries are one of the earliest enterprises in China to carry out research on mimetic defense technology and promote the industrialization of technological achievements, with a number of core basic patents for mimetic defense technology, and is the vice chairman unit of China Cyberspace Endogenous Security Technology and Industry Alliance. The company has first-mover advantages and patent advantages in the field of endogenous security in cyberspace, has mimetic defense infrastructure products, mimetic defense application products, and can provide endogenous security solutions around specific fields and scenarios.

3. Business and technology

1) Composition of main business income

During the Reporting Period, the Company's main business income was RMB173.9046 million, RMB250.8188 million, RMB397.0162 million and RMB197.4717 million, respectively. According to the content of products and services, the company's main business is divided into the following components:

(3) The main business model

1. Develop production plans based on market and order conditions: organize the procurement of raw materials and services, arrange manufacturing and integration, and project implementation or product delivery according to the order or project situation.
2. In the product production process, the company retains the core links of production technology and high technical content such as product stereotyping, system integration, whole machine commissioning and machine inspection, and the production of product-related hardware boards is carried out through outsourcing processing to maximize profits.

(4) The competitive position of the issuer

1. Complete product series: Since its inception, it has been engaged in the research and development, production and sales of military telecommunications network communication products, and has formed a complete product series in fixed communication and special application scenarios of military telecommunications networks.
2. The company has become a comprehensive communication system equipment and technical service provider in the field of domestic military communication network, and actively deploys new product applications and new technology research of military telecommunications networks.
3. The company's NGL04 products have been rated as national independent innovation products, the company is currently one of the main suppliers of communication equipment for our military telecommunications network, and its products occupy a high market share in military telecommunications networks.
4. In terms of environmental protection Internet of Things applications, after years of business accumulation, the company has developed into a comprehensive environmental protection Internet of Things application service provider covering the fields of acoustic environment, air quality, water quality, mobile sources and other fields, facing the whole country. In the field of acoustic environmental monitoring, the company's products have won the first prize of the Guangdong Environmental Protection Science and Technology Award, and the company is also the only enterprise unit to participate in the industry standard "Technical Requirements for Environmental Noise Automatic Monitoring System (HJ 907-2017)".
5. In terms of network content security, the company has three classified information system integration Grade A qualifications, since 2006 it began to engage in the development of telecommunications network content security products, is one of the earliest domestic telecommunications network anti-fraud and harmful content prevention enterprises, the product has been deployed in all 13 international customs bureaus and 12 provincial communications administrations in China; in the field of mobile Internet content security, based on the company's market advantages and technical reserves in telecommunications network content security, The company's mobile Internet content security products are expected to catch up with competitors in the same industry.
6. In terms of endogenous security in cyberspace, the company's subsidiary Shanghai Hongshen grade 2009 participated in the research of the National High-tech Research and Development Program (863 Program) related to mimetic defense technology as a project support unit, and the company and its subsidiaries are one of the earliest enterprises in China to carry out research on mimetic defense technology and promote the industrialization of technological achievements, with a number of core basic patents for mimetic defense technology, and participated in the drafting of 8 mimetic defense related product industry standards (entering the stage of approval and publicity). The company has first-mover advantages and patent advantages in the field of endogenous security in cyberspace, has mimetic defense infrastructure products and application products, and can provide endogenous security solutions around specific fields and scenarios. From 2018 to 2020, the company provided technical and equipment support for the "Strong Network" Mimetic Defense International Elite Challenge sponsored by the Chinese Academy of Engineering, Nanjing Municipal People's Government, Network Communications and Security Purple Mountain Laboratory, etc. for three consecutive years.

(5) The technological advancement of the issuer, the industrialization of R&D technology and the future development strategy

1. Technological advancement

• The company's main military telecommunications network communication equipment, network content security, cyberspace endogenous security and environmental protection Internet of Things application business have high requirements for technology. Since its inception, the company has been focusing on product development and technological innovation, as a high-tech enterprise, as of the end of the reporting period, the company has a total of 309 R & D personnel, accounting for 50.00% of the total number of employees, in 2020 R & D investment accounted for 15.48% of operating income. The company is the Zhuhai branch of the National Digital Exchange System Engineering Technology Research Center, the Guangdong Provincial Enterprise Technology Center and the Guangdong Provincial Network Harmful Information Prevention Engineering Technology Center, with the Colling Research Institute for cutting-edge technology research and the product research and development center of each main business direction, which has passed the CMMI level 5 certification of the software capability maturity model, and has a number of joint laboratories and R&D centers with the military, government agencies and research institutes, which strongly supports the company's continuous R&D investment and technological innovation.
• As of the date of signing of the Prospectus (Registration Draft), the Company and its subsidiaries have 101 authorized patents and 271 software copyrights
• The company's military telecommunications network communication equipment has reached the carrier-grade level, and its products are used in military telecommunications core networks, access networks and other special networks, which is the main supplier of communication equipment for military telecommunications networks. On the basis of telecommunications network technology products, the company integrates communication, data acquisition and analysis, big data applications, mimetic defense and other technologies, and expands environmental protection Internet of Things applications and network and information security products. In the field of environmental protection Internet of Things applications, the company has a relatively obvious advantage in the comprehensive application of new technologies, system integration and software development, the company's related products have won a variety of honors and awards such as independent innovation products in Guangdong Province, Guangdong Famous Brand Products, Guangdong Provincial Environmental Protection Science and Technology First Prize, and participated in the drafting of an industry standard. In the field of network content security, the company has telecommunications network security serial technology, in the communication network massive data storage and analysis, harmful information identification, etc., has accumulated a relatively advanced core technology; the company has a number of mimetic defense technology core basic patents, and has the ability to industrialize the application and comprehensive solution, and participated in the drafting of 8 mimetic defense related product industry standards have entered the approval and publicity stage.

2. Industrialization of R&D technology

• In the field of military telecommunications network communication equipment business, the company has high stability and redundancy hot standby technology, complex network multi-standard communication fusion technology, communication protocol stack technology, link quality detection and fault automatic evasion, large-capacity circuit switching technology and other core technologies, NGL04 series of digital program-controlled switching products are the company's main research and development and industrialization achievements, product application range from comprehensive gateway bureau, long-distance bureau to local end bureau, is the main supplier of communication equipment for our military telecommunications network.
• At the same time, the company applies mimetic defense technology to communication products, and is developing a new generation of communication equipment with endogenous security attributes in order to improve the security and reliability of our military's communication network.
• Based on a series of technical achievements accumulated by the company, the company has built a relatively complete business and product system, from 2018 to 2020, the compound growth rate of the company's main business income has reached 51.09%, and the proportion of core technology business income to the main business income is 90.89% on average, and the deep integration of research and development results and industry has promoted the rapid development of the company's business.

(6) Financial indicators

2. The specific listing criteria selected by the issuer

(1) Listing standards for issuers on the Science and Technology Innovation Board

1. According to the Listing Rules, the Company's selection of listing criteria on the Star Market is Criterion (1): "The expected market value is not less than RMB1 billion, the net profit in the last two years is positive and the cumulative net profit is not less than RMB50 million, or the expected market value is not less than RMB1 billion, and the net profit in the most recent year is positive and the operating income is not less than RMB100 million." ”
2. The Company's net profit attributable to shareholders of the parent company in 2019 and 2020 was RMB40.9359 million and RMB109.3477 million, respectively, the net profit attributable to the shareholders of the parent company after deducting non-recurring gains and losses was RMB37.7988 million and RMB94.9892 million, respectively, and the net profit before and after deducting non-recurring gains and losses was positive and accumulated not less than RMB50 million; the overall valuation of the Company after the latest capital increase was RMB1.503 billion. The market capitalization is expected to exceed RMB 1 billion, so the company meets the above criteria.

(2) The issuer meets the requirements of the industry field

The company's main business and the "National Economic Industry Classification" (GB/T 4754-2017), "Strategic Emerging Industries Key Products and Services Guidance Catalogue (2016 Edition)", "Strategic Emerging Industries Classification (2018)" industry classification, and the "Interim Provisions on Declaration and Recommendation" industry categories are as follows:

(3) The issuer meets the requirements of the attributes of science and technology innovation

3. Major risk warnings

(1) The risk of future performance fluctuations in the communication equipment business of military telecommunications networks

1. The company's program-controlled switching system equipment revenue mainly comes from the sales to the national defense unit B of the military collection platform and the sales formed by the sporadic procurement of various service use units. Affected by factors such as the reform of the military system,
2. In 2018, the company's military telecommunications network communication equipment revenue base was small, resulting in rapid revenue growth in 2019 and 2020, but such growth is not sustainable, and the future will enter a period of stable development and even negative revenue growth.
3. According to the company's sales to national defense unit B in 2020 and the calculation according to the number of local machines and user machine specifications selected by the company, the annual market size of program-controlled switching system equipment in the collection mode is about 277 million yuan, plus the market size of sporadic procurement by various military use units, and the overall annual market size of program-controlled switching system equipment in the military communication field is more than 300 million yuan. According to this calculation, the company's program-controlled switching system equipment market share in the military communications field has exceeded 60% in 2020. Affected by the market size and the company's market share, the future growth space of the company's program-controlled switching system equipment is limited;
4. The company will participate in the market competition of IMS equipment together with potential competitors such as Huawei, ZTE, and Zhenyou Technology.

(2) The endogenous security business in cyberspace is in its infancy but the company invests a relatively large risk

During the reporting period, the company's cyberspace endogenous security business revenue was 3.5554 million yuan, 14.6518 million yuan, 3.7034 million yuan and 20.4259 million yuan, respectively, and the research and development expenditure of the cyberspace endogenous security business was 1.6547 million yuan, 6.0511 million yuan, 18.5476 million yuan and 9.5478 million yuan, respectively. As of the end of the reporting period, the cumulative loss of Xinda NetYu, which specializes in the endogenous security business of cyberspace, was 55.0083 million yuan, and the 537.6268 million yuan raised in this fundraising will be used for two mimetic technology projects: "Endogenous Security Mimetic Defense Infrastructure Platform Construction Project" and "Endogenous Security Cloud and Data Center Development and Construction Project".

(3) The risk of declining revenue from online content security business

(4) The risk of inventory price loss

(5) Risks of new product development

(6) The risk that the income may fluctuate significantly due to the progress of major contract execution

The company's military telecommunications network communication equipment business revenue was 18.9686 million yuan, 72.9399 million yuan, 282.8676 million yuan and 84.7842 million yuan, accounting for 10.91%, 29.08%, 71.25% and 42.93% of the main business income of each period; the main customer of the military telecommunications network communication equipment business was defense unit B, and the single amount of the contract signed between the company and defense unit B was large, and the revenue growth in 2020 was mainly derived from the defense unit B Two contracts were signed for $52.9426 million and $219.8425 million.