As of April 30, the 2023 financial statements of China's listed cybersecurity companies have basically been disclosed. As scheduled, we have conducted a detailed review of the core financial indicators such as revenue and profit of listed cybersecurity companies, and at the same time made a general observation of the development strategies of these enterprises.
Overall, in 2023, the recovery of the domestic macroeconomic environment will be weak, the recovery of market demand will be relatively slow, and the competition will be fierce, so the loss trend of the network security industry will continue, and the industry will generally increase revenue but not profits. In this environment, most enterprises have chosen to reduce costs and increase efficiency, optimize staffing, and strictly control costs to improve the current situation of enterprise operations.
This initiative has indeed paid off, with some companies rebounding in revenue and net profit under prudent management in 2023, while net cash flow has also improved significantly.
*Data source: official websites of various companies, Oriental Fortune Network
Nearly 5 percent of the company's revenue has increased, with an increase of up to 42.59%
Among the 24 listed network security companies we counted this time, a total of 11 companies will have a year-on-year increase in revenue in 2023, and 13 companies will have a year-on-year decline in revenue, with an average year-on-year growth rate of 16.2%. It is worth noting that among the 9 profitable enterprises, the revenue growth rate of Zhongfu Information was relatively large at 42.59%, and the net profit attributable to the parent company also increased by 58.31% year-on-year.
Obviously, in 2023, with the gradual implementation of the information and innovation policies of the party and government, central enterprises and special industries that Zhongfu Information focuses on, the pace of the company's business will be accelerated, which will effectively promote the growth of performance and significantly alleviate the unfavorable factors that led to the decline in performance, and the company's main business will show significant signs of recovery.
In addition, Beixinyuan, Shengbang Security, ABT, and Yongxin Zhicheng will also deliver relatively gratifying results in 2023, with revenue increases of 25.76%, 23.17%, 20.12%, and 19.72% respectively.
Among the companies with revenue losses, NSFOCUS Technology, Geer Software, and Feitian Integrity have seen significant declines, with revenue falling by 36.06%, 14.89%, and 14.88% year-on-year respectively.
The maximum increase in net profit was 524.28%, and the largest decrease was 3516.62%
According to statistics, among the 24 listed network security companies, a total of 9 companies achieved a year-on-year increase in net profit attributable to the parent company and gross profit, and 15 companies saw a year-on-year decline in net profit attributable to the parent company and gross profit.
Among them, there are several more "explosive" data that have aroused our attention.
First of all, in terms of net profit attributable to the parent company, Geer Software has become the enterprise with the largest year-on-year growth rate in 2023 with a growth of 524.28%, successfully achieving the situation of "turning losses into profits". The reason behind it has a lot to do with the steady decline in management expenses in 2023 based on its business philosophy of reducing costs and increasing efficiency and lean management.
At the same time, the cryptographic business market recovered last year, Geer Software focused on the cryptographic business, optimized the revenue structure, and the overall gross profit margin of the main business increased compared with 2022, and the company's net profit attributable to shareholders of listed companies in 2023 is expected to be about 45 million yuan, mainly due to the fair value change income of other non-current financial assets held by the company, idle fund wealth management, income and government subsidy income.
Secondly, ABT's net profit attributable to the parent company has also increased significantly, with a year-on-year increase of 239.25%, and the gross profit has also increased by 11.53%.
On the whole, ABT will continue to enrich its product matrix in 2023 around the three major categories of security gateway, security management and security services, and achieve rapid growth in security management and security service revenue, such as strong market demand for strategy visualization products, traffic products and data security products. In response to the needs of the country's digital construction, the new business digital solutions deployed in 2023 have made breakthroughs, and a significant rebound in net profit and gross profit has been achieved under the combined effect of these actions.
In addition, the data of Beixinyuan this time is also very eye-catching. Among them, the net profit attributable to the parent company increased by 103.52% year-on-year, and the gross profit increased by 31.02%.
Overall, Beixinyuan's business will recover rapidly in 2023, with significantly better performance, and operating income will also increase by 25.76% year-on-year. At the same time, the company further strengthened the collection and management of accounts receivable, accelerated the turnover of accounts receivable, and reduced the credit impairment loss compared with the same period last year.
Among the enterprises with an expanding net profit loss attributable to the parent company, NSFOCUS saw a sharp decline of 3,516.62%. The main reasons for the change in performance were that during the reporting period, the budget of customers in some key industries was reduced, the industry competition was fierce, the pace of bidding and bidding was lagging behind, and the project execution cycle was lengthened.
The same loss margin is also Jida Zhengyuan, net profit attributable to the parent decreased by 366.05% year-on-year, the main reason for the change in performance is that during the reporting period, the progress of some of the company's projects is not as expected, resulting in a year-on-year decline in operating income. At the same time, in order to consolidate the competitive advantage of technology and marketing, the company has increased investment in technology research and development, scenario application, etc., and continued to promote the implementation of new products and technologies and the iterative upgrading of core products; The company has increased investment in marketing to enhance the company's reach in key industries and key regions. The related input has led to an increase in the company's costs.
In addition, the net profit attributable to the parent company of Tianrongxin and SDIC Intelligent also decreased significantly, -281.09% and -239.06% respectively. Among them, the main reason for the change in Topsec's performance was the delay in the implementation and delivery of its security project in December 2023, which affected the revenue recognition in 2023. At the same time, the operating income and operating profit of Tianrongxin and its subsidiaries did not meet expectations, which is also one of the main reasons.
The main reason for the change in SDIC Intelligence's performance is that during the reporting period, the company's budget investment of some customers was reduced, and the confirmation of some orders in hand was delayed, resulting in a certain decline in the company's operating income. At the same time, the operating performance of Jiangsu Tax Software Technology Co., Ltd., a wholly-owned subsidiary of the group, was lower than expected, which also had a certain impact on the decline in the company's net profit.
summary
On the whole, the situation of the network security market in 2023 is still very severe, and many security companies are facing multiple difficulties in survival and development, innovation and profitability. Judging from the proportion of the income level of each enterprise, the pattern of "no oligarchs, only princes" in the network security market is very obvious, and the fragmentation phenomenon is extremely prominent, which is similar to the pattern of the global network security market.
It is worth noting that in 2023, many large security companies, cloud service providers, and software and hardware technology companies will develop integration businesses to varying degrees to expand their revenue scale. At the same time, AI has become the focus of many companies.
Judging from the performance of the financial report in 2023, the fundamental recovery rate of listed companies in mainland China network security shows a certain degree of differentiation. From the perspective of profitability, the listed cybersecurity companies in mainland China are still in a state of general loss. In addition to the macroeconomic impact, the reason for the net loss is mainly due to the fact that most listed network security companies in mainland China are adopting a marketing development strategy with high R&D and high investment. Although the high level of investment in R&D and sales expenses can help enterprises achieve the goal of phased technological development and market expansion. However, in the long run, enterprises still need to improve human efficiency and R&D efficiency to ultimately achieve the results of reducing costs and increasing efficiency.
At the same time, mainland cyber security enterprises still need to further strengthen asset utilization efficiency and optimize internal production processes, including optimizing procurement efficiency, strengthening inventory management, and controlling accounts receivable periods to improve operational efficiency and profitability.
So this year, with the strong support of national policies and the catalysis of the development of the international technological, economic and social environment, it remains to be seen whether the listed companies of network security will be able to usher in a big jump. However, it is certain that on the basis of taking root in their own areas of expertise and maintaining innovation, achieving the goal of a virtuous cycle and steady growth has become the healthy management method of most network security enterprises.