Net profit in the first three quarters, can the network security business and car manufacturing fill the future of 360?

On the evening of October 27, 360 (601360.SH, hereinafter referred to as "360"), an Internet security product and service provider, disclosed its financial results for the third quarter of 2021. According to the financial report, the company's revenue in the first three quarters reached 8.539 billion yuan, an increase of 7.09% year-on-year, and the net profit attributable to the shareholders of the listed company was 1.003 billion yuan, down 41% year-on-year. Among them, the third quarter revenue was 2.920 billion yuan, a slight decrease of 2.75%, and the net profit attributable to the shareholders of the listed company was 432 million yuan, down 26.6% year-on-year.

In fact, since the beginning of this year, the net profit of 360 and the net profit of non-net profit have declined continuously, mainly due to the investment of a lot of money in research and development and market development.

Nandu reporter noted that 360's revenue mainly comes from security business, Internet commercialization (advertising) and value-added business, intelligent hardware business, semi-annual report shows that advertising revenue accounts for 54% of revenue. For the decline in net profit in the first three quarters, 360 said that on the one hand, the decline in internet advertising business revenue, on the other hand, due to marketing expenses and increased compensation of security business personnel.

Xinhua News Agency file photo

Financial data show that in the first three quarters of 2021, its sales expenses were 1.736 billion yuan, an increase of nearly 51% year-on-year, and R&D investment was 2.442 billion yuan, an increase of more than 21% year-on-year. The network security industry is a technology-intensive enterprise, 360 in the core technology research and development to maintain a high investment, it is understood that for more than a decade, 360 has invested more than 20 billion yuan in research and development funds.

As a "network security leader", more than 360 years of investment, gradually into the harvest period, in the case of the continuous decline in Internet advertising revenue, 360 revenue in the first three quarters of the recorded positive growth. From the financial reports of the past two years, the growth rate of security business has doubled, from 473 million yuan in 2019 to 808 million yuan in 2020, in the first half of 2021, the revenue of network security business increased by 322% year-on-year to 912 million yuan, and the scale of half-year revenue has exceeded that of the whole year of 2020.

In addition to expanding the security business, under the wave of intelligent networking, the main security card of 360 has also begun to layout the Internet of Vehicles market, on October 25, 360 Company issued an announcement showing that 360 invested 2.9 billion yuan in Nezha Automobile has fulfilled the procedures required by the relevant government authorities, and the relevant agreements for investment have been signed, becoming the largest shareholder in addition to the management team.

The relevant data also confirms Zhou Hongyi's strategic vision. Since the beginning of this year, Nezha Automobile has set a delivery record for 8 consecutive months. In September this year, the delivery volume of Nezha automobiles was 7699 vehicles, an increase of 281% year-on-year, and it was the third time this year that it entered the top three new car-making forces, breaking the existing "Wei Xiaoli" pattern of new car-making forces.

However, in the secondary market, 360 does not seem to be recognized by investors. In 2018, 360 backdoor Jiangnan Jiajie landed on the A-share market, and its stock price once reached 66.50 yuan / share, while as of the close of trading on October 27, the stock price was only 12.18 yuan / share, down more than 80%.

I wonder when the blue ocean of government and enterprise security and the Internet of Vehicles will push 360 back to the first camp of the Internet?

Written by: Nandu reporter Ye Lu