山石网科(688030) - 2025 Q2 - 季度财报

Definitions This section defines key terms and entities used throughout the report, covering company specifics, major shareholders, industry bodies, and cybersecurity technologies. - This section defines common terms used in the report, including the company name (Hillstone Networks), major shareholders (Digital China, Alpha Achieve, etc.), industry research institutions (IDC, Gartner), and cybersecurity-related technical terms (boundary security, cloud security, data security, application delivery, industrial internet, UTM, next-generation firewall, WAF, etc.)[12][13] Company Profile and Key Financial Indicators This section provides an overview of Hillstone Networks' fundamental information, including its corporate details, contact information, stock overview, and key financial performance metrics for the reporting period. Company Basic Information This section details Hillstone Networks' fundamental information, including its official names, legal representative, addresses, and contact details, noting a change in the legal representative. Company Basic Information | Indicator | Content | | :--- | :--- | | Chinese Name | Hillstone Networks Co.,Ltd. | | Chinese Abbreviation | Hillstone Networks | | English Name | Hillstone Networks Co.,Ltd. | | Legal Representative | Ye Haiqiang (changed during the reporting period) | | Registered/Office Address | No. 181 Jingrun Road, Suzhou High-tech Zone | | Company Website | https://www.hillstonenet.com.cn | | Email | ir@hillstonenet.com | Contacts and Contact Information This section provides contact details for the company's Board Secretary, Tang Yan, and Securities Affairs Representative, He Yuantao. Contact Information | Position | Name | Contact Address | Phone | Email | | :--- | :--- | :--- | :--- | :--- | | Board Secretary | Tang Yan | No. 181 Jingrun Road, Suzhou High-tech Zone | 0512-66806591 | ir@hillstonenet.com | | Securities Affairs Representative | He Yuantao | No. 181 Jingrun Road, Suzhou High-tech Zone | 0512-66806591 | ir@hillstonenet.com | Changes in Information Disclosure and Document Placement Locations The company's designated information disclosure channels and document placement location remained unchanged during the reporting period. - The company's selected information disclosure newspaper is "Shanghai Securities News", the website for publishing semi-annual reports is www.sse.com.cn, and the company's semi-annual report placement location is Hillstone Networks, 2nd Floor, No. 181 Jingrun Road, Suzhou High-tech Zone (Board of Directors Office), with no changes during the reporting period[17] Overview of Company Shares/Depositary Receipts The company's A-shares are listed on the STAR Market of the Shanghai Stock Exchange under the stock code 688030, with no depositary receipts. Company Stock Overview | Stock Type | Listing Exchange and Board | Stock Abbreviation | Stock Code | Previous Stock Abbreviation | | :--- | :--- | :--- | :--- | :--- | | A-shares | STAR Market, Shanghai Stock Exchange | Hillstone Networks | 688030 | None | - The company has no depositary receipts[19] Company's Key Accounting Data and Financial Indicators Operating revenue grew by 9.46% to RMB 416.82 million, while net loss attributable to shareholders narrowed by 4.31% to RMB -76.56 million, despite a 79.89% increase in net cash outflow from operating activities. Key Financial Indicators (January-June 2025) | Indicator | Current Reporting Period (Jan-Jun) | Prior Period | Period-on-Period Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | RMB 416.8158 million | RMB 380.7922 million | 9.46% | | Net Profit Attributable to Shareholders | RMB -76.5572 million | RMB -80.0087 million | Loss narrowed by 4.31% | | Net Cash Flow from Operating Activities | RMB -125.98 million | RMB -70.0321 million | Net outflow expanded by 79.89% | | R&D Investment as % of Operating Revenue | 40.40% | 46.49% | Decreased by 6.09 percentage points | | Basic Earnings Per Share (RMB/share) | -0.4248 | -0.4519 | Not applicable | | Diluted Earnings Per Share (RMB/share) | -0.4248 | -0.4519 | Not applicable | | Basic EPS (Excluding Non-Recurring Items) (RMB/share) | -0.4250 | -0.4835 | Not applicable | | Weighted Average Return on Net Assets (%) | -8.66 | -7.74 | Decreased by 0.92 percentage points | | Weighted Average Return on Net Assets (Excluding Non-Recurring Items) (%) | -8.66 | -8.28 | Decreased by 0.38 percentage points | - The net outflow of cash flow from operating activities expanded year-on-year, primarily due to reduced sales collections and lower VAT refunds for software products and government subsidies[22] Non-Recurring Gains and Losses Items and Amounts Total non-recurring gains and losses were RMB 36,638.77, with specific items including asset disposal gains, government subsidies, and entrusted investment income, while VAT refunds and tax fee returns are classified as recurring. Non-Recurring Gains and Losses Items (January-June 2025) | Non-Recurring Gains and Losses Item | Amount (RMB) | | :--- | :--- | | Gains/Losses from Disposal of Non-Current Assets | 313,517.20 | | Government Subsidies Recognized in Current P&L | 597,649.00 | | Gains/Losses from Entrusted Investments | 166,491.78 | | Other Non-Operating Income and Expenses | -983,754.05 | | Less: Income Tax Impact | 7,485.10 | | Minority Interest Impact (After Tax) | 49,780.06 | | Total | 36,638.77 | - The company classified VAT refunds for software product sales (RMB 12,876,096.43) and tax fee refunds (RMB 564,197.42) as recurring gains and losses because they are closely related to the company's normal operations, comply with national policies, and are continuously enjoyed based on certain fixed or quantitative standards[26] Management Discussion and Analysis This section provides an in-depth discussion and analysis of the company's operational performance, industry landscape, core competencies, and risk factors during the reporting period. Company's Industry and Main Business Overview The company launched its "Dual-A Strategy" (ASIC and AI) to enhance cybersecurity product performance and intelligence, covering 10 product categories and over 50 industry solutions, capitalizing on new opportunities in AI and Xinchuang despite intense market competition. - The company in 2025 officially launched its "Dual-A Strategy" (self-developed ASIC security chips and AI technology), aiming to enhance the performance and intelligence of cybersecurity products through deep integration of hardware and intelligent technologies, building a comprehensive security protection system[29] - The company's business lines now cover 10 major categories of products and services, including infrastructure security, cloud security, data security, application security, security operations, industrial internet security, information technology application innovation, AI security, security services, and security education, forming complete solutions for over 50 industries and scenarios[29] - In the first half of 2025, the cybersecurity industry faced intense competition, but AI large models and Xinchuang (information technology application innovation) brought new business opportunities and growth drivers[52][55] - In the first quarter of 2025, the company ranked third in market share among major vendors in China's Unified Threat Management (UTM) hardware market, with a market share of 13.8%[56] Company's Main Business and Products The company offers 10 major categories of cybersecurity products and services, including infrastructure, cloud, and data security, providing over 50 comprehensive industry solutions. - The company's business lines now cover 10 major categories of products and services, including infrastructure security, cloud security, data security, application security, security operations, industrial internet security, information technology application innovation, AI security, security services, and security education, forming complete solutions for over 50 industries and scenarios[29] Progress of Main Business and Products Boundary security revenue grew 14.00% to RMB 311.43 million with new Xinchuang firewalls and ASIC chip preparations, cloud security revenue increased 14.47% to RMB 37.94 million, while other security businesses saw a 15.94% revenue decline to RMB 60.33 million. - The boundary security business line achieved operating revenue of RMB 311.4335 million, a year-on-year increase of 14.00%, accounting for 76.01% of main business revenue[33] - The cloud security business line achieved operating revenue of RMB 37.9424 million, a year-on-year increase of 14.47%, accounting for 9.26% of main business revenue[35] - Other security business revenue was RMB 60.3262 million, a year-on-year decrease of 15.94%, accounting for 14.72% of the company's main business revenue[49] - In the boundary security domain, 9 new box-type Xinchuang firewalls were released, and preparations were made for firewall products that will soon be equipped with self-developed ASIC security chips[33] - In the cloud security domain, the Hillstone Cloud Armor Host Security Protection Platform (CNAPP) R5 version was released, adding threat protection capabilities such as network intrusion prevention, Runtime Application Self-Protection (RASP), and host intrusion behavior detection[34] - The data security business line released the "Hillstone Networks Data Security Governance White Paper v4.0" and "Hillstone Networks Data Security Decryption Manual v3.0", and developed 4 AI-related security services, with AI continuously empowering data security governance[40] - In the application security domain, the new iWAF (Extreme Speed・Intelligent Defense) and the Large Model Application Firewall (MAF), specifically designed for large model application scenarios, were launched[44][45] - Security services business focuses on data security governance, security operations system construction, and AI agent development services, with significant security projects for several large central state-owned enterprise groups successfully renewed[47] (II) Operating Model The company's core operating models, encompassing sales, procurement, production, and R&D, remained stable and unchanged during the reporting period. - During the reporting period, the company's main operating models (sales, procurement, production, and R&D) did not undergo significant changes, remaining relatively reasonable and stable[51] (III) Industry Overview The cybersecurity industry showed limited recovery in H1 2025 amid fierce competition, with traditional security hardware growing at 4.55% CAGR, data security at 6.14%, and Xinchuang at over 30%, while the company maintained its third-place ranking in the UTM hardware market. - In the first half of 2025, the cybersecurity industry still showed no clear signs of recovery, and market competition was intense; however, the National Cyberspace Administration of China issued the "Cybersecurity Law of the People's Republic of China (Draft Amendment)" to strengthen legal responsibilities, increasing the importance of cybersecurity and data security[52] China Security Hardware Market Forecast (IDC) | Indicator | 2024 Market Size (RMB billion) | 2024-2029 CAGR | 2029 Forecast Size (RMB billion) | | :--- | :--- | :--- | :--- | | Overall Security Hardware Market | 21.02 | 4.55% | 26.2 | | Firewall Market | 14.3 | 4.9% | 18.2 | - In 2024, the data security software market size was RMB 7.1 billion, a year-on-year increase of 6.14%, making it one of the few sub-markets in the security industry with positive growth[54] - The Xinchuang (information technology application innovation) sector is expected to expand at a rate of over 30% from 2025-2027[55] - In the first quarter of 2025, the company ranked third in market share among major vendors in China's Unified Threat Management (UTM) hardware market (13.8%), and was included in IDC's 2 categories for "Security Operations Agents, Security Detection Agents" and all 7 sub-categories of the "China Large Model Security Protection Market"[56] Discussion and Analysis of Operations Facing industry pressures, the company advanced its "Dual-A Strategy" and "Four Major Battles," achieving 9.46% revenue growth to RMB 416.82 million, narrowing net loss by 4.31%, and improving efficiency with a 13% headcount reduction and 26% increase in per-salesperson output. - The company established its "Dual-A (ASIC+AI) Strategy", with the ASIC strategy aiming to enhance security infrastructure efficiency and the AI strategy improving security operations efficiency through intelligent agents[59] - During the reporting period, the company appointed a Chief AI Officer internally to coordinate the top-level design and implementation of AI initiatives, achieving an R&D capacity increase of approximately 25%[60] Operating Performance H1 2025 | Indicator | Amount (RMB million) | Period-on-Period Change (%) | | :--- | :--- | :--- | | Operating Revenue | 416.8158 | 9.46% | | Net Profit Attributable to Shareholders | -76.5572 | Loss reduced by 4.31% | | Net Profit Attributable to Shareholders (Excluding Non-Recurring Items) | -76.5938 | Loss reduced by 10.52% | - The company's total headcount decreased by approximately 13% year-on-year, the period expense ratio decreased by about 15 percentage points, and per-salesperson output increased by approximately 26% year-on-year[61] Four Major Battles Progressing Orderly, Business Improvement Evident The company's "Four Major Battles" show progress: ASIC chip mass production initiated, strong sales growth in key industries, rapid growth in data security and security operations services targeting RMB 100 million orders, and a brand transformation towards a global, AI-driven solution provider. - "Platform Transition": ASIC chip mass production tape-out has started, with capability verification points deployed in finance, healthcare, education, and government/enterprise sectors, and an independent and controllable certification evaluation report obtained from the Fifth Electronics Research Institute of the Ministry of Industry and Information Technology[63] - "Key Industries": The company designated finance, telecom operators, energy, and education as key industries for the year, showing good sales growth and securing representative project shortlists or wins[63] - "RMB 100 Million Product Lines": The company continues to deepen its strategic layout in security services, combining data security governance with security operations services, aiming for over RMB 100 million in orders for this business within three years, with rapid performance growth during the reporting period[64] - "Brand Transformation": Centered on the brand philosophy of "open integration, AI empowerment, intelligent O&M," the company is gradually transforming into a "global brand layout + comprehensive solution provider + Dual-A (ASIC+AI) driven technology innovator"[65] Internal Cost Control and Efficiency Improvement, External Collaborative Expansion The company's business unit reform led to a 26% increase in per-salesperson output, RMB 154 million in channel-contributed sales (up 53%), and a 15 percentage point reduction in period expense ratio, demonstrating significant internal efficiency gains and external expansion. - The company deepened its business unit system, with steady growth in revenue and order volume in finance, telecom operators, and energy sectors, and per-salesperson output increasing by approximately 26% compared to the same period last year[66][67] - The company's Hong Kong and Macau business unit continued to maintain rapid revenue and profit growth, with increasing international brand influence[67] - The company continued to expand its channel ecosystem, with sales contracts contributed by channels amounting to approximately RMB 154 million, a year-on-year increase of about 53%[67] - During the reporting period, the company's period expense ratio decreased by approximately 15 percentage points year-on-year, demonstrating relatively significant achievements in cost control and profitability recovery[67] "Dual-A (ASIC+AI)" Strategy Driven, Technological Innovation Drives Long-Term Growth The "Dual-A Strategy" (ASIC+AI)