Hillstone Networks(SH:688030)2021-08-30 16:00Financial Performance - The company reported a total revenue of 1.5 billion RMB for the first half of 2021, representing a year-on-year increase of 20%[1]. - The company expects a revenue growth of 15% to 25% for the second half of 2021, projecting total revenue between 1.75 billion RMB and 1.88 billion RMB[1]. - The company achieved operating revenue of CNY 294.91 million in the first half of 2021, representing a year-on-year increase of 32.32%[23]. - The net profit attributable to shareholders was a loss of CNY 97.74 million, compared to a loss of CNY 59.63 million in the same period last year[23]. - The net cash flow from operating activities was a negative CNY 211.73 million, a significant decline compared to the previous year's negative CNY 96.43 million[23]. - The company's total assets decreased by 7.87% from the end of the previous year, amounting to CNY 1.65 billion[23]. - The net assets attributable to shareholders decreased by 7.34% to CNY 1.32 billion[23]. - The basic earnings per share for the period was -CNY 0.5423, compared to -CNY 0.3309 in the same period last year[24]. - The weighted average return on net assets was -7.10%, compared to -4.46% in the previous year[24]. - The gross profit margin for the main business was 67.71%, up by 0.65 percentage points year-on-year[126]. User Growth and Market Expansion - User data indicates a growth in active users, reaching 2 million by the end of June 2021, up from 1.5 million in the same period last year, marking a 33.3% increase[1]. - The company is expanding its market presence in Southeast Asia, targeting a 10% market share by the end of 2022[1]. - The company has served over 20,000 users across more than 50 countries and regions, achieving recognition in various industries including finance, government, and healthcare[58]. Research and Development - Research and development expenses increased by 30% year-on-year, totaling 300 million RMB, reflecting the company's commitment to innovation[1]. - The company's R&D investment accounted for 42.32% of operating revenue, a slight decrease from 42.61% year-on-year[24]. - The total R&D investment for the first half of 2021 was approximately ¥124.82 million, representing a year-on-year increase of 31.45%[72]. - The company expanded its R&D team to 494 personnel, with R&D staff accounting for 31.89% of the total workforce[83]. - The company has applied for multiple patents, with 3 patents for its next-generation firewall and 2 for its cloud security micro-segmentation technology[64]. Product Development and Innovation - New product launches include an upgraded version of their firewall technology, which is anticipated to enhance market competitiveness and drive sales growth[1]. - The company launched the A200 desktop firewall for small and medium enterprises and upgraded the A5500 and A5800 high-end firewalls, enhancing their performance and storage capabilities[34]. - The company has made significant advancements in cloud security, releasing 13 related products and enhancing compatibility with major cloud platforms like Huawei Cloud and VMware[38]. - The company launched over 30 new features for application delivery products, significantly enhancing market competitiveness[46]. - The company introduced a 120G mid-to-high-end model to target higher-end markets, improving product coverage[46]. Financial Strategy and Shareholder Returns - The board approved a profit distribution plan, proposing a dividend payout of 0.5 RMB per share for the first half of 2021[1]. - The company emphasizes a cash dividend policy, aiming for a minimum cash dividend ratio of 80% during mature stages without significant capital expenditure[168]. - The company will review its shareholder return plan at least every three years to ensure compliance with its profit distribution policy[169]. Risks and Challenges - The management highlighted potential risks including increased competition and regulatory changes that could impact future performance[1]. - The company faces risks from market competition as existing competitors grow and new entrants emerge, potentially impacting its market position[107]. - The company relies heavily on a few key clients, with sales to the top five clients accounting for 76.28% of total revenue, indicating a high customer concentration risk[111]. - The company has a low accounts receivable turnover rate of 0.55 times, with accounts receivable valued at 363.74 million, which may increase the risk of bad debt losses[116]. Corporate Governance and Compliance - The company has committed to continue increasing its stake in the company by at least 3% of the total share capital within 12 months, without seeking control over the company[156]. - The company guarantees that its prospectus does not contain false records or misleading statements, and all directors and senior management are liable for its accuracy[160]. - The company will ensure or make its best efforts to compensate for the dilution of immediate returns as per the commitment made in 2019[161]. Market Position and Recognition - The company ranked 4th in the "Unified Threat Management (UTM)" market in China from 2016 to 2020 according to IDC data[58]. - The company received the "Customer Choice" honor from Gartner for two consecutive years in the network firewall category[59]. - The company has been awarded the "2021 CDM Market Leader in Data Center Security" by Cyber Defense Magazine, highlighting its advanced product capabilities[62].