Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 20.93 [1][5]. Core Views - The company reported a significant decline in revenue for H1 2025, with a year-over-year decrease of 40.16%, primarily due to tightened customer budgets. However, the gross margin improved to 51.49%, up by 10.77 percentage points year-over-year, indicating a focus on enhancing business quality [2][5]. - The company is accelerating its strategic investments in quantum-resistant encryption and platform services, with the first pilot of a quantum-resistant product launched in the financial sector. It plans to raise RMB 160 million for industrialization [2][4]. - The company is expanding its market presence in various sectors, including government and military, and has successfully won multiple city-level encryption service platform projects [3][4]. Summary by Sections Financial Performance - In H1 2025, the company achieved revenue of RMB 116 million, with a net loss of RMB 72.69 million, reflecting a year-over-year decline of 44.16% in net profit. Q2 revenue was RMB 70.02 million, down 51.63% year-over-year [1][2]. Strategic Initiatives - The company is focusing on new security scenarios, particularly in quantum-resistant encryption, and has made significant progress in integrating its products with major cloud platforms like Huawei and Alibaba [4][5]. - The company has become one of the first encryption vendors in the HarmonyOS NEXT ecosystem, enhancing its product compatibility and integration with major tech players [4]. Market Expansion - The company is actively expanding into new markets and sectors, including tobacco, finance, and customs, leveraging its strengths in the central China region to accelerate growth in the public sector [3][4]. - The company’s expenses have increased due to accelerated market expansion and technology development, with sales, management, and R&D expense ratios rising significantly [3]. Profitability Forecast - Revenue forecasts for 2025-2027 have been adjusted downwards by 8.26%, 11.74%, and 12.51% respectively, while net profit forecasts have been reduced by 10.43%, 5.40%, and 5.63%. The expected EPS for 2025 is RMB 0.33, with a CAGR of 45.44% for net profit [5][11].

Core Insights - The company, Geer Software, has made significant progress in its ESG ratings, achieving a leap from BBB to A level according to Huazheng ESG ratings, and further improving to AA level with a score of 8.41 in 2025, placing it in the top 3.89% of the software industry [1] - Geer Software emphasizes that ESG is an ongoing process, focusing on data security governance, industry collaboration, and innovation-driven development to implement its ESG strategy [1] Group 1: Data Security Governance - In the current data-centric era, data security is crucial for enterprises and a key aspect of ESG governance, with Geer Software integrating ESG principles into the entire data lifecycle management [2] - The company invests heavily in R&D for data encryption, access control, and data leak prevention, establishing a comprehensive data security protection system [2] - Geer Software has developed a unified security management system for various business operations, ensuring end-to-end security control for cloud-based remote access [2] Group 2: Industry Collaboration - Geer Software advocates for a collaborative approach in the cybersecurity industry, aiming to build a new network security ecosystem centered around cryptography technology [4] - The company has successfully partnered with Huawei to promote innovation in network security technology and has collaborated with Guotai Junan to accelerate the application of domestic cryptography [4] - By integrating resources within the industry, Geer Software contributes to the development of domestic technologies and supports national information security strategies [4][5] Group 3: Innovation and Development - The company recognizes the explosive growth in cybersecurity demand due to accelerated digital transformation and integrates ESG principles into product and service innovation [6] - Geer Software has achieved CMMI Level 5 certification, indicating a new level of excellence in R&D management, with a focus on developing innovative security products [7] - In 2024, the company invested approximately 97.89 million yuan in R&D, representing 18.49% of its revenue, and employed 201 R&D personnel, highlighting its commitment to innovation [7] Group 4: Future Outlook - Geer Software plans to continue advancing its ESG initiatives, enhancing governance systems, strengthening innovation capabilities, and expanding ecological cooperation to set a benchmark for sustainable development in the cybersecurity industry [8]