Core Viewpoint - Advances in quantum computing technology pose significant threats to traditional encryption systems, leading to the emergence of post-quantum cryptography as a key technology for information security in the quantum information era [1] Company Summary - Geer Software, established in 1998 and listed in the capital market in 2017, has been deeply involved in the encryption industry for 27 years [1] - The company has developed quantum encryption algorithms and security products, effectively adding a "quantum lock" to data [1] - Since 2021, Geer Software has begun deploying post-quantum cryptography, integrating technologies such as quantum random number generation and quantum key distribution into its product system [1] Industry Summary - The overall upgrade of the industry is expected to gradually expand from critical sectors such as finance, energy, and public welfare [1]

Summary of the Conference Call for Geer Software Company Overview - **Company**: Geer Software - **Industry**: Cybersecurity and Encryption Technology Key Points and Arguments 1. **Performance Expectations**: Geer Software anticipates landing orders of approximately 600-700 million yuan this year, representing a year-on-year increase, and maintains a neutral to slightly optimistic outlook for overall performance [2][3][20] 2. **Sector Performance**: The government and party sectors performed well, while the financial sector saw banks outperforming securities. However, the military sector experienced a significant decline compared to the previous year, negatively impacting overall performance [2][3][20] 3. **Strategic Shift**: The company is shifting its strategy to reduce reliance on encryption as a single label and is expanding into data, AI, and IoT. This includes developing a data middle platform, AI application security, and lightweight encryption products [2][5][6] 4. **Market Potential**: The encryption industry is characterized by strong certainty due to its connection to national security, with significant market potential. Emerging applications are challenging traditional encryption products, necessitating lightweight and user-friendly designs [2][6] 5. **Next-Generation PKI Products**: The next-generation Public Key Infrastructure (PKI) products will include quantum-resistant technology, with preparations underway to address risks posed by quantum computing [2][8][9] 6. **Financial Sector Demand**: There is a strong demand for quantum-resistant technology in the financial sector, with key information fields such as military, government, and state grid showing significant interest. Policy developments are expected to accelerate adoption [2][11] 7. **Acquisition Strategy**: Geer Software has acquired over 50% of Shenzhen Weipin Zhiyuan, focusing on its data middle platform capabilities and relationships with operators and manufacturers, which will help expand AI customer bases and move beyond a single security label [3][13][15] 8. **Future Directions**: The company aims to integrate more AI capabilities into its next-generation PKI systems and develop markets for data security and AI security, which are currently underdeveloped [14][15] 9. **Financial Performance of Acquired Company**: Weipin Zhiyuan reported approximately 500 million yuan in revenue and nearly 40 million yuan in profit for 2024, which enhances Geer Software's future growth potential [17] 10. **Market Trends**: The overall market for quantum-resistant encryption is expected to grow, with standards anticipated to be established by the end of 2025. However, large-scale mandatory replacements are not expected in the short term [21][22] Additional Important Insights - **Customer Adoption**: There are two types of customers regarding quantum-resistant solutions: those willing to invest heavily and adopt immediately, and those proceeding gradually according to policy [12] - **Government Spending Influence**: Special government bonds are expected to have a limited but positive impact on cybersecurity spending, particularly in the military sector [20] - **Long-Term Outlook**: The encryption technology market is projected to have substantial applications over the next 10 to 20 years, especially with the rise of IoT [6][7]

Investment Rating - The investment rating for the company is "Buy-A" with a target price of 57.83 CNY over the next six months [5]. Core Insights - The recent release of the "Key Information Infrastructure Commercial Password Usage Management Regulations" is expected to significantly promote the password industry, clarifying regulatory responsibilities, establishing reporting timelines, and ensuring funding for security assessments [2][3]. - The company has a comprehensive range of password products from chips to complete systems, positioning it to benefit from the anticipated growth in industry demand driven by new regulations [3]. - The company is actively developing quantum-resistant password products and engaging in stablecoin-related businesses, which are seen as critical areas for future growth [4][10]. Summary by Sections Regulatory Impact - The new regulations clarify the roles of various regulatory bodies, which is expected to accelerate the development and penetration of the password industry [2]. - A specific reporting deadline for operators to report on the use and security assessments of commercial passwords is established, promoting regular evaluations and driving product sales [2]. - Financial support for security assessments is mandated, which is crucial for enhancing demand for related products [2]. Company Positioning - The company has launched several pioneering products in the password security space, including the first domestic security level three password card and machine, as well as the "SansecHSM" [3]. - The successful mass production of the self-developed password security chip XS100 and the certification of various IoT-specific chips indicate the company's strong product pipeline [3]. Future Growth Areas - The company has developed a full suite of quantum-resistant password products and is involved in pilot applications across various sectors, including finance and telecommunications [4][9]. - The company is also focusing on stablecoin applications, recognizing the importance of password technology in supporting digital currencies for cross-border payments [9][10]. - Revenue projections for the company indicate significant growth, with expected revenues of 6.65 billion CNY in 2025, increasing to 9.05 billion CNY by 2027 [10].

Group 1: Quantum Communication and Computing - A Chinese research team has achieved a breakthrough in quantum direct communication, successfully establishing a 300-kilometer quantum communication network with a fidelity of over 85% [1] - The global quantum industry is projected to grow from $5 billion in 2024 to over $800 billion by 2035, with a CAGR of 59% [2] - Companies like Geer Software and Keda Guokai are actively developing quantum technologies, including anti-quantum encryption and quantum key distribution [2] Group 2: Analog Chip Market - The global analog chip inventory cycle is believed to have bottomed out after nearly six quarters of adjustment, driven by demand in consumer electronics, automotive electronics, and industrial control [3] - Companies such as Shengbang and Sirepu are leading in the analog integrated circuit design industry, with extensive product offerings and significant customer bases [4] Group 3: Brain-Computer Interface (BCI) Development - The establishment of China's first clinical brain-computer interface ward marks a significant step towards the commercialization of BCI technology, with plans for multiple invasive products to undergo clinical trials by 2030 [5] - Companies like Chengyitong and Sanbo Neuroscience are advancing in both invasive and non-invasive BCI technologies, with products expected to launch in 2025 [6] Group 4: Stablecoin Regulation in Hong Kong - Hong Kong's Stablecoin Ordinance has officially become law, establishing a licensing system for stablecoin issuers and promoting financial innovation while maintaining stability [7] - Companies like Newland and Youbuxun are developing digital currency acceptance solutions and have obtained necessary licenses for cross-border payment operations [8] Group 5: Humanoid Robot Industry - The humanoid robot sector is experiencing a surge in orders, prompting companies to expand production capacity, with significant growth expected in 2025 [9][10] - Companies such as Far East and Zhongding are supplying critical components for humanoid robots, enhancing their capabilities and durability [11] Group 6: Low-altitude Economy - The low-altitude economy is gaining traction, with policies supporting its development and a projected market potential of over a trillion yuan in the coming years [12] - Companies like Zongshen Power and Lais Information are positioning themselves in the low-altitude sector, providing solutions for general aviation and air traffic management [13]