Summary of Conference Call Records Company Overview - The company discussed is 深信服 (Deepin Technology), focusing on its subscription products and services in the cybersecurity and cloud computing sectors. Key Points and Arguments Industry and Business Performance - Subscription product lines, such as MSS (Managed Security Services), have shown significant growth of 20%-30%, while traditional hardware sales have declined. Subscription methods now account for 50% of the cybersecurity business [1][2] - The MSS solution integrates firewall, EDR, XDR, and situational awareness into a platform, providing a good customer experience, but only 10%-15% of long-term operational customers currently utilize it due to high costs. The goal is to increase this to 50% [1][2] - Managed cloud services maintain a growth rate of 40%-50%, primarily targeting medium-sized customers through competitive pricing, representing about 25% of cloud computing revenue [1][13] - EDS (Enterprise Data Services) has seen significant demand in manufacturing and finance, with a large market share and a new unified storage solution launched this year [1][14][19] Pricing and Customer Segmentation - The price for a complete MSS system is approximately 30,000 to 40,000 yuan, which includes bundled services like firewall and XDR. Customers typically increase their module usage over time, leading to higher renewal amounts [1][4] - 信创 (Xinchuang) hyper-converged products are priced 20%-30% higher than non-Xinchuang products, with Xinchuang customers accounting for over 50% of total sales despite being only 20%-30% of the customer base [1][21] AI and Technological Integration - The AICP platform aims to help enterprises utilize AI resources and optimize hardware performance through GPU pooling technology, but its high price is leading the company to adjust its pricing strategy [1][22][23] - The company has discussed AI products like email protection and security GPT, but market acceptance remains low due to high costs and the need for local deployment for data security [9][10][11] Market Dynamics and Competitive Landscape - The cybersecurity market is highly competitive, with price wars among leading firms, resulting in high investment but low returns. Despite some smaller players exiting, the overall market has not improved significantly [2] - The transition from centralized to distributed storage in the financial sector is ongoing, with some clients still using traditional databases, indicating a gradual shift rather than an immediate change [17][18] Future Outlook - The company expects to increase its enterprise user base from approximately 20 to around 100 in the future, with individual user spending gradually increasing [6] - The hyper-converged market is growing at 20%-30%, with a focus on filling the gap left by VMware's exit [20] - The company is exploring ways to leverage existing customers to expand its user base, particularly in AI technology [28] Challenges and Considerations - High costs remain a significant barrier for many potential customers, particularly in manufacturing, where investment decisions are cautious without clear ROI [26][27] - The company recognizes the need to balance hardware and software costs to make their offerings more attractive to customers [27] Additional Important Information - The company has a strong focus on providing high-level operational services, requiring a small team to manage multiple enterprise users [7] - The managed cloud service offers a cost advantage over traditional public cloud services by allowing flexible pricing based on actual resource usage [15]

Core Insights - The company reported a total revenue of 733 million yuan for the first half of 2025, representing a year-on-year increase of 5.05% [1] - The net profit attributable to shareholders was -194 million yuan, showing a year-on-year improvement of 29.57% [1] - The gross margin increased by 1.17% to 55.79%, while the net margin improved by 32.12% to -27.04% [1] Financial Performance - Total revenue for Q2 2025 was 422 million yuan, up 1.18% year-on-year [1] - The company’s operating costs rose by 3.54%, attributed to the increase in revenue [4] - Sales expenses decreased by 3.56%, due to reduced salaries and share-based payments for sales personnel [4] - Management expenses fell by 5.88%, driven by lower salaries and share-based payments for management staff [5] - R&D expenses decreased by 15.84%, reflecting a reduction in salaries and share-based payments for R&D personnel [5] Cash Flow and Debt - The net cash flow from operating activities increased by 25.02%, due to higher cash receipts from sales and reduced salary payments [5] - The company’s cash flow from investing activities saw a significant decline of 187.78%, due to increased purchases of financial products [6] - Cash flow from financing activities decreased by 155.46%, as cash received from borrowings reduced [7] Business Strategy and Market Position - The company continues to focus on its core business, leveraging AI strategies to drive growth in data security and core product lines [3] - The company’s historical return on invested capital (ROIC) has been low, with a median ROIC of 0.29% since its listing [8] - The company has experienced four years of losses since its IPO, indicating challenges in achieving sustainable profitability [8] Shareholder Information - The largest fund holding the company’s shares is the Xin'ao Core Technology Mixed Fund, with a current scale of 626 million yuan [10] - The fund has shown a significant increase of 109.53% over the past year [10]

Core Insights - Nanling Technology (300921) reported a revenue of 270 million yuan and a net profit of 10.22 million yuan for the first half of 2025, marking a year-on-year growth of 66.24% [1] Group 1: Business Performance - The company focuses on three core areas: performance leadership, safety intelligence, and simplified deployment, continuously launching new products and upgrades to meet evolving market demands [1] - The company's digital solutions matrix, which includes "cloud + network + security," serves various industries such as finance, insurance, retail, catering, pharmaceuticals, and manufacturing, gaining recognition from numerous Fortune 500 and well-known domestic enterprises [1] Group 2: Product and Service Development - During the reporting period, Nanling Technology launched Managed Detection and Response (MDR) services, integrating intelligent analysis, assessment, and response capabilities, alongside the upcoming Managed Security Services (MSS) [2] - The company has achieved a comprehensive optimization of its self-developed Secure Access Service Edge (SASE) technology, ranking fourth in the Chinese SASE market according to IDC [2] Group 3: Strategic Partnerships and Ecosystem - Since 2024, the company has initiated an ecosystem cooperation strategy, with over 70 partners, and has been collaborating with major players like China Unicom, China Telecom, China UnionPay, Huawei, and Fortinet to expand market reach and capabilities [2] - The ecosystem cooperation business has seen rapid revenue growth in the first half of 2025 [2] Group 4: Technological Advancements - Nanling Technology leverages its strong R&D capabilities and a robust Managed Service Provider (MSP) system to advance network integration projects with major telecom operators, offering Network as a Service (NaaS), Security as a Service (SaaS), and Monitoring as a Service (MaaS) [3] - The company employs AI technology to enhance product and service capabilities, providing integrated "cloud-intelligent-network-security" services to various industries and AI-related companies [3] - Future plans include deepening SASE exploration and transitioning from cloud-native to AI-native architectures for comprehensive optimization and proactive protection of AI traffic [3]

Investment Rating - The report maintains an "Accumulate-A" rating for the company [1][8][19] Core Views - The company achieved a revenue of 3.009 billion yuan in the first half of 2025, representing a year-on-year growth of 11.16%. The net profit attributable to shareholders was -228 million yuan, a significant improvement of 61.54% year-on-year [5][6] - In Q2 2025, the company reported a revenue of 1.747 billion yuan, a year-on-year increase of 4.50%, and turned a profit with a net profit of 22 million yuan [5][6] - The growth drivers include the super-converged and EDS businesses, with the cloud computing and IT infrastructure segment growing by 26.15% year-on-year [6][7] Financial Performance - The company's gross margin for the first half of 2025 was 62.09%, an increase of 0.75 percentage points year-on-year. The gross margin for the cloud computing business improved by 3.46 percentage points [7] - Operating expenses decreased by 6.81% year-on-year, leading to a significant improvement in the net profit margin, which reached -7.56%, an increase of 14.31 percentage points year-on-year [7] - The operating cash flow improved from -977 million yuan in the previous year to -235 million yuan, attributed to increased sales and better supply chain management [7] Revenue and Profit Forecast - The company is expected to see rapid growth in its cloud business driven by the explosion in AI demand, with EPS forecasts for 2025, 2026, and 2027 at 1.23, 1.88, and 2.45 yuan respectively [8][11] - The projected P/E ratios for 2025, 2026, and 2027 are 97.3, 63.8, and 48.9 respectively, based on the closing price of 119.85 yuan on August 22, 2025 [8][11] Market Performance - As of August 22, 2025, the company's closing price was 119.85 yuan, with a year-to-date high of 142.00 yuan and a low of 42.70 yuan [4][5]

Core Viewpoint - The company reported a revenue of 3.009 billion yuan for the first half of 2025, marking an 11.16% year-on-year increase, while the net profit attributable to shareholders was -228 million yuan, a significant increase of 61.54% year-on-year [1] Group 1: Financial Performance - In Q2 2025, the company achieved a revenue of 1.747 billion yuan, reflecting a 4.50% year-on-year growth, and turned a profit with a net profit of 22 million yuan [1] - The company's gross margin for the first half of 2025 was 62.09%, an increase of 0.75 percentage points compared to the same period last year [3] - The operating cash flow improved from -977 million yuan in the previous year to -235 million yuan, primarily due to increased sales receipts and better supply chain management [3] Group 2: Business Segments - The company's network security business generated 1.435 billion yuan in revenue, a slight increase of 2.61% year-on-year, with strategic areas like XDR and MSS showing faster growth [2] - The cloud computing and IT infrastructure business saw a revenue of 1.395 billion yuan, up 26.15% year-on-year, driven by domestic demand and product quality improvements [2] - The basic network and IoT business reported a revenue of 179 million yuan, down 11.62% year-on-year, mainly due to intensified competition in the enterprise wireless market [2] Group 3: Cost Management and Efficiency - The company implemented cost reduction and efficiency improvement measures, resulting in a 6.81% year-on-year decrease in sales, management, and R&D expenses [3] - The net profit margin improved significantly to -7.56%, an increase of 14.31 percentage points compared to the previous year [3] - The company achieved a turnaround in Q2 with a net profit, indicating effective cost management strategies [3] Group 4: Investment Outlook - As a leading player in network security and cloud computing in China, the company is expected to benefit from the surge in AI demand, leading to rapid growth in its cloud business [4] - The adjusted earnings per share (EPS) forecasts for 2025-2027 are 1.23, 1.88, and 2.45 respectively, with corresponding price-to-earnings (PE) ratios of 97.3, 63.8, and 48.9 [4]

Core Viewpoint - In 2024, the company achieved operating revenue of 7.52 billion yuan, a year-on-year decrease of 1.86%, and a net profit attributable to shareholders of 197 million yuan, a year-on-year decrease of 0.49% [1][2] - In the first quarter of 2025, the company achieved operating revenue of 1.26 billion yuan, a year-on-year increase of 21.91%, and a net profit attributable to shareholders of -250 million yuan, a year-on-year reduction in loss of 48.93% [1][2] - As of the end of the first quarter of 2025, the company's contract liabilities reached 1.43 billion yuan, a year-on-year increase of 16.36%, which may provide momentum for future growth [1][5] Financial Performance - In 2024, the company's operating revenue was 7.52 billion yuan, with a net profit of 197 million yuan and a non-recurring net profit of 77 million yuan, reflecting a decline of 1.86%, 0.49%, and 30.45% year-on-year respectively [2][3] - In Q4 2024, the company reported operating revenue of 2.89 billion yuan, a year-on-year increase of 1.13%, and a net profit of 777 million yuan, a year-on-year increase of 4.46% [3] - In Q1 2025, the company achieved significant revenue growth of 1.26 billion yuan, with a net profit of -250 million yuan, marking a substantial reduction in loss [3] Business Segments - In 2024, the company's cybersecurity product revenue was 3.63 billion yuan, a year-on-year decrease of 6.75%, while cloud computing and IT infrastructure revenue was 3.38 billion yuan, a year-on-year increase of 9.51% [4] - The company’s focus on strategic businesses like XDR and MSS has led to faster growth despite overall industry weakness [4] - The company’s cloud business orders continued to grow well in Q1 2025, driven by the AICP computing platform addressing enterprise private model deployment challenges [4] Customer Demand and Future Outlook - In 2024, the company's enterprise customer revenue grew by 1.82%, supported by resilient IT construction demand [5] - As of Q1 2025, the company's contract liabilities reached 1.43 billion yuan, indicating potential for future growth [5] - The company expects operating revenues for 2025-2027 to be 8.27 billion, 9.43 billion, and 10.93 billion yuan, with corresponding net profits of 398 million, 536 million, and 696 million yuan, reflecting significant growth rates [1][5]