The "Prism Gate" incident that shocked the world in 2013, the rise of P2P applications on the Internet, the increase in network threats such as worms, Trojans, DDOS attacks, and the emergence of new network visualization technologies such as DFI, protocol restoration, and flow co

Reporter | Liu Xiaohan

The "Prism Gate" incident that shocked the world in 2013, the rise of P2P applications on the Internet, the increase in network threats such as worms, Trojans, DDOS attacks, and the emergence of new network visualization technologies such as DFI, protocol restoration, and flow control have led to the development of many application scenarios for controlling and managing network services in this stage.

Haohanshendu is a company that mainly provides Internet traffic identification, analysis, control and data collection functions for China Mobile . It mainly engages in DPI (Deep Packet Inspection) services. DPI is a deep detection technology based on data packet . It conducts deep detection of different network application layer payloads (such as HTTP, DNS, etc.), and determines its legality by detecting the payload of packets.

Haohan Shen recently submitted an application for listing, and moved from the New Third Board to the Science and Technology Innovation Board , and plans to raise 400 million yuan. The prospectus shows that as of the end of 2020, Haohanshendi had a total of 391 people and 155 R&D personnel, accounting for 39.64%, and more than half were undergraduates.

heavily relies on the intelligent control and data application fields of "China Mobile"

Haohan Deep Focal Length Internet Traffic. The company has independent intellectual property rights with DPI technology as the core and is committed to providing intelligent network information security protection solutions for customers such as Telecom operators. Its products are currently deployed in various levels of network nodes such as backbone networks, metropolitan area networks/provincial networks, IDC exports, etc. During the reporting period, the new link bandwidth management scale exceeded 300Tbps.

From 2018 to 2020 (reporting period), the sales of the top five customers of Haohanshendu accounted for 98.75%, 99.02% and 98.90% of the main business revenue, respectively. The customers are highly concentrated. Due to the adjustment of national industrial policies, changes in the macroeconomic situation and their own business adjustments will have a significant impact on Haohanshendu.

During the reporting period, China Mobile was Haohanshen’s largest customer, and Haohanshen’s annual sales amounted to 259 million yuan and 270 million yuan of RMB 322 million, accounting for an average proportion of the current main business revenue of 83.34%. It is disclosed that in 2020, Haohan Software's gross profit margin from China Mobile on the Internet information security management system was as high as 69.15%, far exceeding China Telecom's 31.14%. The most obvious manifestation of

is that during the reporting period, the vast and deep customer base was mainly telecom operators in various places, and the company mainly obtained orders through bidding, single source procurement, and business negotiations. In terms of bidding, the revenues of Haohan In-depth Bidding Project during the reporting period were RMB 82.1251 million, RMB 81.7541 million and RMB 56.067 million respectively. In 2020, affected by the epidemic factors, the centralized procurement bidding at the China Mobile Group's level was postponed to early 2021. Correspondingly, Haohanshen's bidding revenue evaporated by 25.687 million yuan last year.

It is worth noting that in 2020, 80.55% of Haohan Deep's revenue comes from contracts obtained from single source procurement, and through a single procurement method, we have obtained expansion project orders for abnormal traffic monitoring and protection systems in many provinces of China Mobile. In terms of competitive situation, Haohan Deep is at a disadvantage. At the same time, affected by China Mobile's high revenue in the second half of the year, Haohan Software's revenue distribution also shows obvious seasonal characteristics. From the statistics of the revenue proportion of main business in each quarter in the past three years, it can be seen that the average proportion in the second half of the year was 56.79%.

Historical equity transfer has flaws

Haohan Deep’s actual controllers are Zhang Yue and Lei Zhenming, who have controlled a total of 36.59% of the company’s shares after the issuance.

Haohanshendu was formerly known as Kuanbang Telecom. It was established in October 1993 and was jointly established by Beijing University of Posts and Telecommunications , Beijing Telecom Development Corporation and Shenzhen Xianglong Communications Co., Ltd. From October 9, 2015 to January 12, 2021, Haohan Shendu was listed on the New Third Board with the stock code "833175".

From June 2020 to January 2021, Haohanshen added a total of 124 new shareholders through block trading on the New Third Board and call bidding for . Before the IPO, Haohanshen had a total of 158 shareholders, including 141 natural person shareholders and 17 institutional shareholders.

It is worth noting that as of the date of signing the prospectus, Haohanshen’s existing shareholders have 7 three-category shareholders, namely Xinding No. 1, 2, 3, 5 and 6, both under Xinding Rongsheng Capital Management, with a total shareholding ratio of 1.30%; Wandefu No. 1 and 2 are under Wandefu Investment Management, with a total shareholding of 0.01%, both of which are contract fund , with a total shareholding of 1.31%, and are all completed by the secondary market transactions of the National Share Transfer System. Judging from the expiration period of of the third category shareholders, the expiration periods of Xinding No. 1 and Xinding No. 2 cannot cover the requirements for stock locking that the stock may not be transferred within 36 months from the date of acquisition.

In addition, the prospectus shows that there are defects in the transfer of state-owned equity in Haohanshendu historically. In 1995, Haohan Shenzhen shareholder Beijing Telecom transferred its 31.25% equity and 1 million yuan investment to Beijing Yatong. At that time, Beijing Telecom and Beijing University of Posts and Telecommunications , as state-owned enterprises and institutions, the shares held by them were legal person shares , and did not perform the transfer procedures of state-owned equity in accordance with the "State-owned Assets Appraisal Management Measures" and other relevant regulations that were valid at the time.

and Huawei and ZTE's "touch"

prospectus shows that over 90% of the revenue from the three-year reporting period comes from network intelligence and information security protection solutions. According to the prospectus, Haohan Deep core product, the "Intelligent Acquisition Management System", that is, a hardware DPI system and a software DPI system implemented through the use of DPI technology, can have Internet traffic identification, analysis, management and data collection functions.

DPI technology is called "deep packet detection technology". The so-called "deep" is compared with the ordinary message analysis level. Ordinary message detection only analyzes content below 4 layers of IP packets, while DPI also adds application layer analysis to identify various applications and their content. The key is to efficiently identify various applications on the network.

In layman's terms, it's like logistics express delivery. Data is like express parcels. For safety or other issues when transporting, the logistics company will check what is contained in the parcel to avoid some contraband. DPI can conduct in-depth and accurate identification of data content. This deep recognition can even be identified based on DPI technology when there is no obvious feature of the header information of the data packet, such as certain video and voice files.

Haohan Deep is located in the network visualization industry. In terms of its development, the industry is usually divided into three stages, namely "network usage analysis", "visual business control and management" and "intelligent business management". Currently, the vast depth is in the second stage. According to the bidding documents of operators such as China Mobile and China Telecom, Haohan Software has a rival to Huawei in its business.

prospectus shows that Haohanshendi relied on China Mobile's revenue of 322 million yuan in 2020, accounting for 87.91% of the total revenue. Unlike Haohan Depth, in the 2020 China Telecom annual report, Huawei ranked one of China Telecom's five major suppliers, with a purchase amount of 29.628 billion yuan, accounting for 10.05% of the total purchase amount. The two are obviously not on the same scale.

According to Interface News reporters, Haohan Software's operating income during the reporting period was 301 million yuan, 355 million yuan and 367 million yuan, respectively. However, compared with Huawei's 100 billion yuan revenue, its operating scale is still relatively small and its risk resistance is relatively insufficient. At present, none of the companies in the industry are listed, so there are no fully comparable listed companies in Haohanshendi.

public information shows that in 2020, in addition to Haohanshendu, China Mobile's single-source procurement bids also include well-known suppliers such as ZTE, Huawei, and Wuhan Green Network. The "China Enterprise Credit Evaluation Standard Report" of Wuhan Green Network has disclosed revenues in 2018 and 2019 of 294 million yuan and 331 million yuan respectively, which is comparable to Haohanshendu. The industry competitive pressure faced by Haohanshendu can be seen.

In addition, Haohan Deep Raw Materials Cost accounts for 70% of the main business cost, and the raw materials are FPGA chips. The chip manufacturers are mainly Xilinx, etc. The future fluctuations in upstream raw material prices are worth paying attention to.