Why can the security business increase earnings upside?

  • The company’s security business accounted for 34% of first-half revenue and had a gross margin of 74%; CDN and cybersecurity together accounted for more than 90% of revenue. Zheshang Securities believes a higher share of high-margin security business can help improve the company’s profitability.
  • Security services are primarily offered under a SaaS model and can reuse existing CDN nodes, customers and sales channels. Edge nodes are positioned along the path of traffic, making it easier to embed security capabilities close to users, handle threats and deliver services at scale.

How does AI demand translate into opportunities for Wangsu Science & Technology?

  • In the short term, Zheshang Securities expects increased access by AI agents to raise node request volumes, origin fetches and security processing workloads. The public distribution of multimodal content is also expected to increase demand for the transmission of images, audio and video.
  • In the medium term, the company is combining network, computing and security capabilities through its global edge nodes to develop products such as edge AI gateways and computing cloud services. These products grew steadily in business scale in the first half, and the company also launched an edge AI execution engine.
  • Over the long term, existing capabilities in identity authentication, token and API call metering, content risk control and operational auditing can provide a foundation for exploring AI call management.

What changes does the earnings forecast depend on?

  • Zheshang Securities expects the mature CDN business to support operations, improvements in pricing and efficiency to drive a recovery, and security and edge AI to expand growth opportunities. Intensifying competition in the CDN industry is a risk cited in the report.
  • The brokerage forecasts net profit attributable to shareholders of 836 million, 1.085 billion and 1.398 billion yuan for 2026–2028, respectively, up approximately 4.5%, 29.9% and 28.9% from 800 million yuan in 2025. The corresponding forecast price-to-earnings ratios are 45.70, 35.19 and 27.31 times.