The company changed from an established IT distribution company in the past to an investment holding and incubation enterprise. Currently, the company's vast revenue comes from the following three holding subsidiaries: Daheng Group, Zhongke Dayang, and Ningbo Mingxin, with shareholding ratios of 72.7%, 56.48%, and 73% respectively.

In 2010, the company achieved operating income of 3,961 million yuan, an increase of 20.8% over the previous year; operating profit of 120 million yuan, an increase of 251.3% over the previous year; net profit attributable to owners of the parent company was 123 million yuan, an increase of 46.6% over the previous year; and basic earnings per share of 0.28 yuan/share.

In the first quarter of 2011, the company achieved operating income of 822 million yuan, an increase of 16.9% over the previous year; operating profit of 1.85 million yuan, a year-on-year decrease of -38.5%; net profit attributable to owners of the parent company was 4.53 million yuan, a decrease of 4.9% over the previous year; and basic earnings per share of 0.01 yuan/share.

The performance of the company's main holding subsidiaries improved across the board in 2010. In 2010, the performance of its three major holding subsidiaries, Daheng Group (distribution, Daheng Imaging), Zhongke Taiyang (leading television programming and broadcasting system leader), and Ningbo Mingxin (discrete device testing) all improved to varying degrees as the main source of profit, which was the main reason for the rapid increase in the company's net profit. Among them, Daheng Group's revenue increased 11.54%, and Daheng Image's profit before tax increased 305% year-on-year to 17.27 million yuan; benefiting from the development of high-definition technology and the promotion of a new round of technological upgrades for TV stations, Zhongke Taiyang achieved operating revenue of 619 million yuan, an increase of 41.65% over the previous year, and net profit of 93.18 million yuan, an increase of 170% over the previous year. With the increase in capacity utilization rate of Ningbo Mingxin, which specializes in discrete device sealing and testing business, it achieved operating income of 440 million yuan in 2010, an increase of 93% over the previous year; net profit was 12.64 million yuan, compared with a loss of 12.74 million yuan in the same period last year.

The company's profit confirmation is clearly seasonal. The company's net profit declined slightly in the first quarter of 2011. We believe that the company's normal operation fluctuated due to the obvious seasonality of confirmation of the company's profits. Judging from single-quarter data, the company's net profit for the first quarter of each calendar year was around 5%, and the first three quarters did not exceed 20%, accounting for a lower share of the whole year. The main reason is that the revenue settlement of Zhongke Taiyang was mainly concentrated in the fourth quarter, while earnings from the Nuoan Fund were also reflected in the fourth quarter. We believe that the positive trend in the development of the company's various businesses has not changed.

The date of transfer of shares of Nuoan Fund is progressing gradually, and it continues to contribute stable earnings. The company signed an “Equity Transfer Agreement” with Zhongguancun Science City, the former two shareholders, in December 2007, and transferred 20% of Nuoan Fund's shares. Before the transfer was successful, all of the dividends received by Zhongguancun Science City were handed over to Daheng Technology. Recently, the company once again applied for an equity transfer. If the Securities Regulatory Commission successfully approves it, the company will use the equity method to calculate investment income, which can increase EPS by about 0.1 yuan, and will continue to contribute stable income to the company.

Profit prediction and rating: We expect the company's earnings per share from 2010 to 2012 to be 0.3 yuan, 0.46 yuan, and 0.55 yuan respectively, and the corresponding dynamic price-earnings ratios are 30 times, 20 times, and 16 times respectively. We believe that the trend of improving the company's business is still improving. The successful weak transfer of Nuoan Fund will bring a certain margin of safety to the company's stock price and maintain the company's “buy” rating.