Key points of the report Description of events Oriental Communications published its 2015 semi-annual report. The report shows that in the first half of 2015, the company achieved operating income of 1,919 million yuan, up 9.10% from the same period last year; realized net profit attributable to shareholders of listed companies of 77 million yuan, an increase of 23.71% over the previous year; and basic earnings per share in January-June were 0.06 yuan. Incident reviews increased the revenue scale of advantageous businesses, and performance increased significantly in the first half of the year: the company's overall revenue scale maintained a relatively rapid growth rate in the first half of the year. Among them, financial electronics business revenue increased 25.25% year on year, maintaining a good development trend; communications and electronics revenue fell 4.43% year on year, yet the business revenue structure continued to be optimized. In terms of gross margin, the overall gross margin for the first half of the year was 10.82%, down 0.4 percentage points from the previous year, mainly due to the increase in the share of revenue from the low margin business; considering that revenue from the financial electronics and private network business will be confirmed centrally in the second half of the year, there is still plenty of room for improvement in subsequent gross margin. Furthermore, all of the company's expense ratios have been clearly improved to ensure an overall increase in the company's profit level in the first half of the year. The domestic substitution trend is clear, and the prospects for the development of the financial electronics industry are clear: as can be seen, the company's financial electronic business is developing well. The company won the bid for the China Post ATM collection project in the first half of the year, laying the foundation for high growth throughout the year. Looking ahead, we are optimistic about its long-term development prospects. The main reasons are: 1. There is huge room for industry development, and the per capita ownership of domestic ATMs is still far below the level of developed foreign countries, and new products such as VTM are also showing strong demand; 2. The trend of localization and substitution of financial equipment is clear, providing a more relaxed market environment for local Chinese manufacturers; 3. While securing advantageous customer resources such as ICBC and Post, the company is actively developing and developing new customer markets to ensure that its business scale continues to expand rapidly. We believe that the company's financial electronic business has obvious resource advantages and strong development momentum, which will drive the company's profitability to continue to improve. The cluster private network market has huge potential, providing an impetus for accelerated performance growth: it can be seen that the company continues to increase investment in cluster private network products and technology research and development, and its competitive strength is constantly improving. Looking ahead, we believe that the company will continue to benefit from the development of the digital cluster industry and usher in opportunities for accelerated revenue and profit growth. The specific manifestations are: 1. The acceleration of rail transit construction across the country will drive an increase in demand for middle and high-end cluster products and become an excellent opportunity for the company to expand the TETRA product line; 2. There is an urgent need for the digital upgrade of private networks for police clusters in various provinces and cities, and the construction of PDT private networks is about to begin, which will push the private network market into a stage of high prosperity. We believe that the company's cluster private network business has high potential for development and can provide a continuous impetus for the long-term growth of the company's performance. Investment advice: We are optimistic about the company's development prospects. We expect the company's EPS for 2015-2017 to be 0.25 yuan, 0.32 and 0.41 yuan respectively, giving the company a “buy” rating.