Incident: On the evening of July 10, the company issued a revised announcement to the semi-annual performance forecast: The performance forecast for the first half of 2014 was revised upward from -15% to 15% year on year to 30% to 50% year on year. The corresponding net profit attributable to shareholders of listed companies was 17.68 million yuan to 20.4 million yuan. Comment: In the first half of the year, the performance growth was high, and the trend of speeding up performance was determined. Net profit attributable to shareholders of listed companies in the first half of the year is expected to increase 30% to 50% year on year, far higher than the estimated performance growth range of -15% to 15% in the first quarter report; the increase in performance mainly benefits from the continued expansion of the issuance of financial IC cards and social security cards. The impressive performance in the first half of the year laid a solid foundation for high growth throughout the year, and the trend of the company's performance reversal and accelerated growth was determined. The national urban card business has expanded smoothly, and the value of mobile payment platform operators has been highlighted. Citylink Data Co., Ltd., which was established as a joint venture between the company and Yisecode, is a first-level operating platform for the National Urban Card. Currently, the interests of all parties in the industry are converging, and platform construction and operation, and industry (operators, banks, Internet and hardware manufacturers, etc.) are expanding smoothly. The TSM platform is now live and is expected to cover 60 cities in 14 years and 100 cities in 2015. The City Card is one of the two most important application areas for mobile payments. It has the advantages of the largest number of users and the highest user stickiness. It is the field with the most long-term strategic investment value of mobile payments. The City Federation will highlight its value in competitive cooperation with operators, banks, the Internet, and third party (hardware and other) companies. Traditional main businesses (financial IC cards, social security cards, NFC-SWP) are booming, and improvements in incentive mechanisms drive the company's medium- to long-term improvement. 1. Financial IC cards: Shipments are expected to reach 60 million cards in '14, double that of '13. 2. Social security cards: The company has provided social security cards to more than 20 provinces, and will grow at a high level in 2014. 3. Communication cards: The three major operators are expected to issue more than 200 million SWP cards in 2014 (China Telecom's NFC-SWP card tenders are expected to exceed 250 million in 2014, and China Mobile's bidding volume is expected to exceed 250 million). This is a year of explosive growth, and the company will gain an advantage in SWP cards. As an IT state-owned enterprise, the company has introduced equity incentives, and the interests of management and shareholders are in agreement, giving the company the motivation for long-term internal growth. Performance in the first half of the year was high, and the incentive effect is beginning to show, and it is expected that it will continue to improve. Profit forecast and valuation: Net profit attributable to the parent company for 2014-2016 is estimated to be 9599, 16825, and 221.5 million yuan, EPS is 0.33, 0.58, and 0.76 yuan, and corresponding PE is 42, 24, and 18. Maintain the company's “Highly Recommended” rating, with a target price of 21.8 yuan. Risk warning: The launch of the mobile payment market fell short of expectations; City Union's business was slower than expected.