1. Overview of the incident We recently conducted field research on Dongxin Heping and had in-depth exchanges with the company management on the smart card business situation and the development strategy of the CityLink platform. Orders for the company's smart card business in the fields of telecommunications, finance, and social security are in line with expectations and are growing steadily. We are focusing on the transformation opportunities brought by the company's CityLink platform. Currently, the CityLink platform has successfully signed cooperation agreements with local city card companies, and is progressing with the implementation of the plan. According to the current progress of the company's various businesses, we expect the company's EPS for 2014-2015 to be 0.3 and 0.45 yuan, and the corresponding PE is 55 and 37. Maintain a “Highly Recommended” rating. 2. Analysis and judgment have a firm platform strategy, and rely on the City Federation to build a multi-application ecosystem of city cards. In different smart card usage scenarios, the campus card and city card are ideal scenarios for forming a national one-card network due to the widest coverage of people, relatively uniform technical standards, and simple upstream and downstream industrial chains. Among them, due to the fact that the campus card middle school scene is relatively closed and connectivity is insufficient, the city card has become the only application that hopes to establish a national network. The company has a firm platform strategy. Based on the TSM platform, it has built a multi-application ecosystem through interconnection. In addition to local card companies, it attracts participation from different fields, provides users with more convenience, and at the same time increases consumption of traditional city cards. Adhering to the combination of endogenesis and extension, and realizing the transformation and upgrading of the business model through micropayments, the City Card has a long industrial chain with many participants. The joint venture between the company and the Ministry of Housing and Construction has gained early advantages. In the future, it will create an application model through the combination of endogenesis and epitaxial to further integrate all parties in the industrial chain. We believe that by opening up micropayments, the company will hopefully replicate the business model of UnionPay, a subsidiary of the central bank, and become a “small UnionPay” among city cards. The business model will be upgraded from traditional smart card manufacturing to a continuous sharing of platform operations. Financial IC cards and telecom SIM cards drive the explosion of traditional smart card business, and the boom in the smart card industry will drive explosive growth in the company's performance: 1) The domestic financial IC card market continues to grow at a high rate, and the total number of financial IC cards issued in 2014 is expected to increase 30% compared to the same period last year, reaching 600 million cards; 2) Under the catalytic influence of 4G and NFC, NFC-SIM cards and 4G cards will explode this year and next two; 3) Citizen cards are expected to become a new business growth point for the company; 4) Demand for overseas communication card products has rebounded slightly, and rising pressure on exchange rates has lessened. Through measures such as restrictive stock incentives, the motivation of the company's management team has also been further enhanced. 3. Profit Forecast and Investment Suggestions We expect the company's EPS for 2014-2015 to be 0.3 and 0.45 yuan, with corresponding PE of 55 and 37. Maintain a “Highly Recommended” rating. 4. Risk Alerts: 1) Competition in the smart card market is intensifying; 2) Urban Union promotion is blocked; 3) Systemic risks.