Key investment points: Since its establishment, Infineon has been engaged in R&D, production and sales of electronic security products. The company currently has a full product line of video surveillance systems, optical fiber transmission systems and entrance control systems. The company's core products, matrix switchers, fast balls and optical transceivers, had a domestic market share of 12.6%, 5.3%, and 8.5% respectively in 2008, ranking first, first and second in the industry, respectively. In 2009, the company achieved operating income of 376.776 million, a year-on-year increase of 19.54%; realized net profit of 80.17 million, an increase of 38.89% over the previous year. The first half of 2010 achieved revenue of 20.41 million and net profit of 46.21 million. The increase in gross margin is the main reason why the increase in net profit is greater than the growth rate of revenue. After 30 years of development, China's security industry has entered a period of comprehensive development. Large-scale comprehensive security projects such as the “3111” pilot project and the “Safe City”, as well as industrial and household applications, have brought huge demand for security products. In 2010, the domestic security industry market will reach the level of 3 billion US dollars. It is expected that the security industry will maintain a market size growth rate of 15% to 25% for a long time to come. As the industry grows, the concentration of the industry will continue to increase, and companies with technical and financial strength such as Infineon will gradually expand their market share. The company occupies two parts of the entire industrial chain with high added value, R&D and the market, and uses outsourcing methods for parts with low added value such as production and processing, so the company's gross margin has remained at a high level. From 2007 to the first half of 2010, the comprehensive gross margin of the company's main business was 50.27%, 52.96%, 58.66% and 58.02%, respectively, and is in a steady upward phase. The company's technical strength is in a leading position in the industry, and its products are positioned in the middle and high-end. The company's products have been used in places such as the Port of Miami, the Port of Los Angeles, the UAE Convention and Exhibition Center, the Shanghai World Expo venue, and the Nanjing Olympic Sports Center. Successful cases and technical strength will support the company's future expansion in the industry. We believe that the future development prospects of the company's industry are broad, and the demand for the company's products is clear. The company's EPS for 2010 to 2012 is 0.79 yuan, 1.29 yuan, 1.75 yuan, respectively. The company's issuance price is 53.80 yuan, which corresponds to a price-earnings ratio of 68.1 times in 2010. We recommend investors actively subscribe. The company's reasonable price range is 52.1-62.5 yuan.