With the development of the national economy, the demand for security is also increasing. The video surveillance industry, a core sub-industry of the security industry, has ushered in a stage of comprehensive development, driven by safe city planning and large-scale projects. The industry space is very broad, and we believe that the industry will continue to grow rapidly in the future. Video surveillance systems mainly include image acquisition (fast balls, cameras, etc.), image transmission (optical terminals, etc.), image control management (matrices, etc.), image storage (DVR, etc.), and image display (displays, monitors), etc. Among them, industries such as front-end equipment, cameras, optical transceivers, and matrices are less concentrated, and dominant companies such as Infineto will continue to increase their market share by leveraging their brand advantages, technical advantages, and capital advantages. However, the concentration of the storage equipment industry such as DVR is already very high. It is basically dominated by several major companies, and it is difficult for leading companies in the industry, such as Hikvision and Dahua Co., Ltd., to further increase their market share. The company's core products, fastballs, matrices, and optical transceivers, have domestic market shares of 5.3%, 12.6% and 8.5% respectively, ranking first, first and second in the industry, respectively. Furthermore, Infineto has already intervened in DVR production and is moving towards a true system-level manufacturer, which will also further enhance the company's market competitiveness. The company's fund-raising projects are progressing smoothly, and the domestic and foreign marketing networks are constantly being improved: at present, the company's domestic marketing network has covered five major regions, including Beijing, Shanghai, Shenzhen, Xi'an, and Chongqing; the foreign marketing network has covered regions such as the US and Hong Kong. The company's current sales model is mainly customized sales; in the future, some products may adopt an agent sales model. The company's future growth is mainly due to: 1) the market share of core products such as fast balls, matrices, and optical transceivers will continue to increase; 2) the launch of new products such as cameras, DVRs, etc.; 3) the application of the agency model will drive the company's performance growth; 4) due to excessive capital, the company is currently very rich in cash, and the use of overfunded capital will also make it possible for the company to grow beyond expectations. The company's operating income in 2010 was about 489 million yuan, up 29.22% year on year; net profit was about 118 million yuan, up 47.8% year on year; based on the latest share capital calculation, EPS was 0.81 yuan, which is basically in line with expectations. We believe that the company's EPS for 2010 to 2012 was 0.81, 1.43, and 2.03 yuan, respectively. Based on the calculation of 40 times to 45 times PE in 2011, the company's reasonable price range for the next June-12 months is 57.2 to 64.35 yuan. We gave the company a recommended investment rating. Risk warning: The growth rate of the industry is lower than expected.