Incident: Qunxing Toys issued an announcement: A strategic cooperation agreement was signed with Anhui iFLYTEK Information Technology Co., Ltd. (hereinafter referred to as “iFLYTEK”) on January 31, 2013. The two sides have carried out strategic cooperation in the field of electronic and electric toys. Opinion: 1. Cooperation will enhance the company's competitiveness in the development of new products. As a leading voice recognition company in China, iFLYTEK has launched a variety of products that can meet different application environments, from large-scale telecommunication grade applications to small embedded applications, from telecommunications, financial and other industries to enterprises and home users, from PCs to mobile phones, to MP3s and toys, and has cooperated with 500 development partners in the domestic voice core technology market, with a market share of over 80%. The current focus of the company and iFLYTEK is to jointly develop electronic and electric toys. In the future, the company will explore application requirements in the fields of speech recognition, text and graphic recognition, voice processing and transformation, motion voice control, mobile Internet toys, and human-computer interaction system robots, etc., and gradually carry out cooperative experiments to form more intelligent products. Qunxing Toys is one of the largest independent brand electronic electric toy companies in China. In 2009, the company's electric stroller market share ranked second among domestic independent brand enterprises. The cooperation with iFLYTEK will further enhance the company's ability to control the development of upstream core components, develop new products quickly and in a more targeted manner, enrich the company's product range, lead the consumer market, and enhance bargaining power. 2. This cooperation is one of the company's specific measures to implement the “blue ocean” strategy. Competition in the toy industry is extremely intense. The company is one of the companies with the earliest brand building among independent brand companies. In the two years since its listing, it has committed itself to transformation and transformation, and implemented the “Blue Ocean Strategy.” High-end smart toys are hot spots for consumption, and the domestic competitive environment is also relatively relaxed. The company's strategic focus is on the in-depth development and expansion of smart toys, which will help the company break out of the “Red Sea” of toy competition. Next, the company will also creatively experiment with various forms of cooperation and business models to develop innovative products. We are optimistic about the transformation effect of the company after the past two years of adjustments. 3. The inflection point in performance is approaching. We are optimistic that 2011-2012 will be a new round of rapid growth companies as an adjustment year, committed to exploring and adjusting products, channels, and business models. Production capacity raised by investment will reach production in 2013. In the company's product structure, the share of high-margin varieties such as strollers and innovative toys will increase, and the company's profitability will reverse. In terms of export sales, the company is actively exploring emerging market countries and will have a major export breakthrough this year. For domestic sales, the company has actively carried out channel changes over the past two years. Measures such as flattening dealers and opening additional franchise stores will push sales to continue to grow rapidly. Conclusion: After experiencing the company's internal strategic adjustments, product adjustments, and external channel adjustments in 2011-2012, the company's fundamentals have become more stable. We have positioned 2013 as the “year of departure” for the company, and performance will enter a new period of accelerated growth. We forecast operating income for 2013-2014 to be 590 million yuan and 680 million yuan respectively, and earnings per share of 0.42 yuan and 0.58 yuan, corresponding to the current EPS of 31.5 times and 22.8 times, respectively. Upgraded the rating to “Highly Recommended.”