Main assumptions: (1) The revenue growth rate of the patent operation business in 2010-2012 was 100%, 50%, 30%, and the gross margin remained at 95%; (2) the revenue growth rate of flash memory application products was 15%, 15%, 10%, and the gross margin was 20%; (3) the revenue growth rate of the mobile storage business was 40%, 30%, 20%, and the gross margin was 7%, 8%, 8%; (4) the sales expense ratio was 4.7%, 4.2%, 3.6%, and the management expenses rate was 6.2%, 5.5%, 5%, and the income tax rates were 7.8%, 8%, 8.2%, respectively.

Profit forecast and investment suggestions: The company's EPS in 2010-2012 is estimated to be 0.90 yuan, 1.37 yuan, and 1.80 yuan respectively, and the corresponding dynamic PE is 49 times, 32 times, and 24 times respectively. Given the company's rapid development trend in the next few years, a “recommended” rating will be given.

Risk warning: (1) There is a risk that the revenue from the company's patent operation business will be unstable; (2) product operation is greatly affected by the cyclical cost cycle, and a sharp increase in flash memory prices will reduce the profit level of the company's product operation business.