Incidents: The company announced its 2013 quarterly report on April 19:2013Q1, the company achieved revenue of about 84.17 million, up 126.1% year on year; realized operating profit of 6.54 million, up 55.3% year on year; realized net profit attributable to shareholders of listed companies was 5.32 million, up 46.3% year on year; overall diluted EPS was 0.02 yuan; and the total number of new contracts signed was 77.76 million yuan. Comment: Revenue continues to grow rapidly due to the good progress of the intelligent building business. 2013Q1, the company achieved total revenue of about 84.17 million yuan, with a year-on-year growth rate of 126.1%. Judging from the implementation of signed orders announced by the company, Q1 has implemented a total of 75.23 million yuan of intelligent construction projects, accounting for 89.4% of revenue, which is the main driving force for rapid revenue growth. Judging from the status of new orders signed in Q1, the total amount of new contracts signed in Q1 was 77.76 million yuan, all of which were intelligent building projects, an increase of 69.0% over the previous year, showing that the intelligent building industry is still facing high prosperity. At the same time, most of the new orders signed by the company are located in Chongqing, Inner Mongolia, Beijing, Yunnan and other places, showing that the company already has initial ability to expand from other places. According to company announcement statistics, the company's ongoing contracts have now reached 400 million yuan, laying a good foundation for continued rapid revenue growth in 2013. There was a slight decrease in gross margin, and the cost ratio continued to decrease significantly during the period. 2013Q1, the company's consolidated gross margin was 19.6%, down about 1.6 percentage points from the previous year. Continuing the trend of continuous decline in gross margin in a single quarter since 2012 (there was only a slight increase in gross margin in 2012/Q3), we judge that the continued decline in gross margin was due to the combination of changes in business structure and a slight decline in the profitability of intelligent construction. Looking at the full year of 2013, many of the new products Q1 that the company initially invested in research and development, such as face recognition, railway integrated video surveillance, audio and video codecs, and special communication and command and dispatch systems for rail transit, have all been approved and completed, and are expected to increase the profit level of the company's integrated business in the future. Therefore, we expect the company's comprehensive gross margin level to maintain a steady upward trend compared to 2012. The total sales and management expense ratio of the company decreased by about 4.3 percentage points, of which sales expenses increased by 16.3% year on year and sales expenses rate decreased by 3.3 percentage points; management expenses increased by 104.2% year on year, and the management expense ratio decreased by 0.9 percentage points, continuing to show good cost control ability. Judging from the details of management expenses, the relatively rapid growth rate of management expenses is mainly due to a significant increase in total remuneration and technology development costs. Looking ahead to 2013, we expect that the company will still adopt more effective cost control measures. Maintain the “Overweight” rating. Considering that market demand for intelligent water resources and intelligent rail traffic is expected to increase markedly in 2013, we predict that the company's EPS from 2013 to 2015 will be 0.24 yuan, 0.30 yuan, and 0.37 yuan, respectively, and the average annual compound growth rate for the next three years will be about 29.5%. The company's current stock price corresponds to a price-earnings ratio of about 32 times that of 2013, and the valuation is quite reasonable. Considering that the company's total market capitalization is small (1.70 billion yuan), there is still plenty of room for growth in the future, so we maintain an investment rating of “increased holdings”. The reasonable price range is 7.20 yuan to 8.40 yuan, corresponding to the 2013 price-earnings ratio of about 30 to 35 times, and the target price for 6 months is 7.80 yuan. Major uncertainties. Risk of delays in intelligent tendering for water resources; risk of delays in intelligent bidding for rail transit; risk of rising labor costs.