Investment points: 1. Events. Continuously following the development of the industry and the company, the company's development has entered a new stage. 2. Our analysis and judgment. (1) The field of trusted computing chips has been accumulated over many years, benefiting from the wave of localization, and security chip products are expected to usher in explosive growth. The domestic information security situation is getting tighter, the country is paying unprecedented attention, and greater security has ushered in great opportunities. In particular, since the “Prism Gate” incident came to light, information security has been raised to an unprecedented level, and the field of localization has replaced and accelerated development in the field of information security. For example, according to a Gartner study, by 2019, about two-thirds of data center IT infrastructure spending in China will go to local manufacturers. Over the years, the company has accumulated multiple advantages such as technology and customers in the field of trusted chips. Benefiting from the wave of localized information security, security chip products will experience explosive growth. The company is a leading developer and manufacturer of trusted computing security chips in the industry. Its customers cover a full range of mainstream trusted computer manufacturers and are used in mainstream product lines. Since the company launched a security chip in April 2005 in line with the Trusted Computing Alliance, the products have been successfully used by many mainstream computer manufacturers such as Wave Information, Tsinghua Tongfang, Great Wall Computer, and Fangzheng Technology. In the current context of accelerated localization and substitution, the company's security chip shipments are expected to reach millions, and the revenue contribution is expected to exceed 100 million, yet this part of the profit margin is also very high. (2) Actively embrace the big opportunities of “Internet +” and reserve mobile Internet and Internet financial technology and talents. With the rapid development of mobile Internet and Internet finance, the company actively embraces the great opportunities brought by “Internet +”. The company announced that it is focusing on the development and related opportunities in the field of Internet finance, and plans to invest in research and development and technology accumulation in the communication and security of mobile Internet and Internet finance to enhance the company's core competitiveness; the company is making preliminary reserves of technology and talents at this stage. Yu Kai, director of the company, said at the 2013 annual performance briefing that the company's recruitment of mobile software talents is a talent reserve in the field of mobile Internet; the company will promote existing products and technologies to the fields of Internet finance and mobile Internet, while also developing new technologies and products suitable for the mobile Internet field. In terms of extended investment and mergers and acquisitions, we expect the company to focus on targets that have a synergistic effect with the company, such as mobile payment and security. For the company's mobile interaction (3), the company is the only domestic enterprise that has mastered “paper recognition” technology. If it can be promoted by banks, it will create another trillion days. The company is currently the only domestic enterprise that has mastered “paper recognition technology” and commercialized it. It can be applied to banks and other fields, and its products have already entered the commercial stage. The paper pattern anti-counterfeiting technology uses the natural texture characteristics inherent in the inside of the paper to characterize the paper of the bill to perform unique identification. In order to simultaneously perform anti-counterfeiting and anti-cloning functions of bill information in the same system of the company's products, the company has also specially developed a special optical sensor for extracting the “paper pattern” information on the bill at the same time. The market space for “paper pattern recognition” products is vast and is expected to usher in explosive growth. Currently, banks across the country have about 200,000 online stores for public services. It is conservatively estimated that each branch will purchase two “fingerprint readers” (one for use and one for backup), each at a price of 20,000 yuan, and the market size will reach 8 billion yuan. In addition to banks, the company's paper recognition products are also in huge demand in public security, national security, military, Wuli Road, shopping malls, and various large and medium-sized enterprises, etc., and the market space is even larger. Banks and other financial institutions have strong demand for paper recognition, and the company's products are currently being tested within some banks. Once promoted in the banking system, it will create another trillion days. (4) The increase in the chairman's holdings shows confidence in future development, and the company's development has entered a new stage. The company announced on February 18, 2015, that on February 17, 2015, Mr. Wei Kaiyan, the chairman of the company, increased his holdings of the company's tradable shares with unlimited sales conditions by 2,268,859 shares through bulk transactions, accounting for 2.02% of the company's total share capital. After this increase in holdings, Mr. Wei Kaiyan and his co-actors directly and indirectly held a total of 33.1578 million shares of the company, accounting for 29.60% of the company's total share capital. This increase in holdings is based on understanding of the capital market situation and confidence in the company's future development prospects. The company's traditional business stabilized, and at the same time increased research and development of new technologies and products, and the company's development entered a new stage. Over the past two years, the company's net profit has declined mainly because the sales price of payment ciphers has declined, and sales volume has continued to grow. We expect the price decline to narrow and the traditional business to stabilize; at the same time, the company has stepped up research and development efforts on new technologies and products, and paper and Internet-related products are expected to become new growth points. 3. Investment advice. The company benefits from the wave of localized information security, and trustworthy chip products will experience explosive growth; actively embrace the “Internet +” opportunity and reserve mobile Internet and Internet financial technology and talents; “paper recognition” products have multi-dimensional advantages in technology, markets, etc., and if they can be promoted by banks, it will create another trillion days; the chairman's increase in holdings shows confidence in the company's future development, and the company's development has entered a new stage. First coverage, giving a “recommended” rating. 4. Risk warning. Policy risks; increased competition; sales of “paper anti-counterfeiting technology” products fell short of expectations; new product development fell short of expectations, etc.