The company is a key high-tech enterprise under the National Torch Program. Its main business is R&D, production, sales and service of information security products with identity authentication as the core. The upgrading of USB keys and increasing emphasis on information security in other fields are driving steady growth in industry demand. The size of China's information security market grew by 13.5% in 2013, with information security hardware products accounting for about 50%. The average industry growth rate is expected to remain around 11% in the next few years. In the future, the replacement demand in the USB Key stock market is relatively stable, and it is an important sub-sector in the information security market. Since the encryption algorithm of the USB Key expires and must be updated, the original device cannot be reused, so the replacement demand in the future USB Key stock market is relatively stable. According to research by the Smart Card Professional Committee of the China Information Industry Chamber of Commerce, in 2013, the domestic USB Key market sold about 130 million units, and the market size was about 4 to 5 billion yuan. The proportion of second-generation products increased from 35% in 2012 to 85% in 2013. By 2015, the demand for USB keys will reach about 180 million units, the market size is about 5 to 6 billion yuan, and the compound annual growth rate of sales will remain at about 15%. In the future, as other industries continue to pay more attention to information security, USB keys will be more widely used in e-commerce, e-government, industrial and commercial taxation, etc., thus further increasing the overall demand for USB keys. The company has a high market share and strong software development capabilities. The company's USB Key shipments in 2013 accounted for 21.02% of the total market demand, ranking among the top three and five state-owned commercial banks in the industry. In 2013, the company's R&D expenses were 63.1448 million yuan, accounting for 7.47% of revenue. The compound annual growth rate of the company's R&D expenses from 2011-2013 was 54.02%. With the continuous increase in R&D investment, the company has been authorized for a total of 560 patents (523 domestic and 37 overseas), including 383 invention patents (346 domestic and 37 overseas); it holds 135 computer software copyright registration certificates and 14 software product registration certificates. The company's software research and development strength is its core competitiveness. Profit forecasting and valuation. We expect the company to achieve operating income of 1,322, 16.88, and 2,108 billion yuan respectively from 2014 to 2016; net profit attributable to owners of the parent company was 325, 4.24 million yuan and 517 million yuan, respectively, up 61.7%, 30.3%, and 22.0% year-on-year; corresponding EPS was 3.42, 4.46 and 5.44 yuan, respectively. Currently, comparable companies in the industry forecast an average value of 48.53 times the dynamic PE in 2014. We estimate it according to 35-40 times PE, and the reasonable price range is 119.7-136.8 yuan. Risk warning: risk of declining gross margin; risk of inventory depreciation; risk of customer concentration; risk of technology substitution