(1) Investing in Jibo, the intelligent robot business has made significant progress. Jibo is the world's leading smart home robot R&D and manufacturer. The core team comes from the Massachusetts Institute of Technology Media Laboratory in the US, and is mainly engaged in the R&D, production and manufacture of Jibo social robots. CynthiaBreazeal, founder and chief scientist of Jibo, is recognized as a pioneer of social robots, and his work is also regarded as a pioneering achievement in the field of social robotics. According to the company announcement, the Jibo robot is the world's first social robot with artificial intelligence, and has now entered the preparation stage for mass production; at the same time, the Jibo robot's SDK is an open software development platform that can be developed and used by robot enthusiasts around the world. According to the announcement, Jibo expects sales of its Jibo robots to reach 58,083 units in 2016, achieving revenue of 46 million US dollars and profit of 13.5 million US dollars. It is estimated that sales volume in 2017 will reach 249,771 units, achieve operating income of 216.31 million US dollars, and profit of 91.69 million US dollars. Jibo's growth and profitability have been outstanding. Through this investment, the company will participate in the development, production and manufacture of the world's leading intelligent social robot products, and will further consolidate the company's strategic deployment on intelligent service robots. The company has advantages in robot hardware and marketing planning for the Chinese market. Combining the advantages of Jibo's artificial intelligence and software platforms, the two sides will carry out rich forms of cooperation in the Chinese market. We judge that this investment is just the beginning; the company will have further cooperation with Jibo in the future. At the same time, the company currently has more than 600 million yuan in cash on its books. We believe the company will not rule out the possibility of continuing to increase its intelligent robot business through external mergers and acquisitions in the future. (2) Equity incentives unlock a high threshold, promoting intelligent robot development companies previously issued a restricted stock incentive plan (draft). The equity incentives are divided into two phases. The initial incentive target is 40 core management, technical and marketing personnel of the company, with a fixed increase of 4.3 million shares at a grant price of 12.19 yuan/share; it is locked for 16 months from the date of grant, and then unlocked in installments of 20%, 30%, and 50% over three years. The unlocking conditions are: Using the non-net profit of 12.7 million deducted in 2014 as the benchmark, the performance assessment indicators for the 2016-2018 years were an increase of 135.58%/253.37%/430.06%. Assuming that the company achieves the equity incentive target, the corresponding deducted non-net profit is 2992/4488/67.32 million yuan, and the EPS is 0.14/0.21/0.31 yuan. The second phase of equity incentives will focus on rewarding core team members in the robotics business, depending on the company's performance. The stock source is 2 million shares provided free of charge by Mr. Guo Qiyin, the actual controller of the company. The threshold for unlocking equity incentives is high this time. At a time when the performance of the company's traditional main business, large-screen splicing display systems, is declining, the company's strategic focus will shift to the intelligent robot business. The higher unlocking threshold shows that the company has sufficient confidence in the intelligent service robot industry. Furthermore, the inclination of the second phase of the incentive plan for robotics teams also shows the company's determination to strategically transform the intelligent robot industry. We judge that this equity incentive plan will greatly stimulate the company's vitality and help the company achieve its goal of being a leading intelligent robot enterprise with an annual output of 10 billion dollars. (3) The proposed name change reflects the “main business characteristics of intelligent robots” The company issued an announcement on July 28, 2015 to change the name of the company to “GQY**” to better reflect the company's overall strategic transformation and the layout of the intelligent robot industry in the future. Since announcing the three-year transformation plan in early 2014, the company has continued to increase the layout of the intelligent robot business: ① It has established a wholly-owned new era robotics subsidiary. ② The technical team introduced the first “vehicle self-balancing rescue platform” testing machine. ③ Set up the GQY Investment and Financing Center and set up an investment subsidiary Tianzhu Investment to pay close attention to the targets of epitaxial expansion. ④ Cooperate with New Century Robotics to distribute mobile police platform products, etc. (4) There are sufficient reserves of intelligent robot technology, and accelerated implementation of new products. Currently, the company has sufficient technical reserves. Through strong alliances with overseas teams, institutions of higher learning, and research institutes, it has robots in: ① intelligent robot drive mechanisms; ② low voltage servo drives; ③ inertial sensor technology; ④ motion planning and control of multi-axis robots; ⑤ robot navigation and positioning; ⑥ based on IoT cloud robot platforms and other core technologies in the robot industry. Product aspect: ① Medical robots - Special robot product prototypes, mainly on-board self-balancing rescue platforms, are expected to be launched in the second half of the year. On August 15, 2014, the company invested in the establishment of Shanghai New Era Robotics Co., Ltd., a wholly-owned subsidiary of special robots, focusing on R&D, production and sales of vehicle self-balancing rescue platforms. Its main robot project is “Development of the first prototype of a vehicle self-balancing rescue platform”. This product uses a new parallel robot technology platform, sensing technology, human-computer interaction technology, and other key technologies to serve robots. It can actively counteract the effects of inertial motion such as road bumps, vehicle body shaking, and vehicle acceleration and deceleration, and ensure that medical personnel can provide simple care for critically ill patients on ambulances and avoid secondary damage during transportation. A prototype of this product will be launched in the second half of 2015. ② Special robots - deep-water robots: GQY and Stanford University Robotics Laboratory have signed a memorandum of cooperation to develop deep-water robots. Next month, they will participate in deep-water experiments in France. This project has received support from the French government. The deep-sea robot will perform undersea exploration operations below 100 meters through image visualization. The robot's flexible fingers can complete sample collection operations and perform various physical measurements in multiple marine ecosystems. The deep-sea robot can perform autonomous attitude control and can also communicate through underwater wireless communication. The operator uses two robot arms with strong feedback and tactile perception to perform remote operation of the underwater robot. Below 100 meters is very complicated, and video transmission and operation on the seabed has not been achieved until now in the world. ③ Special robots - mining and emergency rescue robots: Jointly developed with various laboratories of bionic robots at Stanford University, the world's top and cutting-edge technology, including R&D funding provided by Middle Eastern oil countries. ④ Special robot - GQY mobile police platform: It is also used in **** Square. Some anti-terrorism equipment and police equipment have already begun to be sold. ⑤ Service robot - iGO will soon be promoted: The civilian product iGO will be launched at the end of October. The focus is on campuses. The price is very low, a few thousand yuan, so that college students can easily reach from dormitories to classrooms, from classrooms to restaurants, and replace bicycles. (5) Yao International, a shareholder holding 5% or more of the shares: Promising that the stock price will not be reduced by less than 50 yuan in the next 6-12 months, the company received the “Letter on the Promise to Increase the Company's Shares” from Mr. Yao International, a shareholder holding 5% or more of the company's shares, on July 16, 2015. Based on full confidence in the development strategy of the company's transformation into an internationally leading intelligent robot company, Yao International continued to increase its holdings by 2.57 million shares from June 29, June 30, July 1, and July 15, 2015, and it is not ruled out that it will continue to increase its holdings in the future according to market conditions. Yao International promised that starting from July 16, 2015, it will not reduce its holdings of the company within the next 6 months; in the next 6-12 months, if the company's stock price does not reach 50 yuan, it will not reduce its holdings in the company's shares; in the next 12-24 months, if the company's stock price does not reach 80 yuan, it will not reduce its holdings in the company's shares. As of September 30, 2015, Mr. Yao International held 2.57 million shares of the company through a general securities account, accounting for 1.21% of the company's total share capital; held 10618888 shares of the company through the China Galaxy Securities Co., Ltd. customer credit transaction guarantee securities account, accounting for 5.01% of the company's total share capital; held a total of 131,888 shares of the company, accounting for 6.22% of the company's total share capital, and is a shareholder holding 5% or more of the company's shares. According to the company announcement, because Yao International is optimistic about the company's future development prospects and the growth space of the intelligent robot industry, between April 7, 2015 and May 21, 2015, it increased its holdings of 10618888 shares through a centralized transaction through the China Galaxy Securities Co., Ltd. customer credit transaction guarantee securities account, accounting for 5.01% of the total shares. The details are as follows: 748,8800 shares were purchased between April 7 and April 30, 2015, with a price range of 17.99 yuan to 21.06 yuan, 2015, between May 4 and May 21, 2015 3130088 shares were purchased, and the price range for the increase was 18.01 yuan to 26.16 yuan. We are concerned that Zhongyuan Xiehe Cell Genetic Engineering Co., Ltd. (600645) became GQY Video's fourth largest tradable shareholder in GQY Video's 2015 interim report, holding 2.08 million shares, accounting for 0.98% of the total share capital. At the same time, we are concerned that the listed company Zhongyuan Xiehe (600645) received a voluntary donation of RMB 1 million from Mr. Yao International to the company on May 5, 2015, specifically for the company's R&D expenses in the field of next-generation CAR-T immune cell therapy technology. According to the 2014 annual report of Zhongyuan Xiehe (600645), at the end of 2014, Yao International held 5.07 million shares of Zhongyuan Xiehe, accounting for 1.44% of the shares. It is the fourth largest tradable shareholder of Zhongyuan Xiehe, and the only individual investor among the top ten tradable shareholders, holding a market value of about 200 million yuan. (6) China will become the largest market for robots. The prospects for the service robot market are promising that China will become the largest market for robots, and the prospects for the service robot market are promising. In 2014-2017, the total size of the global service robot market will reach 200 billion, in 2013 it was only 30 billion, and the compound growth rate in the next three years will reach 22%; the growth rate of the Chinese market is far higher than the global growth rate. We expect the global service robot market demand to exceed 1 trillion dollars in the next ten years. The national “12th Five-Year Plan for the Development of Service Robotics Technology” states: Cultivate the service robot industry into a strategic emerging industry in China's future. The project will focus on deploying “one goal, three breakthroughs, four major tasks.” The four major tasks refer to focusing on the development of public safety robots, medical rehabilitation robots, bionic robot platforms, and modular core components. The global service robot industry is divided into professional service robots (special robots) and personal and household service robots. Home service robots and site professional service robots are highly intelligent, and are expected to become smart terminal entrances and smart home platforms, and there is huge room for future development. The development of service robots will go from simple to complex and from easy to difficult. The application scenarios of cleaning robots are simple, and it is optimistic that they will explode first; surgical robots and military robots have advantages and characteristics beyond manpower, and are expected to spread rapidly after costs are further reduced and functions continue to be enhanced. 3. Investment advice The company strives to build a leading intelligent robot enterprise with an annual output of 10 billion dollars, focusing on special robots, service robots, and medical robots. The company has a market value of 7.1 billion yuan and cash of 600 million yuan. It is expected that in the future, the company will continue to increase the intelligent robot business through endogenous and epitaxial methods. Assuming that the company achieves the equity incentive target, the corresponding deducted non-net profit is 2992/4488/67.32 million yuan, the EPS is 0.14/0.21/0.31 yuan, and the corresponding PE is 238/156/107 times. We are optimistic about the development prospects of the intelligent robot industry. There is potential for future performance to improve, and for the first time, we have given it a “careful recommendation” rating.