The company's original main business was an AFC equipment supplier, but at present, the company has undergone several major changes: in the product field, from traditional paper and coin ticket vending machines, gates and other products to transportation card rechargers with functions such as WeChat Alipay bank cards; in terms of business scope, the company has expanded the AFC business from Shanghai to more Tier 1 and 2 cities in the central and western regions; third, the company is also expanding externally in software and hardware. In the future, the company will seek development in the midst of change. The current market value is 4.6 billion yuan, which is worth focusing on. For the first time, it has been given a purchase rating, and the target price is 41.00 yuan. Key points supporting the rating There has been a significant increase in in-hand orders. According to the company's interim report, orders in hand were 700 million yuan at the end of June 2016, and only 400 million yuan in the same period last year. Current orders increased 75% year over year. The increase in business brought about by new fields such as streetcars and the development of markets such as Guiyang is obvious. Benefit from the major development of urban rail lines. Since the 12th Five-Year Plan, domestic rail transit has ushered in major development. High-speed rail, subways, streetcars, etc. have successively become investment hotspots. The “13th Five-Year Plan” will be a period of concentrated release in the urban rail sector. Most Tier 1 and 2 cities across the country will expand subway lines, and automated equipment such as AFC, and vending machines in subway stations will usher in explosive growth. Product innovation and upgrading are in progress. Judging from subway station research, although ticket purchases and recharge have changed from ticket sales habits of ticketing agents in the past to automatic ticketing and recharge machines, there will also be more new types of ticket purchase and recharge models in the future, and various types of ticketing and recharge services such as WeChat Alipay credit cards are also expected to become mainstream. Huaming's intelligent transportation card travel card recharge machine is already in service at Lujiazui and other stations in Shanghai. Seek change in epitaxial mergers and acquisitions. Judging from the announcement information of the past year, the company is actively changing the traditional business model of vending machines that relied solely on banknotes and coins in the past, and is trying to inject new software and hardware technology such as network technology. It is worth looking forward to the company seeking development through epitaxial expansion. The main risks faced by ratings include market competition risks, untimely technological innovation and upgrading, etc. The current market value of the valuation company is 4.6 billion yuan, and the net profit is expected to be 50 million yuan. The static PE valuation is high, but the company's fundamentals are changing. The high year-on-year increase in on-hand orders will drive the improvement in performance. The search for development through epitaxial expansion is worth looking forward to, and it is recommended to focus on it. We gave it an initial rating for the purchase, with a target price of $41.00.