Case S: The company announced that it achieved operating income of 1.48 billion dollars (+9.49%) in 2015; affected by increased competition in the smart IC card market, which accounts for a large share, and exchange losses for imported materials, net profit was 7 million (-88.07%). By strengthening repayment and non-inventory management, operating cash flow turned a loss into a profit of 290 million (+368%). Investment highlights: Jointly with Coolpad, the company's TEE product solution won its first case in a mobile terminal. The subsidiary Guohe Technology did not cooperate with Coolpad to launch its first mobile phone based on the Qualcomm platform and supports WeChat fingerprint payment. (1) This launch will accumulate the first case experience in the application of the company's TEE technology in mobile terminals, which will help the company accelerate the market expansion of the mobile phone security service business in the future. (2) The company is one of the first domestic manufacturers to engage in mobile phone security services. Its solutions support mainstream mobile phone security technology (such as TEE, eSE, TSM, Token, HCE, etc.), and has the advantages of secure application management and multi-application deployment. (3) With the gradual spread of mobile phones equipped with fingerprint recognition modules in 2016, it is expected that the mobile phone security service market represented by TEE may explode. Currently, a number of mobile phones equipped with the company's TEE solution will be released soon. K12 education has taken off rapidly, and the education cloud has a leading position in the education cloud market, and is gaining ground in horse-racing circles. The company will continue to expand its coverage area and strengthen the operation of services to schools; we believe that while horse racing, it will be accompanied by the deepening of education services. In the future, the company is expected to experience significant revenue growth in terms of cloud platform services, core applications, and resource services. By the end of 2015, the company had undertaken the construction, operation and maintenance/operation of regional education cloud platforms in 30 provinces/cities including Zhejiang, Fujian, Sichuan, Liaoning, Jilin, Guangdong, Wuhan, and Shenyang. Policy support has promoted the growth of government related funding, the 2B market is booming, and the company's first-mover advantage is remarkable. The company is determined to expand its core education service business. Mobile terminal security set sail in 2016. The education cloud will be a key factor directly affecting the company's profits, and TEE-based terminal security solutions are highly flexible. We are optimistic about the rapid rise of the education cloud market without companies taking the lead, and the potential of leading TEE technology in the mobile terminal security market. We raised the 16-18 EPS to 0.12/0.28/0.40 yuan, the “recommended” rating, and the target price was 18.2 yuan. Risk warning: The sales price of financial IC card products continues to decline and sales volume falls short of expectations; online education business market expansion falls short of expectations; uncertainty about the promotion volume of terminal security products such as TEE on mobile phones