Event Summary:

After calculating the newly issued shares, the total share capital is 160 million. As of January 13, 2016, the market value of mind control is 17.9 billion. Yuanwang Valley, as the third largest shareholder of mind control, has a large correction in the stock price recently. We believe that the continued rise before thinking control is in line with the expectations of our previous report, while the company's recent sharp pullback can be described as ups and downs, and we remain optimistic about the company's continued development.

1. Thinking control provides a huge increment in market capitalization for the company:

Thinking Train Control is a leading train monitoring system enterprise in China. The company's main products are LKJ system and locomotive security system. It is one of the only two LKJ suppliers in China, with a market share of more than 40% in LKJ system. Thinking train control holds a large number of patents of LKJ system, participates in the formulation of industry standards, and has the overall solution ability to meet the needs of train operation control, traffic safety monitoring, LKJ safety management and informatization. In the future, with the increase of the number of railway vehicles in our country, the running speed and operation density are gradually improved, and the train control technology of the company has room for long-term development. At the same time, the company actively carries out the research and development of new train operation control system, locomotive-vehicle networking system based on Internet of things technology, locomotive on-board safety protection system, locomotive remote monitoring and diagnosis system and other new products, so as to enrich the company's product line and open up the growth space. Yuanwang Valley holds 2400 million shares, accounting for 15% of the total share capital, and is the company's third largest shareholder, with a market capitalization of about 2.68 billion yuan at current prices. The current market value of Yuanwang Valley is only 9.77 billion yuan, after deducting the market value of the shares controlled by thinking, only 7.09 billion yuan, the market value retracts greatly.

two。 Industrial integration continues to advance:

Yuanwang Valley issued an announcement on July 7, 2015, the wholly-owned subsidiary Yuanwang Valley Investment Management Co., Ltd. and Shenzhen Maixing Investment Management Co., Ltd. jointly funded the establishment of Shenzhen Maixing Yuanwang Grain Network Investment Enterprise, an equity investment fund for the related fields of the Internet of things. The overall size of the fund is 100 million, the investment of Yuanwang Valley is 69.93 million yuan, the investment of Maixing is 29.97 million yuan, and the management of Xinggu is 100000 yuan. In addition, the company also plans to work with Elite Times Fund Management Co., Ltd. to establish a professional investment management company for Internet of things-related industries, with a registered capital of 10 million yuan, in order to help Yuanwang Valley to integrate the Internet of things for the purpose of industrial mergers and acquisitions. For the RFID industry, there are many downstream application scenarios, for different scenarios need different professional system integrators to dock with customers to achieve customer needs. Therefore, the integration from manufacturing to system integration is an important market clamping means for RFID enterprises. The company terminated the major asset restructuring in the first half of 15 years, and we do not think the company will give up the strategy of M & An integration in the field of system integration, which is also confirmed by the establishment of the fund. In the future, through the continuous merger and integration of system integrators in various sub-industries, it will have a synergistic effect with the company's own business.

3. The smart tourism business is just around the corner:

The company announced on September 21, 2015 that it invested 20 million yuan to set up a wholly-owned subsidiary Shanghai Yuanwang Valley Information Technology Co., Ltd. in Shanghai to fully carry out related business in the field of smart tourism. From foreign experience, RFID has been widely used in scenic spots, entertainment parks and other places. By combining with wearable devices, it has become a personal identification symbol in scenic spots, which can provide customers with convenient park tickets, hotel keys, quick payment and other functions. At the same time, due to the information collected by RFID equipment, scenic area managers can effectively grasp customer information and tourism behavior, and provide core data for targeted operation improvement, which is an important development direction of intelligent scenic spots in the future. We believe that the establishment of a special subsidiary of Yuanwang Valley reflects the company's determination to develop smart tourism business, and professional companies can respond to customer needs more quickly and enhance the competitiveness of the company. In the future, the company will use Shanghai Yuanwang Valley Information Technology Co., Ltd. as a platform to gradually develop RFID-based smart tourism business from East China, so as to create new growth points for the company.

4. Maintain Yuanwang Valley Buy rating:

The company is the world's leading provider of RFID technology, products and systems solutions. We estimate that the company's EPS for 15-17 years is 0.06,0.11,0.18 respectively, and the company's current share price valuation is 210,117,74 times, respectively. We believe that the market capitalization equity held by the company has increased rapidly after the listing of thinking control, and the company's stock price has adjusted sharply with the recent adjustment of the market. We believe that the company's stock price has once again entered a reasonable investment range and maintained a "buy" rating.

5. Risk Tips:

The progress of 1.RFID promotion in China is lower than expected.

two。 The profit level of railway electronic car number products continues to decline due to the impact of the restructuring of the railway bidding system.

3. The progress of M & An integration in the field of RFID is lower than expected.