Investment highlights: 1. Incident The company announced that it plans to invest 1.4 million US dollars to acquire 3,170,289 A-1 preferred shares of Jibo Company, accounting for 1.1% of the shares of the bid company on a fully diluted basis. 2. Our analysis and judgment (1) We have invested in Jibo, and the intelligent robot business has made significant progress. Jibo is the world's leading R&D and manufacturer of intelligent household robots. The core team comes from the Massachusetts Institute of Technology Media Lab and is mainly engaged in the R&D, production and manufacture of Jibo social robots. Cynthia Breazeal, founder and chief scientist of Jibo, is recognized as a pioneer of social robotics, and her 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 mass production preparation stage; at the same time, the Jibo robot 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 its Jibo robot sales volume to reach 58,083 units in 2016, generating revenue of US$46 million and achieving profit of US$13.5 million. In 2017, sales volume is expected to reach 249,771 units, achieving operating revenue of US$21.631 million and realized profit of US$91.69 million. Jibo's growth and profitability are outstanding. Through this investment, the company will participate in the R&D, production and manufacturing of world-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 in the Chinese market. Combined with Jibo's artificial intelligence and software platform advantages, the two sides will develop rich forms of cooperation in the Chinese market. We judge that this investment is only the beginning, and the company will have further cooperation with Jibo in the future. At the same time, the company's cash currently exceeds 600 million yuan, and we believe the company will not rule out the possibility of continuing to increase its intelligent robot business through epitaxial mergers and acquisitions in the future. (2) Equity incentives have a high threshold for unlocking. The Intelligent Robot Development Company previously issued a restricted stock incentive plan (draft). The equity incentive was divided into two installments. The initial incentive targets 40 core management, technical and marketing personnel of the company, with a fixed increase of 4.3 million shares, and the grant price is 12.19 yuan/share; it is locked for 16 months after the grant date, and unlocked in 20%, 30%, and 50% installments over three years thereafter. The unlocking conditions are: Based on the deduction of non-net profit of 12.7 million in 2014, the performance evaluation index for each year of 2016-2018 was 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 EPS is 0.14/0.21/0.31 yuan. The second equity incentive will focus on rewarding the core team members of the robotics business based 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. This time, the threshold for unlocking equity incentives is high. At a time when the performance of the company's traditional large screen splicing display system is declining, the company's strategic focus will shift to the intelligent robot business. The higher unlocking threshold indicates that the company has sufficient confidence in the intelligent service robot industry. Furthermore, the second phase of the incentive plan's inclination towards 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 its name to “GQY**” to better reflect the company's overall strategic transformation and layout of the intelligent robot industry in the future. Since announcing the three-year transformation plan in early 2014, the company has continued to expand 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-mounted self-balancing rescue platform” testing machine. ③ Set up a GQY investment and financing center, and set up an investment subsidiary Tianzhu Investment to pay close attention to epitaxial expansion targets. ④ Cooperate with New Century Robotics to distribute mobile police platform products, etc. (4) Intelligent robot technology reserves are sufficient, and new products are being implemented at an accelerated pace. 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 driving 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 side: Medical robots - prototypes of special robot products based on vehicle-mounted self-balancing first aid 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 Robot Co., Ltd., a wholly-owned subsidiary of special robots, focusing on R&D, production and sales of vehicle-mounted self-balancing rescue platforms. Its main robot project is “the first prototype development of a vehicle-mounted self-balancing ambulance platform”. This product uses key technologies for service robots such as a novel parallel robot technology platform, sensing technology, and human-computer interaction technology. It can actively counteract the effects of inertial movements such as road surface bumps, vehicle body shaking, and vehicle body acceleration and deceleration, and ensure that medical personnel can simply rescue critically ill patients in ambulances and avoid secondary damage during transportation. A prototype of this product will be launched in the second half of 2015. Special robot - deep-water robot: GQY signed a memorandum of cooperation with the Stanford University Robotics Laboratory to develop deep-water robots. Next month, they will participate in deep-water experiments in France. The project has received support from the French government. The deep-sea robot will carry out undersea exploration operations below 100 meters through image visualization. The robot's flexible fingers can complete sample collection and operation tasks and perform various physical measurements in multiple marine ecosystems. The deep-sea robot can perform autonomous attitude control, or can use underwater wireless communication. The operator uses the arms of two robots with strong feedback and tactile sensation to remotely operate the underwater robot. Below 100 meters is very complicated, and video transmission and operation have not been realized on the seabed until now. Special robots - mining and emergency rescue robots: Jointly developed with several laboratories for bionic robotics at Stanford University, the world's top and cutting-edge technology, including R&D funding provided by Middle Eastern oil countries. Special robot - GQY mobile police platform: Also used in **** Square, some anti-terrorism equipment and police equipment are already on sale. The service robot, iGO, is about to 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) Shareholder Yao International, who holds 5% or more of the shares: Promises that the stock price will not be reduced by 50 yuan in the next June-December. The company received a “Letter on the Promise to Increase Shareholdings and Not Reduce 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 company's development strategy to transform 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's shares for 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 of 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 of the company's shares. As of September 30, 2015, Mr. Yao International held 2.57 million shares of the company through an ordinary 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 account, accounting for 5.01% of the company's total share capital; in total, he held 1318888 shares of the company, accounting for 6.22% of the company's total share capital, and is a shareholder holding more than 5% of the company's shares. According to the company announcement, due to optimism about the company's future development prospects and the growth potential of the intelligent robot industry, Yao International increased its holdings of 10618888 shares through centralized transactions through the China Galaxy Securities Co., Ltd. customer credit trading guarantee account from April 7, 2015 to May 21, 2015, accounting for 5.01% of the total shares. The details are as follows: From April 7 to April 30, 2015, the increase price range was 17.99 yuan to 21.06 yuan. 31,30088 shares were purchased between May 4 and May 21, 2015, and the increase price range was 18.01 yuan to 26.16 yuan. We note that in GQY Video's 2015 interim report, Zhongyuan Xiehe Cytogenetic Engineering Co., Ltd. (600645) became GQY Video's fourth largest tradable shareholder, holding 2.08 million shares, accounting for 0.98% of the total share capital. At the same time, we note that the listed company Zhongyuan Xiehe (600645) received a voluntary donation of RMB 1 million from Mr. Yao International 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 Concord (600645), at the end of 2014, Yao International held 5.07 million shares of Zhongyuan Concord, accounting for 1.44% of shares. It was the fourth largest tradable shareholder of Zhongyuan Concord 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 service robot market prospects are optimistic that China will become the largest market for robots, and the service robot market prospects are promising. The total global service robot market will reach 200 billion in 2014-2017, and only 30 billion in 2013, and the compound growth rate will reach 22% in the next three years; 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 in the next ten years. The national “12th Five-Year Plan for the Development of Service Robotics Technology” states that the service robot industry will be cultivated into a strategic emerging industry in China in the future. The special project will focus on deployment around “one goal, three breakthroughs, and 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 field 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 be simple to frequent, from easy to difficult. The application scenarios of cleaning robots are simple, and I am optimistic that they will be the first to explode; surgical robots and military robots have advantages and characteristics that are beyond the reach of manpower, and are expected to spread rapidly after further cost reduction and functionality continues to be enhanced. 3. Investment proposal 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 600 million yuan in cash. It is expected that in the future, the company will continue to increase its 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, 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 an increase in future performance, and for the first time, we have given a “careful recommendation” rating.