Event: On April 30, 2014, the company released a quarterly report: In the first quarter of 2014, it achieved operating income of 601 million yuan, an increase of 15.33% over the previous year, and realized net profit attributable to shareholders of listed companies of 23.57 million yuan, a year-on-year decrease of 48.28%, and earnings per share of 0.02 yuan. Comment: Affected by a sharp year-on-year decline in real estate settlement revenue in the first quarter of '13, actual performance improved markedly. The increase in revenue was mainly due to trade business and some financial electronics businesses. The digital cluster business did not yet have large-scale settlement; the net profit attributable to shareholders of listed companies was 23.57 million, a decrease of 48.28% over the previous year. The main reason for the sharp decline in profit was: In the first quarter of '13, the real estate project settled by Hangzhou Oriental Communications City, received an additional 25.52 million net profit, deductions After the impact of the project, the actual company's performance increased by 18% year on year, improving markedly. Actual gross margin is basically stable, and is expected to rise in the future. Expenses have declined slightly, and the trend will continue in the future. The company's overall gross profit for the first quarter of 2014 was 13.22%, down 5.5 percentage points from the previous year, mainly due to structural factors of change. In the first quarter of '13, 25.52 million real estate settlement net profit boosted the gross profit margin, and the gross margin remained stable by business. In the future, with the continuous and rapid development of the company's financial electronic business and the launch of a digital cluster business with high gross margin, the company's gross margin is expected to rise structurally. Judging from the cost rate, the company's three expenses in the first quarter of 2014 was 12.11%, a slight decrease from the previous year. The increase in sales expenses was mainly due to the expansion of digital cluster business, and the overall cost rate will maintain a steady downward trend in the future as the company expands in size. Without changing the high performance growth forecast for the full year of '14, future orders are expected to continue to be implemented. Although the company's performance in the first quarter of '14 is relatively average, we do not expect the company's high performance growth in '14:1. The digital cluster business is about to explode: in mid-March, the company won the bid for the Dalian Public Security Private Network project (along with the subway), with an amount of 90 million. This is the first major order since the company officially entered the public security network digital cluster business. It is also the first large-scale order since the company officially entered the public security network digital cluster business in recent years (since the end of 2012). It is also the first large-scale order in the public security network digital cluster industry in recent years (since the end of 12). It is significant, marking the beginning of the company's digital cluster business explosion. This project can accumulate large-scale supply and implementation experience, and will push the company's digital cluster business to continue to develop rapidly. We believe that the company has TETRA and PDT technology, is backed by China's Putian, and has outstanding resource endowments. It is expected that in the future, digital cluster scale orders will continue to be placed, the sharing industry will explode, and achieve rapid growth. 2. The financial electronics business has maintained high growth: At the same time, in terms of ATM business, this year is a major procurement year for the Industrial and Commercial Bank, one of the company's main customers. The company will also continue to promote localization in its procurement, and the company will benefit greatly; furthermore, the company is expected to achieve a breakthrough with the Agricultural Bank this year. Furthermore, Silver Star Finance, which was acquired by the company earlier, has expanded the company's financial business product line, which helps the company provide comprehensive financial electronic solutions and promotes the rapid development of the company's financial electronic business. Therefore, we believe that in 14-15, the company will benefit from the explosion of the public security digital cluster industry and the rapid growth of the ATM business to achieve explosive growth in performance. Furthermore, the company's information consumption security-related business, which has been actively transformed on the basis of the original switching network business, is also expected to make a certain breakthrough in 2014: both the signaling gateway and media gateway have passed Bell tests and will soon be used on mobile 4G networks. It is expected that in 2014, industry applications and information security market fields will be fully expanded. It is expected that in 2014, it will break through certain group customers, achieve commercial cases, and open up new growth space for the company in the field of information consumption security. Profit forecast: Looking at 2014, the company's digital cluster business began to explode, the financial electronic business grew rapidly, and the company's equity incentive exercise conditions required the company's 14-year performance to increase by more than 52% year on year. Therefore, we judge that the company's 14-year performance will explode and increase by more than 60%. Looking at the medium to long term, we are optimistic that the company will benefit from the large-scale construction of the public security network and the construction of financial electronic solutions. It maintains the 14-16 EPS at 0.28 yuan, 0.40 yuan, and 0.50 yuan, continues to pay attention to the implementation of the public security network, and reaffirms the “increased holding” rating. Risk warning: Public security network promotion falls short of expectations, industry competition is fierce