Core view: 1. Integrated identity information service provider. The company with sufficient orders is the world's leading integrated identity information service provider. It is committed to providing industry customers with integrated software and hardware solutions for online and offline identification and management applications. The company's core business is to provide information security, data management and industry application solutions using smart cards as carriers. In recent years, the company has adopted the two-wheel drive of “endogenous growth+epitaxial development” as its development strategy, widely deployed various fields of identity information services, realized product integration and industry chain extension for integrated identity information services, and expanded the company's future continuous development space. Since this year, the company's performance has continued to improve. In the first half of the year, the company achieved operating income of 232 million yuan, an increase of 67.26% over the previous year, net profit of 34 million yuan, an increase of 37.95% over the previous year, revenue of 357 million yuan in the first three quarters, an increase of 57.84% over the previous year, and net profit of 59 million yuan, an increase of 43.34% over the previous year. At the same time, the company disclosed that the number of new contracts signed by the company from January to June 2018 increased by more than 120% year on year, which strongly guaranteed the company's growth for 19 years. 2. The traditional business is in a boom cycle. The traditional business of the company is mainly divided into two segments. One is the identification and management business, and the other is the smart transportation business. Among them, identification and management services mainly include equipment for issuing and producing ID cards and e-passports, online e-passport management systems, and overseas business (election systems and overseas e-passport issuing systems). The company's ID card and electronic passport issuance and production equipment business is in a leading position in China. This business has been relatively stable in the past few years, but since '19, related equipment has entered a renewal cycle, driving rapid growth in this part of the business. The online e-passport management system is mainly used in the field of passport management for the Party, government, foreign affairs departments, enterprises and institutions to solve problems such as inefficient manual passport management. The company has been promoting this business in airlines, banks and other fields since '17, and has achieved good results. Currently, the company is continuously optimizing product design and solutions and striving to quickly open up the market; In terms of overseas business, the company has accumulated a large number of projects, such as Hong Kong's next-generation smart ID card system package C, the “Hong Kong Homecoming Permit Self-Service Verification System” for Hong Kong and Macao residents traveling to and from the mainland, electronic information from Belarus, and the Nigerian election system. At the same time, 2019 is the general election year in Nigeria, and related demand is expected to further explode. 3. Large-space new business continues to advance. The company's traditional business is in a boom cycle. Growth in the past two years has been worry-free. At the same time, the company is making efforts in many new business fields, opening up new growth space for the company. In the field of smart buses, the company provides overall solutions for microfinance electronic payments integrating various forms of online and offline payments. Currently, it has covered more than 100 cities across the country. Based on this, the company continues to expand its business areas, expand and integrate bus data entrances such as intelligent dispatch and monitoring systems, passenger flow analysis systems, and bus peripheral management, and gradually build intelligent bus solutions and decision analysis systems supported by the four major system platforms of small electronic payment, intelligent scheduling, passenger flow analysis, and operation services. The company's bus cloud business has begun to be piloted. According to our estimates, the company's bus cloud business has begun to be piloted. It is calculated that the overall market space for public transportation informatization is about ten times more than the market space for payment equipment. If this market is successfully opened, it will bring the company an additional market of 10 billion dollars. In addition, in card-related fields, the company is actively expanding the card market in non-public security fields such as finance and social security. Related products and solutions include: smart livelihood policing (household administration, immigration, traffic police) solutions, smart social security office hall solutions, smart bank branch self-service acceptance systems, etc., and it is expected that it will also open up new growth space in the future. 4. The monetization value of bus payment scenarios is huge in the field of smart buses. Based on rich industry experience, customers and channel resources, the company has successively joined hands with Ali and Tencent to combine the company's overall solution capabilities, customer resource advantages and Internet companies' platform advantages to jointly create a new path for mobile payment development for public transportation, promote the migration of the company's identification business from offline to online, accelerate the company's planning, layout and development of offline and online identity management interconnection, and online trusted identity authentication services, etc., and gradually realized the transformation from hardware supplier to service provider. In the future monetization of bus payment scenarios, on the one hand, Xiongdi Technology may take on the role of a specific implementer. On the other hand, Xiongdi will integrate travel data other than payments and integrate it with third-party data from Internet giants to provide more accurate services. We anticipate that the monetization value of future bus scenarios may be reflected in methods such as localized services and the reverse flow of offline traffic. In localization services, after integrating big data on passenger transportation and travel with big data such as shopping, finance, social networking, and catering collected by other platforms, it is possible to accurately portray individual user preferences, and to promote localized services close to user needs based on user location, thereby upgrading the accuracy of marketing. On the other hand, with the disappearance of the Internet dividend, the cost of online traffic continues to rise, and the giants are invariably focusing their attention on offline traffic entrances. According to data from the Ministry of Transport, the number of bus trips in China reached 90 billion in 2016. As a high-frequency and highly sticky application, bus travel payments are expected to become a potentially huge entry point for offline traffic. 5. The investment proposal highlights the advantages of the company's card position. The company is expected to achieve net profit of 120, 170, and 220 million yuan in net profit in 2018-2020. The corresponding valuation is 30, 21, and 16 times the current market value, maintaining a “highly recommended” rating. Risk warning: The strategic development process falls short of expectations; industry customer development falls short of expectations; progress in technology development falls short of expectations; and overseas business development results fall short of expectations.