Key elements of the report: Currently, the company has sufficient orders in hand, cost control is showing initial results, and performance continues to show a steady growth trend. Under the premise that the intelligent transportation business maintains a high level of prosperity, the company's layout in the smart city sector will provide growth momentum for long-term development. Regardless of changes in share capital brought about by non-public offerings, it is predicted that the company's EPS for 15-16 will be 0.39 yuan and 0.49 yuan. Based on the closing price of 26.35 yuan on August 5, the corresponding PE will be 68.11 times and 53.42 times, covering and giving the company an investment rating of “increased holdings” for the first time. Considering that GEM has recently entered into deep adjustments and the overall valuation of the industry has clearly declined, we judge that the company's stock price may still face short-term adjustments after the resumption of trading. Event: The company published its 2015 semi-annual report. In the first half of 2015, the company achieved sales revenue of 1,011 million yuan, a year-on-year increase of 13.68%, operating profit of 116 million yuan, a year-on-year increase of 22.18%, net profit of 109 million yuan, a year-on-year increase of 21.34%, and earnings per share of 0.18 yuan. Comment: The company has sufficient orders in hand, and its performance has shown a steady growth trend. In the first half of 2015, the company achieved sales revenue of 1,011 billion yuan, an increase of 13.68% over the same period last year, down 6.17 percentage points from the same period last year. Meanwhile, in the first half of the year, the company received additional orders of 1,087 billion yuan, an increase of 18.7% over the previous year, 5 percentage points higher than the revenue growth rate and 33.5 percentage points higher than the same period last year. The order growth rate has shown a gradual upward trend since bottoming out last year, which guarantees the steady growth of the company in the future. The intelligent transportation business remains booming. By business, the company's current revenue mainly comes from intelligent transportation, smart medical care, and smart cities (excluding the first two smart city businesses). The revenue of the three businesses in the first half of 2015 was 507 million yuan, 122 million yuan, and 370 million yuan respectively, accounting for 62%, 10%, and 25%, respectively, up 38%, -3%, and -5% from the previous year. As of the first half of the year, the company's smart transportation business has covered 139 cities across the country, and the company's smart medical system has entered 1,147 hospitals (including single-signed hospitals and hospitals covered by regional medical programs). Judging from the new orders in the three business sectors, the smart transportation, smart medical, and smart city businesses received orders of 414 million yuan, 163 million yuan, and 510 million yuan respectively in the first half of 2015, up 17.6%, 1%, and 26.8% from the previous year. The implementation of the smart city strategic cooperation agreement will be the main driving force for the company's future performance to accelerate growth. The company has carried out overall smart city planning and top-level design in many cities in China. Since 2013, the company has signed strategic cooperation agreements for smart city turnkey projects with 24 cities, involving a total project amount of 140.1 billion yuan. Of these, 7 smart city general contract agreements have been signed since 2015, involving 1.45 billion yuan. The completion of the refinancing project will effectively enhance the company's financial strength. Since July 23, the company has suspended trading for non-public offering matters. It plans to issue no more than 11 million shares and raise no more than 998 million yuan for “smart city base construction and application service projects”, “smart city information service platform development and industrialization projects”, “enterprise technology center R&D and upgrading projects”, and the company's liquidity supplement for four projects. Considering the large financial support required for the operation of smart city projects, this fund-raising project will help strengthen the company's financial strength and is an important guarantee for the implementation of new projects and the successful completion of existing projects. The effects of cost control are gradually showing, improving the company's profitability. The company's gross profit margin, operating profit margin, and net profit margin for the first half of 2015 were 28%, 11.5%, and 10.8% respectively, up -0.9, 0.8, and 0.7 percentage points from the same period last year. The company's sales expense ratio, management expense ratio, and financial expense ratio respectively fell 0.79, 1.53, and 0.26 percentage points from the same period last year. The effects of the company's cost control gradually became apparent, becoming the main reason for the improvement in profitability in the first half of the year. Profit forecast and investment advice: Regardless of changes in equity brought about by non-public offerings, the company's EPS for 15-16 is predicted to be 0.39 yuan and 0.49 yuan. Based on the closing price of 26.35 yuan on August 5, the corresponding PE is 68.11 times and 53.42 times, covering the first time and giving the company an investment rating of “increased holdings”. Considering that the computer industry index has recently entered a deep adjustment, and the overall valuation of the industry has clearly declined, we judge that the company's stock price may still face short-term adjustments after the resumption of trading. Risk warning: GEM continues to adjust; deterioration in local solvency is dragging down corporate project repayment; implementation progress of smart city general contracting projects falls short of expectations.