Matters: The company recently intensively announced the winning bids of the business, and the results of vigorously expanding the smart city project business in the early stages were remarkable. Comment: IoT technology enabler, smart city business is gradually being implemented, maintaining “buy” rating companies as technology enablers in the IoT field. In 2018, through asset acquisition and team introduction, the complete industrial chain technology layout of module-middleware-terminal-cloud platform-solutions was completed, and products and technologies were first gradually implemented in the smart city field. In 2019, the company will explore market demand and promote application development through a wide range of partners. We are optimistic about the company's prospects and expect the company to enter a stage of rapid development. The company's net profit in 2018-2019 was 19/270 million yuan respectively, corresponding to a price-earnings ratio of 39/27 times and maintaining a “buy” rating. Risk warning: The risk that the development of the IoT industry does not meet expectations; Project expansion does not meet expectations Risk text: The company's smart city business development results are remarkable. After exploration in 2018, the company has mainly established three vertical application areas as business directions: smart cities, electric vehicles, and movable property monitoring. Recently, the company has achieved a lot in the smart city field: 1. It won the bid for the “151 project” in Jing'an, Shanghai. Recently, the company received the “Notice of Winning Bid”, confirming that the company won the bid for the “2018-2019 Joint Digital IoT Terminal Equipment Procurement and Installation Project”. The specific package is as follows. The specific transaction price and sales volume still need to be further determined. Shanghai Lianshu Internet of Things Co., Ltd. is one of the constructors of the “151 Project” in Jing'an, Shanghai, a major digital economy pilot project of the National Development and Reform Commission in 2018. It is also the main unit for smart city construction and operation in Shanghai. Nikkai has now won the bid for ten smart city IoT application scenarios from Lianshi Corporation, reflecting the company's technical advantages and solution capabilities. It can further accumulate technical experience, consolidate its position in the industry, and facilitate the rapid expansion of the company's IoT business. 2. Signing a strategic cooperation agreement with Ping An Smart City. Recently, the company and Ping An International Smart City Technology Co., Ltd. signed a strategic cooperation agreement. The two sides will use their respective resources to carry out business innovation and marketing cooperation, focusing on smart living, smart government, smart parks and other fields related to smart cities, and jointly plan and organize marketing activities. Ping An Smart City is a subsidiary of Ping An Group. As a leading integrated financial service platform in China, Ping An Group has established six major technology research institutes, making major breakthroughs in fintech, medical technology, artificial intelligence, blockchain, and big data. With advanced technological advantages and rich application scenarios, Ping An has successively incubated various science and technology innovation platforms such as the Lujin Institute, Ping An Health Insurance Technology, and Smart Cities to export scientific and technological services to the community. The company's cooperation with Ping An Smart City is expected to use Ping An Group's nationwide channel resources to rapidly promote the business development of IoT smart city solutions. 3. Invest in Rihai Smart City and establish college entrance examination standards Recently, Nikkai Intelligence and Ningbo Hengzhi's new enterprise management partnership (limited partnership) jointly invested 10,000 million yuan to establish Shenzhen Rihai Smart City Technology Co., Ltd., and agreed that if the operating income of Rihai Smart City in 2019 and 2020 is not less than RMB 2.6 billion and RMB 3.8 billion, respectively, and net profit is not less than RMB 67 million and 99 million yuan respectively, then Nikkai Intelligence has acquired 20% of the new shares held by Ningbo Hengzhi. Ningbo Hengzhi's new team has rich channel resources in the field of smart cities. The company has now jointly invested with it to establish a subsidiary. In fact, the city has taken advantage of its advantages to expand its products and markets. Furthermore, higher performance assessment requirements are also expected to significantly increase the performance of listed companies. Acquisition is carried out after meeting performance assessment standards. Compared with previous methods of completing performance promises after acquisition, the interests of listed companies are more secure and incentives for subsidiaries are stronger. It is expected that future channel partner cooperation between Japan and Sea will be developed using this as a template. As a provider of capital and technology, the company is expected to quickly expand the market and expand its business scale through this method. The IoT technology reserve is in place. Waiting for industrial development to take off in 2018, the company completed a series of acquisitions and integrations at the capital level, including Longshang, Ayla, and Xinxuntong, and obtained the capabilities of IoT modules+cloud platform+solutions. Furthermore, through the introduction of excellent external teams, terminal software capabilities have been laid out. After the reform of supply chain integration and R&D integration, the company has basically completed the preparation of basic IoT technology. In addition to this, the company expanded downstream. On the one hand, it established a terminal company to transform technology into products for export, and on the other hand, established three major application markets and moved towards solutions and project business. Judging from the overall strategic plan, the layout of resources and management has been completed. 2019 is the year of monetization of technology and resources. In fact, the IoT industry is developing rapidly. As operators purchase modules on a large scale (the price of NB-IOT falls below 20 yuan to replace 2G modules), the number of IoT connections has increased exponentially. There are more and more IoT terminals that can be observed around us, the IoT technology tools used by the government in smart cities are becoming more and more abundant, and the industry is improving overall. In this context, the company is expected to fully benefit from industrial dividends.