The company's annual performance report predicts a sharp increase in revenue for the whole year. In the short term, due to strategic considerations for expanding the bus payment market in the smart transportation sector, gross margin has declined, and is expected to pick up later. The company has expanded from legal to non-statutory fields, keeping the technology in the same vein, raising the growth ceiling, and upgrading ratings to highly recommended. Incident: The company released its 2018 annual performance forecast. It is expected to achieve net profit of 106-112 million yuan for the whole year, an increase of 33.31%-40.86% over the previous year, and an estimated revenue growth rate of more than 50%. Revenue increased sharply, and gross margin declined in short-term concessionality. The company started with the production and identification of legal licenses and bus cards. The market may think that the development of these fields is maturing and overlooked some of the positive changes taking place in the industry and the company. Thanks to the development of secure document generation, intelligent scenario applications, and integrated bus payment, the company's revenue increased by more than 50% year-on-year in 2018. The trend of digital identity has been established, the demand for electronic ID cards and passports and related supporting management is emerging, and the company is also actively expanding overseas markets, all providing a driving force for the company to continue to grow. In '18, the company cooperated with internet giants to actively expand the bus payment market. Based on strategic considerations such as market share and card slots for subsequent application scenarios, the gross margin of the smart transportation business declined. We believe that in the future, gross margin will rise rapidly as the company's business structure changes and adjustments. Legal is extended to non-statutory fields, and scenario applications enhance business space. The company's business gradually expanded from the earliest services focusing on identification of legal documents such as ID cards and passports to the fields of smart transportation, finance, social security, etc. The core license recognition technology is in the same vein, and the ceiling for development continues to rise. The company's innovative businesses such as digital identity, online license management, and bus intelligence continue to advance: the scope of products and services in the fields of public security, government and enterprise continues to expand and expand, facing good demand opportunities under the “liberalization and service” reform; cooperation with Internet giants in the offline bus sector has also given the company a development opportunity to gradually enter the integrated bus operation system platform using payment reading equipment as an entry point, adding a new driving force for elastic growth in addition to the company's own high-certainty business growth. “Highly Recommended - A” investment rating. The company's traditional license market is facing new business opportunities, and application expansion in new industries has exceeded expectations. The company's EPS is expected to be 0.80/1.07/1.53 yuan in 18-20. The current price is equivalent to 33/24/17 times PE. The “small but beautiful” target with high growth and undervaluation has been raised to a “Highly Recommended - A” rating. Risk warning: There is a risk of declining gross margin due to fierce competition in the industry market; cooperation with giants and overseas expectations are falling short.