Event: The company released its 2018 annual and 2019 quarterly reports. In 2018, the company achieved operating income of 572 million yuan, an increase of 11.18% over the previous year; net profit attributable to shareholders of listed companies was 94.09 million yuan, an increase of 2.88% over the previous year. In the first quarter of 2019, the company achieved operating income of 110 million yuan, an increase of 27.43% over the same period last year; net profit attributable to owners of the parent company was 3,738,800 yuan, an increase of 204.66% over the same period last year. The increase in product capacity has led to an increase in gross margin, and the revenue of the energy government industry has increased rapidly. The company achieved revenue of 572 million yuan in 2018, an increase of 11.18% over the previous year; the net profit of the company was 94 million yuan; the company's revenue for the first quarter of 2019 was 110 million yuan, an increase of 27.43%; and the net profit of the mother's net profit was 3.738 million yuan, an increase of 204.66% over the same period last year. Due to the continuous improvement of the company's product capabilities in information security solutions, the company's gross margin in 2018 was 72.95%, up 4.58 percent year on year, and 2019Q1 gross profit margin was 77.66%, up 7 percentage points year on year. Among them, system integrated equipment achieved revenue of 138 million yuan, a year-on-year increase of 17%, a gross profit margin of 24.73%, an increase of 11.7 percentage points over the previous year; software products achieved revenue of 326 million yuan, an increase of 19% over the previous year, and a gross profit margin of 94.24%, a year-on-year decrease of 1.61 percentage points. The company's net operating cash flow in 2018/2019Q1 was -0.87/-47 million yuan respectively, a significant improvement over the previous year. Looking at downstream customer segments, the company's information security products have completed a number of benchmark cases in the energy industry, achieving revenue of 727 million yuan, an increase of 42.27% over the previous year. The government industry benefited from the popularity of localized software and hardware platforms, achieving revenue of 170 million yuan, an increase of 18.98% over the previous year. Safe and controllable industrialization has been implemented, and many of the company's products have been shortlisted in the “Procurement List”. Catalyzed by the triple factors of policy, technology, and market, Encore's progress is very obvious, and the market space for Encore related software and hardware products and services is expected to reach the trillion level. The company continues to improve its product line and has built a complete information security product system for products such as network boundary security, host security, data security, server security, cloud security, industrial control security, and anti-virus driven by big data. The product system has fully covered domestic terminals, servers and hardware platforms. A number of the company's localized safety products were selected into the “Adaptation List” for localized information products. It provides domestic end users with functions such as identity security identification, security control of terminal hosts and related operations, intrusion prevention of external malicious code and viruses, and security auditing of user data printing and recording. R&D investment continues to be strengthened, and multiple versions of Xinyuan Doudou have been implemented. In 2018, the company invested 120 million yuan in R&D, accounting for 20.96% of operating income, an increase of 18.75% over the previous year, and a capitalization rate of 41.78%. The number of R&D personnel was 559, accounting for 43.23%. Xinyuan Doudou released version 4.1, which has been applied to customers such as the Beijing Internet Information Office, the Geological Science Data Network Construction Center of the Chinese Academy of Geological Sciences, the General Clearing Center of the People's Bank of China, Huaxia Bank Co., Ltd., and the Hubei Provincial Department of Finance. At the same time, exemplary deployment has been carried out among customers in special industries such as public security and military industry. Investment advice: Under the catalytic influence of the three factors of policy, technology, and market, Enco has ushered in a policy implementation. Many of the company's products have been shortlisted in the “Purchasing List”. At the same time, multiple versions of the company's Xinyuan Doudou have been applied in various government and financial industries. The company's revenue for 2019-2021 is estimated to be 739/9.12/1,179 million yuan, and net profit is 2.08/3.09/479 million respectively, maintaining the “buy” rating. Risk warning: Competition in the industry is increasing; government investment in security information products falls short of expectations; and there is a risk that key assumptions may be erroneous.