The company is the world's leading electronic security solutions and product provider, has been focused on video surveillance and intelligent technology research and development and innovation.

Security and Internet marketing dual business-driven, performance back to positive growth. After the adjustment in 2016, the company's performance returned to the development track in 2017 and 2018. In 2018, the company's operating income increased by 46.99% to 4.271 billion yuan compared with the same period last year, and the deduction non-net profit belonging to shareholders of listed companies increased by 35.62% to 100 million yuan.

Deep investment and control of shares form win-win cooperation, and the development of Guangdong, Hong Kong and Macao brings new opportunities. On the one hand, in 2018, the company introduced the second largest shareholder, accounting for 21.35% of the stock ratio. At the same time of obtaining financial support, it will be more beneficial for the company to deeply control the project resources throughout the country, coordinate development, and open up new space for business growth. On the other hand, relying on its own technological advantages, the company will continue to promote the construction of Guangdong-Hong Kong-Macau Greater Bay Area's smart city. The construction and development of the Greater Bay area will continue to provide the company with the driving force for performance growth.

Ranked second in the field of domestic security, will fully benefit from the development of the industry. In the next few years, the demand in the field of security in China will be further expanded, and the construction and operation of the security + Internet + intelligent city built by the company will further highlight its advantages and open up the company's development space.

Profit forecast and valuation: we estimate that the EPS of the company in 2019 will be 0.16,0.19,0.26 respectively, and the corresponding dynamic PE will be 27.7,23.7,16.8 times respectively. Be careful to give the company an "overweight" rating.

Risk tips: 1) the risk of product technology upgrading; 2) the intensification of trade frictions; 3) the international market development is not as expected; 4) exchange rate risk; 5) goodwill impairment risk; 6) management improvement is not as expected.