Investment highlights: National Technology released its semi-annual financial report. During the reporting period, the company achieved operating income of 293.4653 million yuan, an increase of 29.69% over the previous year; the company achieved operating profit of 33.5619 million yuan, an increase of 90.93% over the previous year. The company's net profit attributable to ordinary shareholders was 45.4684 million yuan, an increase of 54.55% over the previous year. The company's main business includes information security chip design and RCC technology. The increase in sales revenue comes from the explosion of centralized control chips in financial terminals. The company accurately grasped the opportunity of concentrated demand for financial terminal control chips and achieved a year-on-year increase in sales revenue; on the other hand, it further strengthened internal management: improving the accuracy of R&D projects, balancing medium- to long-term and immediate R&D results, and striving to improve R&D efficiency; strengthen supply chain management and reduce product costs; strictly manage various expenses, intensive allocation of resources, and achieve a year-on-year increase in net profit. The decline in RCC is due to non-standard reasons, and future growth needs to be driven by industry. RCC achieved revenue of 5.04 million, a year-on-year decline of 73.08%. The main reason is that RCC is not a mobile payment standard for the financial industry. In the long run, the relevant national standards for RCC have been introduced. RCC meets the development requirements of the national information security strategy and corporate strategy, and future growth needs to be promoted by the industry. Mobile device information security encourages trusted computing chips to be similar to RCC technology. The company also lays out trusted computing chips ahead of time. The company participated in formulating the TPM 2.0 standard, and TPM 2.0 officially became an ISO/IEC international standard and supports China's cryptographic algorithm system, providing the necessary technical foundation for the development of the trusted computing industry. The company is a core domestic enterprise that can supply chips with Chinese algorithms. As the number of connected devices increases in the information age, in theory, every device needs to be equipped with a trusted computing chip to protect the machine from being invaded by the outside world. The company's current shipments of trusted computing chips are mainly used on the Surface Pro 3. The price of a trusted computing chip is around 1-2 US dollars, and the overall market has reached 1-2 billion US dollars. The decline in USBKey chip sales, and the domestic replacement of financial ICs is driven by the top down to drive the decline in USBKey chip sales. The main reason is that market competition is fierce, products are mature, and volume and price have fallen sharply. The total market capacity is 100 million pieces, and the company accounts for about 70%. The company is currently developing wireless keys based on wireless communication methods (Bluetooth, sound waves), and there will be a need to replace existing products. Investment proposals In the long run, as the country attaches more importance to information security, domestic alternatives to financial ICs will also be on the agenda. A push from top to bottom may bring benefits. We expect the company's EPS for 16-18 to be 0.22, 0.30, and 0.41 yuan respectively, covering the first time and giving it a buying rating. Risk warning: Business progress falls short of expectations.