Matters: The company announced on the evening of August 13 that it had signed the “Jiangsu Expressway Electronic Toll System (ETC) Electronic Label Procurement Contract” with Jiangsu Tongbao Smart Transportation Technology Co., Ltd. According to the contract agreement, Tongbao will purchase 6.8 million ETC electronic tags from the company. The contract period is from August 1, 2019 to October 31, 2019. There is no contract amount agreed in the above contract. The purchase of this project will adopt a tiered unit price. The specific unit price is subject to the purchase order. At the same time, it was announced that the company recently proposed restructuring of Xinlian Pay by Xinlian Pay, leading to adjustments in the company's investment plan for Xinlian Pay: the company will increase the capital of Xinlian Pay by RMB 32.3656 million, corresponding to the additional registered capital of RMB 23 million. After completing the capital increase, the company will hold 23% of Xinlian Pay's shares; the company will increase its capital by 43.6232 million yuan, corresponding to the additional registered capital of RMB 31 million. After completing the capital increase, the company will hold 6.2% of the shares in Xinlian Technology; after completing the capital increase, the company will hold 6.2% of Xinlian Technology's shares; The investment amount of yuan is used to cover the long-term receivables of Xinlian Technology not exceeding 13 million yuan (including interest, late fees, liquidated damages, etc.) and obtain all rights in the corresponding claims (including interest, late fees, liquidated damages, etc.). Among them, Xinlian Technology also plans to introduce Shanghai Yunxin (a wholly-owned subsidiary of Ant Financial) as one of the investors. Guoxin Computer's opinion: The company's OBU share has continuously ranked first in the market, and the current OBU purchase has surpassed the company's highest annual OBU shipment volume in history, and the industry boom has once again confirmed. Driven by the policy, the current average daily circulation volume of OBU is about 600,000 units, and orders from the ETC sector continued in the second half of the year. At the same time, OBU procurement prices have been rising steadily. Compared with the situation in 2018, the situation has improved significantly, which is beneficial to the gross margin level of the industry. The volume and price of the industry have risen sharply. As an industry leader, the company has an advantage in upstream and downstream prices, and is expected to become the target for the greatest performance flexibility. In terms of credit union payment investment, after the restructuring, the positioning of Credit Union Pay and Credit Union Technology became more clear. The introduction of Xinlian Technology's investment in Ant Financial is conducive to speeding up the development of the ETC post-market. The company will actively promote collaboration and in-depth cooperation in various fields with Credit Union Payment and Credit Union Technology, achieve customer resource and channel sharing, further expand ETC application scenarios (ETC post-market) and the company's business areas, fully seize the ETC market opportunities brought about by the abolition of inter-provincial toll gates, and help the company continue to develop and improve its profitability. Continuing to maintain the previous profit forecast, net profit is expected to be 506/3.06/373 million yuan in 2019-2021, with a year-on-year growth rate of 2237/-39/ 22%; diluted EPS = 4.30/2.60/3.17 yuan. The current stock price corresponds to PE = 13/22/18x, maintaining the “increased holdings” rating. Comment: This OBU procurement has surpassed the company's highest annual OBU shipment volume in history, and the industry boom has once again confirmed the “Jiangsu Expressway Electronic Toll System (ETC) Electronic Label Procurement Contract”. According to the contract agreement, Tongbao will purchase 6.8 million ETC electronic tags from the company, while the company's OBU sales volume in 2018 was only 5.1093 million units, and the highest sales volume in history was only 5.4872 million units in 2017. A single batch of OBU purchases in Jiangsu Province alone surpassed the company's (number one in market share in history)'s highest annual shipment volume in history, once again demonstrating the high level of prosperity in the industry. The performance of the ETC sector in the second half of the year is expected to concentrate and explode beyond expectations, with orders continuing. In June, the National Development and Reform Commission issued the “Implementation Plan for Accelerating the Application of Electronic No-Stop Express Toll Services on Highways”, which clearly states that “by the end of December 2019, the number of ETC users nationwide will exceed 180 million, with full ETC coverage at expressway toll gates.” Driven by policy, OBU installation usage will increase dramatically. According to data from the Ministry of Transport, as of August 2, the total number of ETC users nationwide has exceeded 100 million. Currently, the average daily ETC circulation has exceeded 580,000. It is anticipated that the annual target of 180 million users will be completed. The remaining 5 months of 2019 will assume 80% of the total distribution volume. In the second half of the year, there was a concentrated outbreak in the second half of the year, and the supply of equipment was in short supply, and the price of OBU showed a steady upward trend. Furthermore, the total number of ETC lane construction and renovation plans nationwide is 51,366, corresponding to the demand for RSU equipment at least 10-15 thousand. Installation, commissioning, and inspection will be concentrated in the second half of the year. Leading companies in the industry are product-oriented companies. Against the backdrop of an explosion in revenue, marginal expenses are declining, and profit growth is expected to exceed expectations. Investment suggestion: The company's OBU share continues to rank first in the market, and the current OBU purchase has surpassed the company's historical high OBU annual shipment volume, and the industry boom has been confirmed once again. Driven by the policy, the current average daily circulation volume of OBU is about 600,000 units, and orders from the ETC sector continued in the second half of the year. At the same time, OBU procurement prices have been rising steadily. Compared with the situation in 2018, the situation has improved significantly, which is beneficial to the gross margin level of the industry. The volume and price of the industry have risen sharply. As an industry leader, the company has an advantage in upstream and downstream prices, and is expected to become the target for the greatest performance flexibility. In terms of credit union payment investment, after the restructuring, the positioning of Credit Union Pay and Credit Union Technology became more clear. The introduction of Xinlian Technology's investment in Ant Financial is conducive to speeding up the development of the ETC post-market. The company will actively promote collaboration and in-depth cooperation in various fields with Credit Union Payment and Credit Union Technology, achieve customer resource and channel sharing, further expand ETC application scenarios (ETC post-market) and the company's business areas, fully seize the ETC market opportunities brought about by the abolition of inter-provincial toll gates, and help the company continue to develop and improve its profitability. Continuing to maintain the previous profit forecast, net profit is expected to be 506/3.06/373 million yuan in 2019-2021, with a year-on-year growth rate of 2237/-39/ 22%; diluted EPS = 4.30/2.60/3.17 yuan. The current stock price corresponds to PE = 13/22/18x, maintaining the “increased holdings” rating. Risk warning: Currently, the company has not signed a relevant agreement, so there is a possibility that the transaction will not be successful; ETC investment growth is lower than expected; parking fees and V2X business development are lower than expected.