H1 performance slightly exceeded expectations, IT cloud prosperity increased, and the company's performance continued to improve. The company's 2019 semi-annual report was released on the evening of August 15. In the first half of the year, the company achieved revenue of 1,593 billion yuan, Yoy +34.69%, net profit of 44.8071 million yuan, and Yoy +16.8%. Overall, the growth rate was above the median value in the forecast range. Overall, the company's growth slightly exceeded expectations. The company has long been deeply involved in vertical industries such as telecommunications, finance, and public security for many years, and has accumulated core advantages, and is expected to benefit from the increased IT cloud prosperity of enterprises brought opportunities. The company's 2019-2021 EPS is expected to be 0.44, 0.60, and 0.81 yuan respectively, maintaining the “buy” rating. The profit growth rate slightly exceeded expectations. The overall gross margin level was relatively stable. In the first half of 2019, the company achieved a 16.8% year-on-year increase in net profit. Among them, the impact of non-recurring profit and loss on net profit was about 9.944,400 yuan, which was deducted from non-recurrent net profit of 34.8627 million yuan, an increase of 22.0% over the same period last year, and the profit growth rate slightly exceeded expectations. By business, the company's network product distribution and financial business both achieved good growth, with growth rates of 47.69% and 29.53% respectively. Among them, the financial business benefited from bank credit risk control and collection demand remained strong, and operating income and profit based on credit risk control continued to grow rapidly. The telecommunications industry had a high base due to early settlement of operator projects last year. The growth rate in the first half of the year was only 2.56%. In terms of gross margin, the company's overall gross margin level in the first half of the year was 20.08%, which was relatively stable. 5G has brought about accelerated demand for BOSS cloud development, and the public security business has expanded into a number of new markets. As operators face a continuous widening gap in volume reduction, as 5G commercialization approaches, a differentiated billing model has become an effective approach. It uses multi-scale billing methods in various aspects such as traffic and Internet speed to provide an incremental market for BOSS services. Tianyuan Dico has a high market position in the traditional operator BOSS field, and continues to increase R&D in the 5G direction. It is expected to achieve a continuous increase in market share in the context of increasing market concentration. The public security industry market broke through rapidly, expanding into new markets such as Foshan, Zhanjiang, Chongqing, Ezhou, Jurong, Suqian, Shaoyang, Linwei, and Chifeng. The contract amount increased significantly compared to the first half of last year. Sailing overseas, cross-industry cooperation has been further strengthened, and military quality has opened up more room for growth. Cooperation between the company and Alibaba Cloud has been further strengthened. In 2019, it was obtained as an integrated partner of Alibaba MSF (Total Integrated Framework Cooperative Supplier). It is expected that by accumulating experience in IT cloud services of large central enterprises such as Unicom Tiangong Ecology and Telecom Government and Enterprise Ecology, it will be possible to rent ships to achieve expansion in smart government (public security), new retail, intelligent customer service, education and other industries, thus increasing the reuse and gross profit margin of industry products. Furthermore, on August 5, the company announced that it has obtained a military second-level secrecy qualification and weapons equipment quality management system certification. Its products are expected to expand into the military industry, opening up room for further growth. Continued development and maintaining the “buy” rating We are optimistic about the core advantages that the company has accumulated over a long period of time in vertical industries. It is expected to benefit from the increase in enterprise IT cloud prosperity in the 5G era, forming a situation where the three major fields of operators, government, and finance are blooming more. It is estimated that the company's EPS in 2019-2021 will be 0.44, 0.60, and 0.81 yuan, respectively, and maintain the PE given to the company in '19 at 23-26 times. The corresponding target price is 10.12-11.44 yuan/share, maintaining the “buy” rating. Risk warning: There is a risk that operators' capital expenses will decline, and the performance of the M&A business falls short of expectations.