Revenue and non-profit deductions have grown rapidly. The company released its 2019 interim report and achieved revenue of 297 million yuan in the first half of the year, an increase of 51.33% over the previous year. Net profit of the mother was 27.11 million yuan, an increase of 11.52% over the previous year. After deducting non-net profit of RMB 2.01 million, a year-on-year increase of 82.03%. Both gross margin and period expense ratio have declined. 1) In terms of cost, due to the increase in the share of system integration business, gross margin decreased by 8.89pct compared to the same period last year. 2) In terms of expenses, the period fee rate decreased by 10.52 pct compared to the same period last year, of which the sales expenses rate decreased by 2.40 pct and the management expenses rate decreased by 7.73 pct. R&D investment was 72.2 million yuan, accounting for 24.32% of revenue, and R&D investment increased 20.22% year over year. 3) In terms of cash flow, net operating cash flow in the first half of the year decreased compared to the same period last year due to reasons such as the company's new large-scale projects and prepaid procurement payments. Taking advantage of the wave of localization, the government industry has achieved rapid growth. In the first half of the year, as one of the leading companies in terminal security under the wave of IT localization, the company responded positively to the country's general direction of network information security, actively promoted the integration of the Internet with the traditional information security industry, built an Internet ecosystem based on high-intensity security, and launched emerging businesses such as big data management and analysis platforms and Internet security aggregation channels, and extended the company's industrial chain with the three directions of “information security, big data, and Internet security aggregation channels”. We actively participated in high-level technology product exhibitions at home and abroad, focusing on showcasing new products and technologies in the fields of information security, source beans, big data, and localized security. A new series of industrial control and security products were showcased. Big data IT operation and maintenance management solutions were vivid and comprehensive, showcasing the company's cutting-edge network information security technology and products from multiple angles. By customer industry, the government industry achieved revenue of 140 million yuan in the first half of the year, an increase of 164.19% over the previous year. By product, software products achieved revenue of 193 million yuan, an increase of 35.39% over the previous year, and system integration achieved revenue of 61.53 million yuan, an increase of 113.78% over the previous year. By region, South China and Northwest China have achieved relatively rapid growth, with revenue growth rates exceeding 80%. Investment recommendations: EPS for 2019 to 2020 is expected to be 0.11 yuan and 0.15 yuan, respectively. For the first time, it was given an “Excess Holdings-A” rating, with a target price of 7 yuan for six months. Risk warning: policy progress falls short of expectations; industry competition intensifies