Event: On January 16, 2020, the company released the 2019 annual performance forecast. The company's various businesses maintained steady growth during the reporting period. Net profit attributable to shareholders of listed companies in 2019 is expected to be about 155-180 million yuan, an increase of 10.54%-28.36% over the same period last year. The impact of non-recurring profit and loss on net profit is expected to be about 6.8 million yuan (net profit after deducting non-recurring net profit is expected to be about 148-173 million yuan, up 14.14%-33.39% year-on-year), of which net profit for the fourth quarter was about 14.14%-33.39% 1.24-149 million yuan, up 7.83%-29.57% year on year. In-depth cooperation with Huawei to create a new intelligent financial IoT business format: On December 10, 2019, the company signed a strategic cooperation agreement with Huawei aimed at developing all-round cooperation in the financial intelligent IoT industry and jointly promoting the rapid development of the bank's intelligent IoT business. Relying on the advantages of Huawei's chips, architecture, and future-oriented intelligent products, and the company's technical advantages such as embedded algorithms and low-code platforms in application scenarios, the two sides will jointly create end-to-end financial IoT solutions, from integrated IoT platforms to edge computing nodes. Currently, the company is using high-computing power chips provided by Huawei to embed embedded algorithms for specific application scenarios developed by the company for bank customers into Huawei software-defined AI products to create new solutions for specific financial scenarios such as intelligent operation and safety management; and using Huawei's 5G technology and basic cloud platform to break the existing traditional solutions for local storage, realize cloud storage for massive terminal data, and construct a new pattern of data storage and computation. As Huawei's most important partner in the field of smart finance, the company will replicate its successful cooperation model in the financial industry to other industries, seek greater market share, and promote rapid growth in performance. The electronic identity authentication platform has been certified by the expert group, and the “Guangdong experience” in the field of smart justice is expected to be promoted nationwide: on January 10, 2020, Runan Technology, a holding subsidiary of the company, as a core member of the Guangdong Provincial Judicial Administration Science and Technology Collaborative Innovation Center, successfully passed the expert group verification of the smart prison “Judicial Electronic Identity Authentication Platform for Supervisors” built by UWB technology, including Huang Qingqing, general adviser on informatization guidance at the Ministry of Justice. The platform is the first smart prison electronic identity management platform in China based on UWB technology and artificial intelligence IoT technology. It disrupts the daily management model of traditional prisons and pioneers application scenarios such as electronic nomenclature, supervision maps, and judicial clouds. Among them, the dynamic accuracy of UWB precise positioning technology can reach within 10cm and static accuracy within 2cm, truly achieving centimeter-level accurate positioning. The expert group believes that the platform can be used as a “Guangdong experience” in the field of smart justice to be promoted to the judicial field throughout the country. The company is expected to use this opportunity to quickly occupy the market and further enhance its leading position in the field of smart justice. Ultra-wideband UWB technology may bring huge market size, and the company is expected to fully benefit from the accumulation of the advantages of many years of leading technology: UWB technology is an infinite carrier communication technology that uses nanosecond non-sine wave narrow pulses to transmit data. It has the advantages of high data transmission rate, high security, strong penetration, good anti-interference effect, low power consumption, and low cost. It can position up to 200 meters and provide “centimeter level” positioning accuracy. Currently, UWB technology has formed new popular applications in smart fields such as mobile terminals, automobiles, the Internet of Things, and industry. There is also wide application space in the civilian field. Preliminary estimates suggest that UWB's civilian market size is close to 30 billion dollars. As Apple implants positioning technology into mobile phones, the civilian market may grow on a huge scale. As a manufacturer that has been deeply involved in UWB technology for many years and has implemented mature technology and product applications such as mobile phone implantation, the company is expected to fully benefit from the rapid development of UWB technology with its advantages accumulated in early technology. Investment suggestions: Currently, the company's main business is concentrated in the three fields of financial IoT, smart justice, and public safety. Among them, the financial IoT, as the company's traditional business field, has evolved from integrated security to integrated IoT to smart IoT. Through this comprehensive and in-depth cooperation with Huawei, the company's innovative business level and profitability are expected to improve significantly; at the same time, in terms of smart justice and public safety, with the implementation and comprehensive advancement of UWB technology, the company will open up a broad market space and achieve rapid growth. We expect the company to achieve operating income of 1,009 billion yuan, 1,361 billion yuan and 1,839 million yuan, net profit of 164 million yuan, 204 million yuan and 284 million yuan respectively in 2019-2021, and EPS of 0.24 million yuan, 0.29 yuan, and 0.41 yuan respectively, maintaining a “highly recommended” rating. Risk warning: The development process of informatization in the administration of justice fell short of expectations; Runan Technology's business development fell short of expectations; and UWB technology progress fell short of expectations.