This report is read as follows:

The company's public issuance of convertible bonds has been approved by the CSRC, and the company has maintained a high investment in sales and research and development in recent years. After raising funds, the company has been able to further increase the scale of research, production and marketing, and the company's performance can be reversed at the bottom.

Main points of investment:

Maintain the target price of 17.70 yuan and maintain the "overweight" rating. The company's public issuance of 516 million yuan of convertible bonds has been approved by the CSRC. The funds raised by the company will be invested in video artificial intelligence industrialization, cloud video industrialization, marketing network construction and other projects and supplementary liquidity. We believe that the smooth implementation of the investment project will, on the one hand, effectively expand the company's production scale and give the company new development opportunities, on the other hand, it will further improve the company's strategic layout in emerging fields, and is expected to build a business coordination closed loop in the field of cloud office. In the context of the rapid improvement of the overall penetration of the industry, the company is expected to meet a new round of high performance growth with a solid business foundation. We maintain the company's EPS of 0.18,0.59 and 0.74 yuan in 2019-2021, give a valuation of 30 times PE in 2020, maintain the target price of 17.70 yuan, and maintain the "overweight" rating.

The funds raised will be invested in the field of video comprehensive applications to enhance the core competitiveness. We believe that on the basis of consolidating the layout of traditional advantageous areas such as the Public Security and Law Department, and increasing investment in cloud video industries such as distance education and telemedicine, combined with the accelerated penetration of the video conferencing industry, the business structure will be significantly optimized.

The sales strategy tends to be sound, and the coverage and service ability of the marketing network are more perfect. The funds raised will be invested in the construction of the marketing network. We believe that with the assistance of a stronger marketing network, combined with the national government affairs informatization and the policy of building a safe city, the video application system will remain high, and the company's innovative technology products will be able to be introduced to the market faster and speed up the performance recovery.

Catalyst: acceleration of government video bidding procurement; acceleration of cloud video vertical industry development.

Risk factors: the benefit of the fund-raising project is not as good as expected; the competition in the industry is intensified.