Event: Company announcement. In the first half of 2014, it achieved revenue of 586 million yuan (+10.0%), net profit attributable to the parent company of 1974 million yuan (+45.2%), corresponding to EPS of 0.068 yuan; revenue of 307 million yuan (+14.0%) in April-6, net profit attributable to the parent company of 11.25 million yuan (+153%), corresponding to EPS of 0.039 yuan. Among them, non-net profit for the first half of the year was 18.32 million yuan (+76.1%), and the performance was in line with expectations. The company expects the net profit attributable to the parent company to change by 60-90% in January-September. Investment highlights: Revenue growth is flat, and financial cards, social security cards, and export markets are bright spots. Although demand for domestic SIM cards has declined due to the domestic transition phase between 3G and 4G, the export market has clearly picked up (+29%). At the same time, the company's financial card business also doubled in the first half of the year, spurred by the release of domestic financial IC cards. Furthermore, the social security card and card business maintained steady growth; gross margin rebounded slightly, and financial expenses improved drastically. The company's gross margin rebounded 1.87 percentage points to 25.1% in the first half of the year, mainly due to an increase in the gross margin of financial cards and social security cards (the share of high-margin IC cards in financial cards increased, while the price of social security cards stabilized and the cost of social security cards fell). In terms of expenses, the ratio of sales and management expenses was generally stable, while exchange profit and loss improved dramatically by 14.66 million yuan due to the devaluation of the renminbi in the first half of the year; the profitability of leading NFC payments will continue to increase. Mobile payments will be a major trend, and NFC is likely to take the lead, especially if the upcoming iPhone 6 supports NFC, which will further greatly improve the payment environment. The company is the largest communication card manufacturer in China (annual shipment volume of about 200 million cards; current prices for 4G cards and SWP-SIM cards are about 1.1, 5 to 6 yuan/card, respectively). If NFC cards are released, the company will be the biggest beneficiary, and profitability is expected to increase dramatically; TSM platform construction is progressing steadily, and value is far underestimated. At present, the infrastructure of the Citylink TSM platform has been completed, and it is expected that it will connect with some cities within the year. Apart from China Telecom, it will be further connected to other TSM platforms in the future. The City Card has the characteristics of high circulation volume (more than 400 million cards) and strong stickiness. With the increase in the penetration rate of NFC mobile phones and the expansion of non-bus payment services, the company is expected to build a platform for online-offline payments and occupy mobile payment portals and online entrances. Its huge value is far from being reflected in stock prices; it continues to be highly recommended. The 14-16 EPS was increased by 0.24/0.32/0.41 yuan, and the corresponding PE was 66/50/38 times. If Citylink data successfully expands its online business, its users reach 100 million levels, and occupy mobile payment portals and online portals, and the value is expected to exceed 91 assistants that only have online portals; risk warning: the price reduction for smart cards exceeds expectations; the progress of Citylink data's business development is uncertain; and competition in the mobile payment market is fierce.