Results in line

1) In 2015, revenue increased 22.53% YoY to Rmb784mn driven mainly by rapid growth in revenue from security,system integration, and LCD products; net profit slumped 57.51% YoY to Rmb35.1627mn; 2) in 1Q16, revenueincreased 27.87% YoY to Rmb140mn, but Anjubao suffered a net loss of Rmb11.84mn due to seasonality as well ascontinued spending on mobile Internet and urban cloud parking system projects.

Trends to watch

Accelerating transformation into a mobile Internet player; recruitment of partners for Zhoubian YouhuiAPP; stepped-up marketing of cloud parking system after upgrades of products and business model: 1)Zhoubian Youhui APP has become a B2b2C platform, which can help suppliers shorten channel construction periods andreduce channel costs. Anjubao is recruiting partners for this project; 2) cloud parking system: in 2015, Anjubaoupgraded its cloud parking hardware and systems and slashed hardware cost. Anjubao provides hardware to B-endclients for free, provided that Anjuhao is allowed to use gateway advertising places. As of end-December 2015, Anjubaohad signed agreements with 504 parks for its cloud parking project. As of April 15, 2016, Anjubao had signedagreements with 870 parks since it stepped up its efforts to explore community markets around the country.

To become a smart community internet platform service provider: Anjubao is making great efforts to marketcloud intercom, security, Zhoubian Youhui APP, and cloud parking projects, and may adjust these projects based onactual conditions. It plans to build an Anju ecosystem based on integrated community security solutions and extendedservices (e.g. cloud community, cloud travel) and transform into a smart community internet platform service provider.Earnings forecastWe expect revenue to grow 19.9% YoY to Rmb940mn in 2016 and 20.8% YoY to Rmb1.136bn in 2017; and net profit togrow 92.0% YoY to Rmb67.53mn or Rmb0.12/sh in 2016, and 15.7% YoY to Rmb78.14mn or Rmb0.14/sh in 2017.

Valuation and recommendation

Maintain BUY and TP of Rmb20 given its stepped-up efforts to transform into a mobile Internet player.

Risks

1) Housing completion or starts plunge; 2) transformation and community O2O market exploration disappoint; 3) sectorvaluation contracts.