Company Profile

Beijing Hanbang Technology Corp Ltd. specializes in the R&D, manufacturing, and sales of digitalvideo surveillance products and systems. The company offers a full range of video surveillancesystems and is a major supplier of audio and video compression cards, as well as, embeddeddigital video recorders.

Event

Beijing Hanbang Technology announced the Company and its executives are going to jointly foundBeijing Fei Shi Technology Co., Ltd. with Beijing Wen Tong Visual Recognition Technology ResearchCenter through an industry fund. Registered capital of new company equals CNY 40 million.

Beijing Hanbang Technology and its executives contributed CNY 28 million and hold 70% stakesin it.

Comment

Transformation Underway

Created by pattern recognition professionals of Tsinghua University, Beijing Fei Shi TechnologyCo., Ltd. operates cutting‐edge technology in the field. Three shareholders of Beijing Fei ShiTechnology are Beijing Kang Yi Technology Co., Ltd (86%, controlled by Dr. Wang Liting fromTsinghua University), Ding Xiaoqing (10%) and Chen Yan (4%). Ding Xiaoqing, graduated fromTsinghua University, China in 1962 with won the Golden Medal. Now she is the professor andPh.D supervisor at department of electronic engineering, Tsinghua University. She is the IAPRFellow. Her research interests include pattern recognition, image processing, charactersrecognition, biometric identification, computer vision and video surveillance etc. She has got aseries of achievements on Chinese/Multilanguage character recognition, face recognition, etc.

She has published more than 400 papers and holds eleven patents. She has won the mostprestigious four National Scientific and Technical Progress Awards in China in 1992,1999, 2003and 2008, also won the Awards of “Best Overall Performing Face Verification Algorithm” inFAT2004 on ICPR2004 and got the better performance in FRVT2006.

Beijing Fei Shi Technology Co., Ltd. is principally engaged in R&D and application (especially inintelligent monitoring and automatic drive) of artificial intelligence. It will focus on facerecognition, action recognition, video compression, fuzzy retrieval and ADAS driver‐assistancesystem, which present bright prospects.

Beijing Hanbang Technology, one of the first enterprises entering into digital video surveillanceindustry, has successfully developed a number of digital surveillance product series and formeda number of digital core products such as audio and video compression cards, embedded DVRs,network video servers, analog cameras and IP cameras. It is one of the key domestic suppliers ofvideo compression cards and embedded digital video recorders. The products are supplied toclients in financial, medical, education, transportation and environmental protection industries.

R&D team of Beijing Hanbang Technology has built up strong competence in designing videoprocessingalgorithms.

Beijing Hanbang Technology is going to step into smart drive field with existing technical strengthand look for partners to conduct cooperation as well. Total number of automobiles and drivershas reached 172 million and 280 million respectively in China per data of Traffic ManagementBureau of The Public Security Ministry. We believe as smart drive technology becomes matureand gains popularity among the pubic, the demand for relevant devices and services will surgesignificantly.

Earnings Forecast and Investment Recommendations: we made EPS forecast for the Company atCNY 0.39 in 2016, CNY 0.47 in 2017 and CNY 0.55 in 2018. Reiterate OUTPERFORM.

Potential Risk: intensified competition on the market, slower‐than‐expected R&D progress.