Description of the incident The company announced that it will divest and sell its original home appliance retail business to the related party, Shandong Dazhong Electric. The divestment assets will be 94% of inventory household appliances, such as refrigerators, washing machines, televisions, air conditioners, etc., with an assessed price of 138 million yuan, which will be paid in cash. The company's own property will be retained, and a housing lease contract will be signed with Shandong Dazhong for an annual amount of 18 million, a rental period of 15 years, an increase of 5% every 3 years. Incident analysis and conclusion The company has completely solved the problem of peer competition with the controlling shareholder Gome Group by the end of the year. It will no longer engage in the home appliance retail business and will make every effort to transform the secure smartphone business. In the future, it will face problems that match its name and reality, and the problem of joining a new management team. Moreover, the company has potential to break through in capital operations such as additional capital raising, which the company has not been able to advance until now. After the company acquired Dejing Electronics, it promised performance of 60 million, 80 million, and 100 million yuan respectively in 16-18. Among them, the ODM portion of secure smartphones, and secure mobile phones manufactured in collaboration with the four companies Zanxun, Yuanxin, and Hongba, was announced in September alone, and there were 270 million yuan orders. It is expected that next year's likely explosive growth will become the main driving force for the company's performance growth. Investment Ratings and Valuation We conservatively forecast that Sanlian Trading Company's net profit for 16-18 exam preparation will be 70 million yuan, 140 million yuan, and 200 million yuan, and EPS will be 0.28 yuan, 0.55 yuan, and 0.8 yuan. However, great attention should be paid to it. According to industry feedback, demand for the secure mobile phone industry in 2017 is expected to be over 1 million units, and industry alliances are expected to ship more than 500,000 units, which is likely to bring profit of 1-2 million to Dejing Electronics. There is huge flexibility, and there is room for continued increase in profit forecasts in the future. The medium- to long-term target price is based on the market value of 10 billion dollars, and the target price is 6 billion yuan, corresponding to the stock price of 23.72 yuan, giving a recommended rating. Risk warning: Shipments of secure mobile phones fell short of expectations; Gome's independent brand promotion fell short of expectations.