I. Overview of events

Recently, Furi Electronics released its quarterly report for 2017: revenue reached 2.213 billion yuan, up 54.22% from the same period last year. Net profit belonging to shareholders of listed companies was 14.3893 million yuan, down 20.10% from the same period last year. Non-net profit was 10.7631 million yuan, down 35.22% from the same period last year. Basic earnings per share is 0.03 yuan, deducting non-earnings per share is 0.02 yuan.

II. Analysis and judgment

Gross profit margin improved month-on-month, revenue growth benefited from fast sharp communications and table and Furi industrial income growth 1, 17Q1 performance is basically in line with market expectations. (1) the company's comprehensive gross profit margin was 5.07%, down 1.99 percentage points from the same period last year and 0.3 percentage points higher than the previous month. (2) the expense rate during the period was 4.48%, down 1.68 percentage points from the same period last year. The sales expense rate, management expense rate and financial expense rate were 0.95%, 3.32%, 0.21%, 0.28%, 0.62%, 0.78% respectively. During the reporting period, the subsidiaries of the company received a total of 4.6554 million yuan in government subsidies.

2. The main reason for the revenue growth is the growth of the business income of the subsidiary Xunrui Communications and Furi Industry. The main reason for the decline in performance is the decline in gross profit margin. The efficiency of benefit management has been improved, and the expense rate has been significantly improved compared with the same period last year.

Communication business continues to strengthen, LED industry chain deepens layout, domestic and foreign trade business is steadily promoted. 1. China-Nuo Communication will actively expand domestic high-quality customers, vigorously develop overseas markets such as Europe, America and Africa, and look for business cooperation opportunities for high value-added products; the company will deepen the layout of LED industry chain and create the whole industry chain such as epitaxial wafer / chip, packaging, application products and application engineering to achieve good synergy. Optimize domestic and foreign trade business, strengthen the construction of supply chain business, and expand the proportion of exports of self-operated products.

2. The performance target of Xunrui Communications commitment: the net profit (excluding non-recurrent profit and loss) of the consolidated statements belonging to the owner of the parent company in 2016, 2017 and 2018 is not less than 38 million yuan, 45 million yuan and 52 million yuan respectively.

3. We believe that the company is positioned as a well-known comprehensive intelligent communication solution and energy-saving service provider in China, by expanding the communications industry, deepening the layout of the LED industry chain, and steadily promoting domestic and foreign trade business to achieve development goals. The high performance commitment of Xunrui Communication will promote the company to expand and strengthen the communications industry.

Third, profit forecast and investment suggestions

It is estimated that the EPS of the company from 2017 to 2019 is 0.18,0.22 and 0.25yuan respectively. Considering that the company is a key listing platform under the Fujian State-owned assets Supervision and Administration Commission and has the expectation of state-owned enterprise reform, the company can be given 60-65 times PE in 2017, with a reasonable valuation of 10.80-11.70 yuan in the next 6 months, maintaining the company's "cautious recommendation" rating.

Fourth, risk tips:

1, smartphone shipments fall short of expectations; 2, industry competition intensifies; 3, product price reduction risk.