1. Overview of the incident Recently, Lianjian Optoelectronics announced that it intends to repurchase the company's shares through centralized bidding transactions, bulk transactions, etc. to be cancelled to reduce the company's registered capital, share reward plans, employee stock ownership plans, or equity incentive plans. The repurchase price of the shares will not exceed 25 yuan/share, and the total repurchase capital will not exceed 240 million yuan. The funding source is the company's own funds. The repurchase period is estimated to repurchase about 9.6 million shares, accounting for 1.56% of the company's current total share capital. 1. Analysis and judgment. The company's investment value is clearly undervalued. The repurchase of shares shows that the company is confident in future development1. According to the performance forecast, the company's estimated net profit range attributable to shareholders of listed companies in 2016 was 370 million yuan — 430 million yuan, an increase of 65.42% — 92.25% over the previous year. Net profit attributable to shareholders of listed companies achieved by the company in 2014, 2015, and January-September 2016 was 133.9735 million yuan, 223.6720 million yuan, and 258.726 million yuan, respectively, an increase of more than 60% over the previous year. Based on current business conditions, the company expects the company's performance to maintain a good growth trend in 2017. 2. We believe that the company is a leading digital communication group in China. The three major businesses are developing well and have significant synergy effects. The repurchase of the company's shares indicates that the company's investment value is undervalued by the market, which will help maintain shareholders' interests, increase investor confidence, and enhance the company's image in the capital market. It is proposed to launch an employee stock ownership plan or equity incentive plan to enhance the company's long-term development momentum. The company has gathered a number of excellent subsidiaries with long-term growth potential through acquisitions. The share repurchase is intended to motivate the company's core business backbone, technicians, executives, etc. An employee stock ownership plan or equity incentive plan will stimulate employees' enthusiasm and determination to work hard, and enhance the company's long-term development momentum. We believe that the company still has the potential for rapid growth, and we are firmly optimistic about the company's future development prospects. 2. Profit forecast and investment recommendations Considering that the company provided equity incentives to management in 2016, the equity incentive exercise price was 24.40 yuan/share on May 17, 2016, and the current stock price is highly secure. Considering the impact of the acquisition of Artixium, it is estimated that the company's 2016-2018 EPS will be 0.66 yuan, 0.96 yuan, and 1.11 yuan. It will give a “highly recommended” rating, which can be valued 30 to 35 times that of 2017, and a reasonable valuation of 28.8 yuan — 33.6 yuan for the next 6 months. 4. Risk warning: 1. The acquisition company's performance falls short of expectations; 2. The business integration of subsidiaries falls short of expectations; 3. Industry competition intensifies.