Event description: the company received a reply from the China Securities Regulatory Commission to approve the non-public offering of shares, the approved company's non-public offering shall not exceed 118 million shares, and the fund raised shall not exceed 1.12 billion yuan.

Core viewpoints

Directional additional issuance has been approved, and funds are in place to accelerate capacity expansion. The company received approval from the Securities Regulatory Commission on December 10. after the funds raised are in place, the production capacity expansion of RF devices and consumer electronics metal casing will be carried out smoothly. Benefiting from the increase in the localization rate of communication RF devices, the company will increase its market share through capacity expansion in the future to meet the order needs of overseas communication equipment manufacturers; at the same time, the company will use the funds raised to purchase a large number of CNC processing equipment to rapidly extend the metal processing business to the consumer electronics field. At present, the stock price is close to the fixed price, the expansion of the consumer electronics sector will help the company to improve its profitability, and we are optimistic about the growth of the company's main business in the future.

The pace of epitaxial mergers and acquisitions has not stopped, and the belief in transformation is still firm. On December 3, the company announced the termination of the capital increase and merger of Beijing Chiyilong. We believe that the termination of the project will not prevent the company from continuing to expand its business in the military field in the future, and the company's advantages in the field of metal processing still exist. In addition to Chi Yilong, the layout of Xi'an Xinghang, Zehong Technology and Kaimao Technology is still in progress and will be quickly put into operation to generate revenue in the future. The road to transformation of the company is very firm, and we are still optimistic about the development prospects of the company in other areas.

Terminate the reduction plan and safeguard the interests of shareholders. On September 3, the company issued an announcement on the intention of the actual controller and concerted actors to reduce their shareholdings in the Company, which is expected to reduce no more than 100 million shares due to the need for cash flow. So far, the reduction plan has not been implemented. The reduction plan was terminated on October 26, and the company promised not to reduce its holdings in the coming year, which fully demonstrated that the controller was full of confidence in the future development of the company and safeguarded the interests of the majority of minority shareholders. We believe that the termination of the reduction plan has given the market a reassurance, and the short-term negative has been exhausted.

Financial forecasts and investment suggestions

We predict that the company's earnings per share from 2016 to 2018 will be 0.27,0.34,0.42 yuan respectively. Short-term reference RF devices, housing processing and Tesla, Inc. concept can be compared with the company valuation, corresponding to 16 years 45 times PE, we give the target price of 12.15 yuan, maintain the buy rating.

Risk hint

The localization rate of RF devices and the permeability of metal casing slow down, and the progress of fixed increase and expansion is lower than expected.

The progress of automobile and aerospace business is lower than expected