Event description The company released its report for the third quarter of 2016. The company achieved operating income of 1,798 million yuan in the first three quarters, an increase of 18.92% over the previous year, and net profit attributable to shareholders of listed companies of 134 million yuan, an increase of 10.40% over the previous year. The application for a fixed increase in core views has been reviewed and approved by the Development and Review Committee of the Securities Regulatory Commission, and production capacity is about to be rapidly expanded. On September 1, the company received documents from the Securities Regulatory Commission on the review and approval of the application for this non-public offering of shares. This will mean that the capital raised this time will soon be able to be invested in expanding production capacity. This fixed capital increase is mainly used to expand production of 1.15 million sets of communication radio frequency devices and 4.7 million sets of mobile phone metal cases. We believe that after the project is delivered, the company's communications and consumer electronics business will grow rapidly. At the same time, the company expanded its business into the 3D glass field through a capital increase in Kaimao Technology. This will work well with metal CNC processing to meet industry trends. The first flight of the C919 large passenger aircraft is imminent, and the military/aerospace industry is rapidly deploying. Lu Zheng, Vice Director of Marketing at COMAC, said: The domestic C919 large airliner will make its first flight around the end of 2016. We believe this will benefit manufacturers and suppliers in the aircraft industry chain. The company plans to acquire Xi'an Xinghang to enter the aircraft metal structural parts supply chain, and will benefit from increased demand for domestic aircraft orders in the future. At the same time, the company plans to increase capital and acquire Beijing Chiyilong, and use its military certification as a platform to expand its business into the military industry. If this capital increase and acquisition is successfully completed, the company will experience rapid growth in the military and aerospace sector. The localization rate of communication radio frequency devices continues to increase, and the company's main business will grow steadily. Currently, communication radio frequency devices and metal structural parts are still the company's main products. Benefiting from changes in the procurement models of communications giants Nokia and Ericsson, the localization rate of communication radio frequency devices will increase rapidly. We believe that after expanding production through this fixed increase, the company will gradually increase its market share over the next 3 years and maintain rapid growth in RF device sales. Financial forecasting and investment recommendations We forecast the company's earnings per share for 2016-2018 to be 0.27, 0.34, and 0.42 yuan respectively. Short-term reference to the company's valuation of RF devices, chassis processing, and Tesla concepts is comparable, corresponding to 45 times PE in 16 years. We gave a target price of 12.15 yuan to maintain the buying rating. Risks suggest that the localization rate of radio frequency devices and the penetration rate of metal cases are slowing down, and that the progress of fixed growth and expansion of production is lower than expected, and that progress in the automotive, military and aerospace business is lower than expected