Incident: The company announced on September 6 that it plans to purchase 100% of Dejing Electronics's shares through cash payment. The transaction price is 800 million yuan, and it will be paid to the counterparty in three installments. Meanwhile, the counterparty used 300 million yuan of equity transfers to purchase shares of listed companies in the secondary market within 18 months. The counterparty promised that the audited net profit achieved in 2016, 2017, and 2018 for the underlying assets was not less than RMB 60 million, $80 million, or 10,000 million yuan. Comment: The revised plan proposed a cash merger and acquisition. Certainty improved after the company's fundamentals bottomed out. The company's previous merger and acquisition of shares was denied, and whether it was proposed to extend the period for resolving interbank competition, caused the majority shareholders to be unable to fulfill their commitment to resolve interbank competition issues by July 26. However, the company also announced that it will continue to push forward with restructuring matters and completely resolve competition issues in the industry. This time, the company's revised plan is to use cash for mergers and acquisitions, which fully demonstrates the determination of the majority shareholders to resolve competition issues in the industry. At the same time, we believe that subsequent restructuring matters are expected to accelerate. The company's fundamentals have now been definitively improving since bottoming out in late July. The secure and encrypted mobile phone industry will quickly gain momentum. We judge that the market space for the special industry alone is over 30 billion dollars. If the commercial market is taken into account, the space is likely to double. There are three reasons why the promotion of related companies and products has not been able to rapidly expand the market: national demand has not been implemented, there are no national production of secure encryption products, and it has not been possible to find effective industry alliances to promote it together. However, we judge that these three factors have now matured, and the secure and encrypted mobile phone industry will quickly gain momentum. An encrypted mobile phone industry alliance has been formed with top companies in the industry, and Dejing's future performance is flexible. Dejing has formed strategic alliances with Zhanxun, Zhongke Hongba, and Yuanxin Technology. At the same time, as Spreadtron's sole partner in the field of secure mobile phones, Dejing is responsible for project development and process design as a core member. The company has now received some orders from aerospace science and industry, and the current layout of the 1.4G private network mobile terminal project, the popular smartphone project in cooperation with Defender Connect, and the public security system project are all expected to start rapidly in the future. Given that the profit margin of secure encrypted phones is much higher than that of ordinary mobile phones, we believe that Dejing's performance will be very flexible in the future. If this cash merger and acquisition is approved, we are optimistic about the company's subsequent development and maintain the “Prudent Recommendation - A” rating. Regardless of mergers and acquisitions, we expect Sanlian's net profit for 16-18 to be 2364.25/2387.29/24917,400 yuan, corresponding to 16-18 EPS of 0.09/0.09/0.10 yuan. Considering the merger and acquisition of Dejing Electronics, we expect net profit to be 94 million, 124 million, and 205 million yuan, corresponding to EPS of 0.37 yuan, 0.49 yuan, and 0.81 yuan, and the current stock price of 13.75 yuan corresponding to 16-18 PE is 37 times, 28 times and 17 times, maintaining the “Prudent Recommendation - A” rating. Risk warning: Mergers and acquisitions do not pass the risk; the progress of secure and encrypted mobile phones falls short of expectations.