Runxin Technology is a leading authorized IC distributor in China. Its products are mainly communication connection chips and sensor chips. The company's distribution products cover consumer electronics, industrial control, network access, mobile communications and other fields. The agency companies include global giants such as Qualcomm, Synopsys, and NXP, and has high-quality customers such as ZTE Kangxun, TCL, Gongjin Electronics, and DJI. It is an important link between upstream IC chip design and downstream electronic product manufacturing in the IC industry chain. Currently, the market generally believes that the company's chip distribution business has low technical added value, and that the business has no potential to explode, but we believe that in the context of large-scale development of the Internet of Things, the company's chip distribution and solution technical support business will have huge potential for growth. Reason: The Internet of Things has entered a stage of rapid development, and communication connectivity chips and sensor chips will be deployed on a large scale. The Internet of Things is entering a stage of rapid development. Applications such as the Internet of Vehicles and remote meters are constantly emerging in the cloud. With the completion of the NB-IOT protocol, the pipeline end is entering the IoT pipeline era, and the terminal side is also continuously creating networked terminal devices such as drones, smart meters, and smart in-vehicle terminals. According to ITU, Cisco, Intel and other organizations, the global IoT terminal device will reach 50 billion units by 2020, and the share of communication connectivity chips and sensor chips as the core components of IoT terminals will increase further. It is expected that by 2020, the proportion will increase to more than 50%, and the total demand will reach 25 billion pieces, 40 times that of 2015. The rapid growth of IoT terminals will greatly stimulate demand for communication connectivity chips and sensor chips, and the company's business will also enter a stage of explosive growth. Build a strong Great Wall with the advantage of “distribution resources+application solutions”. The company has the supply channel resource advantages of internationally renowned IC design manufacturers and the customer resource advantages of excellent electronic product manufacturers, and has formed sufficient influence in the domestic IC distribution industry. At the same time, the company continues to strengthen its technical capabilities for application solutions. On the basis of the supplier's existing chip platform, the company independently develops and does not cooperate with customers to complete IC application solutions around downstream needs. In the future, IoT applications will show a diversified and diversified development trend. Applications such as drones, smart meter terminals, various handheld terminals, and sensor monitoring terminals will continue to emerge. Product manufacturers will focus more on product functional design and business model development, and product hardware circuit development will rely more on chip distributors. At that time, the technical capability advantages of the company's application solutions will continue to be highlighted, building strong barriers. As a leading domestic chip distributor, the company continues to improve its application solution capabilities while strengthening its distribution resource advantages. With the advent of the Internet of Things, the company relies on the advantage of “distribution resources+application solution capabilities” and is expected to become the king of next-generation chip distribution. First coverage, given a highly recommended rating. EPS is expected to be 0.49, 0.64, and 0.87 yuan in 16-18, and the PE corresponding to 16-18 will be 132x, 101x, and 74x, respectively. Considering the lack of the company's ability to engage in chip distribution business as an A share, the target price was 83.3 yuan for 16 years 170 times PE. Risk warning: the progress of fund-raising projects falls short of expectations, risk of changes in market structure, exchange rate risk