Key investment points were affected by external factors, model delivery work was delayed, and performance fell far short of expectations. On April 21, the company announced its 2015 annual report and its quarterly report for 2016. In 2015, the company achieved revenue of 77.87 million yuan (-65.08%), net profit attributable to the parent company of 55.33 million yuan (-173.49%), or EPS-0.46 yuan. The company's ownership of the parent company in the first quarter of 2016 was 9.66 million yuan (-54.69%). The company's losses in 2015 and the first quarter of 2016 were mainly due to the long development cycle of the military goods business market, changes in the policy environment, and adjustments in the original user organization. As a result of these factors, the company's model business bidding and delivery were affected to varying degrees. With the gradual completion of military reforms, the company's subsequent model bidding and delivery work has returned to normal, and the company's performance is expected to resume growth in the second half of this year. Product barriers are high, and the first-mover advantage is obvious. The company is a product supplier for terminal air defense command and control systems. Its main business is R&D, production, and technical trade of investigation, command, and control systems centered on continuous wave radar technology and photoelectric detection technology. The military business revenue accounts for 100% of the main business revenue. In the domestic market, the company has obtained qualifications such as weapons equipment research and production licenses, military confidential qualification unit certification, weapons and equipment quality system certification, etc., and has obtained 9 national defense invention patents. The military electronics industry has shown high technical barriers due to the difficulty of technology research and development, obtaining military grade quality and product model approval, strict formalization requirements, and long required cycles. In the international market, the company has a prominent market position in the export regions and already has a certain first-mover advantage. It is expected that the company will maintain an advantageous position for some time to come. The military products business has a multi-point layout and is actively entering the civilian market. The company's main business is continuous wave radar technology and photoelectric detection technology, which are dual-use technologies for both military and civilian use. As developing countries pay more attention to the field of terminal air defense, the company's demand for air defense command systems is expected to continue to grow. At the same time, the company is actively developing in the fields of optoelectronic technology and marine defense, and related products are already quite mature. Furthermore, the company is actively promoting the interactive development of military and civilian goods, gradually expanding the application of its technology in civil fields such as general aviation, critical perimeter security, and marine exploration; with the opening up of the civilian market, it is expected that the company will have more room for development in the future. Taking advantage of the military and civilian integration policy, future performance growth can be expected. With the launch of the National Defense Bureau of Science, Technology, and Industry's special action plan for civil-military integration in 2016, policy support in the field of civil-military integration has further increased. As a representative of domestic enterprises participating in the military, the company is expected to take advantage of the policy of military and civilian integration to further expand its business and obtain more orders under the trend of “people joining the army,” and the company's future sales revenue is expected to reverse. risk factors. The progress of military reform has fallen short of expectations; the company's model bidding and delivery have fallen short of expectations. Earnings forecasts, valuations and investment ratings. Taking into account the company's performance last year and the uncertainty of the external environment, we lowered the diluted EPS forecast for the full year of 2016/17 to 0.58/0.76 yuan (the original forecast was 1.21/1.48 yuan) to give the 2018 EPS forecast of 1.05 yuan. The current price is 52.12 yuan, which is 90/68/48 times PE corresponding to 2016/17/18, respectively. Considering that the level of military improvements is in line with expectations and that the company's model delivery is expected to return to normal in the second half of this year, it will promote the release of performance and maintain the company's “increase in holdings” rating.