Key investment points Runxin Technology is a leading semiconductor chip and solution provider in China. It is in the distribution link in the industrial chain and is a technology-based distribution. The products distributed by the company include wireless connectivity chips, WiFi and network processor chips, sensor chips, microprocessor chips, etc. The main application fields include: mobile communications, broadband access, consumer electronics, and industrial control. In 2014, the field of mobile communications and broadband access was the core, accounting for nearly 75% of revenue. In the future, while stabilizing the core business, the company will actively expand the layout of consumer electronics and industrial control. Future expectations of the Internet of Things and the Internet of Vehicles will continue to drive the company's performance to accelerate growth. The company has certain supplier resource advantages, customer resource advantages and technical advantages. Cooperating suppliers include Qualcomm Innovation, Rui Xun, AVX/Kyocera, ?$#@$, Synopsys, Sijiaxun, NXP, etc. Customer resources include ZTE Kangxun and Kyojin Electronics. These advantages give the company a great advantage over other small and medium-sized distributors in terms of product competitiveness and profitability. The IC industry has a lot of space, and IC distribution plays an important role. IC Design is responsible for the fastest growth rate of the IC industry, CAGR = 29%. The global IC industry has maintained a growth rate of 5% since 2004, but the base is large, and China's IC industry is developing rapidly despite its low base. In 2014, the sales volume of China's IC industry reached 301.5 billion yuan. Excluding 2008, 2009 was affected by the global economic crisis, and the average annual growth rate reached 20%, which is a high level of growth. IC design sales are expected to reach 163 billion yuan in 2015, a growth rate of 30%. At the same time, the share of IC design sales in the entire industry is gradually increasing. The share in the last two years has exceeded 30%. It is expected that the next five years will still be a golden period for the rapid development of IC design. IC distribution serves the upstream and downstream of the IC industry chain; 1) the asymmetry of the upstream and downstream IC industry chain has created a large number of IC application technology gaps; 2) the rapid expansion of IC application fields and diversification of customer products have created a large number of IC application technology gaps; 3) IC authorized distributors have become important providers of IC application technology in the industry chain. China's technology-based distributors account for 77%, and Chinese IC distributors will continue to follow this model in the future. Broadband access, consumer electronics, and industrial control will be fast-growing areas. Internet broadband ports will double in 2015, generating 200 million optical network units (ONUs) for EPOM/GPON devices, and demand for 200 million IC chips; the market size for EOC broadband access will also exceed 200 million; the industrial control applications of the Internet of Things, smart home applications and security monitoring, and basic WLAN data coverage in public areas in 2015, with a scale of more than 800,000 and more than 4 million APs. We expect the average growth rate of broadband access over the next 3 years to more than 25%. It is estimated that the domestic market for multimedia chips and WiFi modules in the smart TV field will reach 39 million sets in 2016. In the future, in-vehicle multimedia will be an important terminal device for consumer electronics. Coupled with the company's reserves in the Internet of Things and smart homes, we expect the company's revenue growth rate in consumer electronics and industrial control to average more than 40%. We expect Runxin Technology to achieve revenue of 1185, 1555 and 1995 million yuan in 2015-2017, with year-on-year increases of 17.3%, 31.2%, and 28.3%. Net profit attributable to the parent company was 48, 62 and 78 million yuan, up 24.82%, 29.85%, and 25.18% year-on-year, corresponding to 2015-2017 EPS of 0.53, 0.69, and 0.86 yuan, respectively. Based on the number of additional shares issued for 30 million shares, the issue price is 6.87 yuan, and the market valuation is 25-30 times higher. Referring to the average valuation of the industry, the company's capital strength increased after listing and benefited from the growth brought about by the expansion of the entire IC industry and new technology. The reasonable relative valuation was 70-80X2015PE, and the target price was 37.10-42.40 yuan. Risk warning: Company fund-raising project construction falls short of expectations, risk of macroeconomic downturn, risk of market structure, risk of industrial policy falling short of expectations.