1. Overview of the incident The company recently issued an announcement. The company is planning an important matter. The matter involves an asset acquisition. The company is hiring relevant intermediaries, and the specific acquisition is still being negotiated and communicated. 2. Analysis and judgment that the security and communications carriages drive revenue performance growth. Leon Technology's quarterly report shows that net profit attributable to the owners of the parent company was 3.7949 million yuan, turning a loss into a profit. Revenue was $123 million, an increase of 258.40% over the same period last year. The good start of the quarterly report reflects the strong demand from downstream customers since the beginning of this year. Communications engineering services and security system engineering are the company's core business at this stage, accounting for more than 70% of revenue, driving revenue growth in the first quarter. Based in Xinjiang, the company's security business ushered in a peak era. As an established local communications service provider in Xinjiang, the company has system integration and security qualifications, and has always ranked in the top three among the top ten system integration enterprises in Xinjiang. Beginning in 2016, with the huge increase in demand in the security market in Xinjiang, Leon Technology's security business surpassed the communications business. In 2017, fixed asset investment in Xinjiang reached 1.5 trillion yuan, a year-on-year increase of 50%, and investment in network information technology construction reached more than 10 billion yuan. Investment is driving the expansion of the security industry. In addition, the demand for stability in Xinjiang is very strong, and there is huge room for regional security demand. We believe that industry dividends are expected to spur an explosion in the company's security business, and the company's downstream security demand will continue to be strong in the future. Participating in the construction of smart cities in Xinjiang, several projects are progressing smoothly at the same time. The projects currently being carried out by the company include the Altay region, the Tacheng region, the border security monitoring project in Kunlun Mountain in Kerzhou, the Yili and Bole information base station operation and maintenance projects, and the long-term cooperative telecom operator system integrated operation and maintenance service project. All projects are progressing smoothly, and some representative projects are expected to be tested by the end of the year. These projects will become the benchmark for the entire Xinjiang security project. We believe that, driven by orders, the company's market share will continue to increase, underpinning the company's high annual performance growth. Continuing to implement the “Northwest Wolves” strategy The company is currently actively implementing the “Northwest Wolves” strategy: based in Xinjiang, backed by northern Guangzhou, and moving towards Central Asia. With the construction of the Belt and Road Initiative, the company made full use of its historical advantages, developed businesses such as NB-IoT and other related application platform expansion, and participated in and deepened the construction of informatization in Central Asian countries. The company will use its early market to integrate communications and security to comprehensively promote the construction of “three-dimensional” security, that is, from terminals to transmission to computer rooms to data collection to AR data analysis, and participate in the construction of smart cities in Xinjiang. We believe that in the future, the company is expected to be deeply involved in telecom construction and operation in Central Asian countries, and there is huge room for innovative applications. 3. Profit forecast and investment recommendations The company's 2017-2019 EPS is expected to be 0.58, 0.87 and 1.35 yuan, respectively, and the corresponding PE is 57X, 37.5X and 24.3X, respectively. Since the company's business has high growth potential, the company was given a reasonable valuation range of 65-70 times within the next 12 months, and the corresponding stock price was 37.7-40.6 yuan, which covered the “Highly Recommended” rating for the first time. Data 4. Risk Warning 1) Competition is intensifying and the pace of order execution is slow; 2) Investment in security informatization in Xinjiang falls short of expectations.