Investment highlights: Event: On the afternoon of August 14, 2017, the company released its 2017 semi-annual report. In the first half of 2017, the company achieved operating income of 769 million yuan (YOY 22.51%) and net profit attributable to the parent company of 42 million yuan (YOY -36.29%). Revenue is growing steadily, but rising raw material prices and declining gross margin have greatly eroded profit levels. In the first half of 2017, the company's revenue increased by 141 million yuan (YOY 22.51%), but due to the increase in prices of major raw materials such as aluminum ingots and optical fibers compared to the same period last year, the gross margin of the company's products fell 10.92 percentage points year on year, so gross profit fell by about 38.3 million year on year (YOY -18.90%). On the one hand, the overall control of period expenses was relatively good, with a year-on-year increase of only 11.5 million (YOY 9.33%), and on the other hand, net investment income increased by 14 million (YOY 162.73%, equity investment income and hedging income). In the end, the company's operating profit decreased by 28.3 million (YOY -39.97%), total profit decreased by 31 million (YOY -41.60%), and net profit decreased by 23.9 million (YOY -36.29%). Power cable business: Benefiting from the “13th Five-Year Plan” smart grid construction. The company is one of the few domestic enterprises with mature power cable production technology. Its core technical advantages are obvious, and its market share has ranked in the top two for many years. Investment in smart grid construction continued to be high during the “13th Five-Year Plan” period, with an estimated total investment of 175 billion yuan. As one of the main suppliers of transmission line materials for the State Grid and China Southern Power Grid, the company's performance is expected to benefit. Communication cable business: The development prospects of 5G are huge, and undersea cables are being actively deployed. In recent years and during the “13th Five-Year Plan” period, 5G research and development will receive key support from major projects. The company's industry is in the middle of the communications industry chain, and there are great prospects for 5G-related markets. At the same time, the company completed the acquisition of the Group's assets, Tongguang Information (mainly engaged in communication optical fiber cables; the main customers are China Mobile, China Unicom, China Telecom, etc.), added a subsidiary, Tongguang Strong Energy's business scope, and established a new subsidiary, Haimenguantongguang Wire, to further broaden the relevant product structure and consolidate its leading position in the industry. In addition, the company is actively deploying submarine cables. In April 2017, it was announced that it plans to establish a joint venture to establish CSIC Offshore Engineering Co., Ltd. In the future, it is also expected to benefit from the vast development space brought by the construction and maintenance of high-end cable products such as submarine optical cables and submarine photoelectric composite cables and related offshore projects. Equipment cable business: There is an urgent need for localization of aerospace cables. The company has permission to produce military products. It is a qualified supplier of products related to various host units and research institutes of China Aviation Group, Aerospace Science and Technology Group, Aerospace Science and Industry Group, and CLP Group, and China Power Group, and is ranked in the market share of equipment and cables. In 2014, stable phase cable passed the design certification review, laying the foundation for fully opening up the military phase stable cable market. At present, the company's aerospace cables have replaced the batch use of similar products abroad. At the same time, it is the first company in the domestic cable industry to receive a comprehensive capability assessment from COMAC suppliers. Future replacement of aerospace cable imports is imperative. At the same time, according to Xinhua News Agency, the C919 aircraft is currently ordered for 600 aircraft, and it is optimistic that the company's participation will take a share of the vast market. Flexible cable business: Acquire Derou Cable to improve the layout of high-end special cables. In June 2017, the company acquired 51% of Derou Cable's shares in cash and increased its capital by 2 million yuan. Derou promised to deduct non-net profit of no less than 6.304,000 yuan, 7.992 million yuan, and 11.863 million yuan in 2017, 2018, and 2019, respectively, for a total of not less than 26.077 million yuan for three years. Derou Cable is committed to high-end flexible cables and their solutions. Its products are mainly used in high-speed robots and their integration, port machinery and unmanned terminals, automated automobile production lines, high-precision CNC equipment, and railway rail vehicle cables. Currently, its market share is constantly increasing, gradually reversing the situation where high-end flexible cables are dependent on imports. The acquisition will improve the company's layout in the field of high-end special cables and enhance the company's position in the industry. The parent company, Tongguang Group, has high quality in vitro assets, and is expected to be deposited and injected. In June 2017, the company announced that due to major changes in the objective situation in the securities market and uncertainty about the current order size of the subject matter of the transaction, the company terminated the purchase of 100% of Tongguang Ocean Optoelectronics's assets, the controlling shareholder Tongguang Group's assets. In the future, when the market for Tongguang Offshore Optoelectronics products stabilizes, the company will not rule out continuing to plan acquisitions. In addition, Tongguang Group's net profit in 2015 was 200 million yuan (the company was only 90 million yuan in the same period), and mergers and acquisitions in 2016 included many excellent companies such as Changlong Electric, Jingli Electric, and Jinbo Technology. As the only listed company within the group, the company has high quality in vitro asset injection expectations. Profit forecasts and investment advice. The company's 2017-2019 EPS is expected to be 0.58, 0.76, and 0.97 yuan, respectively. Considering the company's subsequent performance growth rate and asset injection expectations, combined with comparable company valuations, the company was given 26 times PE in 2017, with a target price of 15.08 yuan, and a “buy” rating. Risk warning. (1) Uncertainty about military orders; (2) increased competition in the civilian market; (3) uncertainty about asset injection.