Key investment points: Endogenous and epitaxial expansion is accelerating, and business performance is growing rapidly. After six years of development, Jinxinuo's main business has gradually expanded from a single RF coaxial cable development and sales at the beginning of listing to an interconnection solution provider covering various technical fields such as cables, connectors, and PCBs. From 2001 to 2016, the company's operating income increased from 506 million yuan to 2,016 billion yuan, with a compound growth rate of about 32%. Net profit and operating income grew simultaneously. From the beginning of listing, the company's net profit and operating income grew simultaneously. It increased from 30 million yuan to 195 million yuan at the beginning of listing, with a compound growth rate of about 43%. In the same period, the comprehensive gross margin of Kim Sung-nuo increased steadily from 19% to 27%. As of the first half of 2017, the company's asset size increased from 1,016 billion yuan at the beginning of listing to 4.835 yuan. After targeted issuance in 2016, the company's balance ratio was less than 50%. Furthermore, since 2013, the quality of Jin Xinnuo's profit has improved year by year, and the annual net operating cash flow and net profit have increased at the same time. In the first half of 2017, the company achieved operating income of 1,066 million yuan and net profit of 1.12 yuan. Jiangsu Wanbang was acquired in cash to expand the scale and profitability of the military products business. Jin Xinnuo plans to acquire 38.08% of Jiangsu Wanbang's shares with 14.2.8 million yuan in cash. After the acquisition is completed, Jin Xinnuo will hold 51% of Jiangsu Wanbang's shares. Jiangsu Wanbang has long been committed to the development of core localized chips (TR component support) for active phased array radars, high-precision power management systems and special instruments and equipment for antenna front transceiver component debugging. The products have been used in various types of projects such as space-borne communication, missile guidance, airborne fire control, and shipborne electronic warfare, and is a qualified supplier to many central enterprise military industry groups such as China Telecom, aviation industry, and aerospace technology. We believe that Jinxinuo's acquisition of Jiangsu Wanbang will help improve the company's strategic layout, accelerate the development of the company's system-level R&D capabilities in the fields of communications and aerospace, and expand business scale. We are optimistic about the future synergy between the two companies' resources after integrating them. In addition, the cash acquisition of Jin Xinnuo can avoid dilution of share capital. The former shareholders of Jiangsu Wanbang promised the results from 2017 to 2021, and the total net profit deducted from the parent for the next five years will not be less than 120 million yuan. A fixed increase in capital raised is used to improve technical standards, develop new products, and consolidate production capacity. At the end of 2016, Jin Xinnuo completed targeted issuance for the first time since completing its listing. The total capital raised was 120 billion yuan, and the issue price was 3335 yuan/share, corresponding to the additional issue of 35.982 million shares. Among them, the actual controllers of Jin Xinnuo and important shareholders participated in the establishment of Xinnuo Investment to subscribe for some of the additional shares issued this time, with a subscription amount of about 550 million yuan. The capital raised this time was used for 6 projects, including the Jinxinuo Industrial Park, the production of new connectors, and the construction of an R&D center, and supplementary working capital. It is expected that after the project is completed and delivered, Jinxinuo's main business will cover various signal transmission equipment industry chains such as cables, connectors and components, PCB boards, and high-end communication products. Product applications will expand from traditional communications and aerospace to various fields such as big data informatization, rail transit, consumer electronics, Internet of Vehicles, and new energy. It is proposed to repurchase the company's shares for subsequent equity incentives. Based on confidence in the company's future development and the purpose of improving the company's long-term incentive system, Jin Xinnuo plans to raise its own funds to carry out share repurchases. The repurchase of shares will be used as a stock source for later stock reward plans, employee stock ownership plans, or equity incentive plans. The maximum repurchase amount shall not exceed 28 million yuan, the repurchase price shall not exceed 28 yuan/share, and the corresponding shares shall not exceed 1 million shares. Profit forecasts and investment advice. We expect Jinxinuo's EPS from 2017 to 2019 to be 0.47 yuan/share, 0.58 yuan/share, and 0.72 yuan/share, respectively. Considering the company's development prospects in the military industry and communications sector, and taking into account the valuation situation of comparable companies, we gave Jin Xinnuo a PE valuation of 50 times in 2017, with a corresponding target price of 23.50 yuan, covering the “increased holdings” rating for the first time. Risk warning. The acquisition has not yet been completed; technology development risks; and the progress of the fund-raising project has not met expectations.