Event: the company released its semi-annual report in 2017. from January to June 2017, the company realized operating income of 91 million yuan, an increase of 68.58% over the same period last year. Net profit belonging to shareholders of listed companies was 6 million yuan, up 153.68% over the same period last year. Basic earnings per share was 0.01yuan, up 104.26% over the same period last year.

Shikai science and technology and thickening performance, the layout of the three main industries has been formally established. In the first half of the year, the company completed the merger and acquisition of Shikai technology and entered the field of military precision guidance, thus forming the three major business sectors of military industry, communications and coal mine safety. Among them, Shikai Science and Technology achieved a net profit of 5.9794 million yuan in the first half of the year, with a gross profit margin of 64.76% for military products. The operating income of the communications sector reached 36.6517 million yuan in the first half of the year, an increase of 79.49 percent over the same period last year. Among them, the company made a new breakthrough in rail communication, and the high-speed rail WIFI integrated server solution developed by its holding subsidiary Fuhua Yuqi won the first application in the country in the high-speed rail standard bullet train "Fuxing". The operating income of the coal mine safety sector reached 39.4802 million yuan in the first half of the year, an increase of 17.64 percent over the same period last year. With the rise in coal prices, coal companies' demand for safety products has increased, leading to a pick-up trend in the business sector. We believe that the company is expected to give full play to the synergy of the three major business sectors to further enhance competitive advantage and profitability.

Military-civilian integration has achieved initial results, and the prospect of coordinated development is promising. The Xi'an military-civilian Integration Industry Fund initiated by the company has recently completed the investment in a military industrial enterprise in the field of communication, navigation, measurement and control, and the pre-reserve high-quality military industrial projects will be gradually landed in the second half of the year with the completion of due diligence. In addition, in the first half of the year, by increasing the intensity of integration and giving full play to the synergy, Fuhua Yuqi, a subsidiary company, cooperated with Shikai in science and technology to obtain a military communications project with a business income of 5 million yuan. We believe that the company has strong technological advantages in the fields of precision guidance, rail communication, and coal mine safety, and is expected to form a new pattern of in-depth cooperation and coordinated development among the three major business sectors in the future. hit the field of civil-military integration into an important new growth pole of the company.

Profit forecast and investment rating: we estimate that the company's 2017-2019 return net profit is about 31 million yuan, 39 million yuan, 44 million yuan, EPS is 0.05,0.06,0.07 yuan, corresponding to PE is 177,142,125 times, given the "overweight" rating.