1. Event Overview Recently, the company released the 2017 Q3 performance forecast: the first three quarters achieved net profit of 57-59 million yuan, an increase of 248%-260% over the previous year; the third quarter achieved net profit of 2050-22.5 million yuan, an increase of 1835.8%-2024.7% over the previous year. 2. Analysis and judgment demand for stabilization drives performance growth, and demand for stabilization in Xinjiang drives rapid growth in the security industry in Xinjiang. Relying on technological and product advantages in the field of security, the large orders received this year increased compared to the same period last year. The impact of non-recurring profit and loss on Q3 net profit is estimated to be about 970,000 yuan. We believe that industry dividends are expected to spawn an explosion in the company's security business, and that downstream demand for company security will continue to be strong in the future. The company's overall business situation is improving, and the market share driven by orders will continue to increase, laying the foundation for the company's high performance growth throughout the year. The advantages of characteristic communication security integrators in Xinjiang show that the company is currently working on include: Altay region, Tacheng region, China-Kazakhstan border, and Kunlun Mountain border in Kerzhou; information technology base station operation and maintenance projects in Yili and Bole; and long-term cooperative telecom operator system integration operation and maintenance service projects. As a participant, the company won the bid for the Qimei County security project. The estimated total investment of the project is 387 million yuan, operation and maintenance expenses are 17.32 million yuan/year, and the franchise period is 10 years (including 1 year construction period). As an established local telecommunications service provider in Xinjiang, the company has system integration and security qualifications, and has always ranked in the top three of the top ten system integration enterprises in Xinjiang. Beginning in 2016, with the surge in demand in the security market in Xinjiang, Leon Technology's security business surpassed the communication business. In 2017, the fixed asset investment in Xinjiang reached 1.5 trillion yuan, an increase of 50% over the previous year, and the investment in network informatization construction reached more than 10 billion yuan (source: China Securities Network). Investment has led to an increase in the security industry. In addition, demand for stability in Xinjiang is very strong, so there is huge room for regional security demand. The “northwest wolf” strategy continues to be effective. The company is currently actively implementing the “northwest wolf” strategy: based in Xinjiang, going north to 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 the expansion of NB-IoT and other related application platforms, and participated in and deepened into the construction of informatization in Central Asian countries. The company will utilize the market it has previously owned to integrate communication 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 participate deeply in telecom construction and operation in Central Asian countries, and that there is huge room for innovative applications. 3. Profit forecast and investment recommendations expect the company's 2017-2019 EPS to be 0.90, 1.28, and 1.80 yuan respectively, and the corresponding PE is 36.2X, 25.5X, and 18.2X, respectively. Since the company's business has high growth potential, the company is given a reasonable valuation range of 45-50 times within the next 12 months. The corresponding stock price is 40.5-45 yuan, and continues to be given a “highly recommended” rating. 4. Risk warning 1) Competition is intensifying, and the pace of order execution is slow; 2) Investment in security information technology in Xinjiang falls short of expectations.