Guide to this report: Net profit in the 17-year performance report was slightly lower than expected, mainly due to lack of raw materials, which dragged down the shipment of household appliances. Now that the cause of this constraint has been removed, and the penetration of inverter refrigerators has accelerated, the home appliance business is expected to resume high growth. Maintain the target price of 20.4 yuan. Key investment points: Maintain an “increase in holdings” rating, with a target price of 20.4 yuan. On February 23, the company announced its 2017 performance report, which achieved net profit of 190 million dollars, which was slightly lower than expected. The main reason for the home appliance business was being dragged down in shipment volume due to lack of raw materials, but at present, the cause of this constraint has been removed. At the same time, the penetration of inverter refrigerators has accelerated, so the company's home appliance product shipments are expected to achieve a high growth rate in the first quarter, faster than market expectations. Based on the above reasons, the net profit forecast for 17/18 has now been lowered to $19/251 million, and the corresponding EPS is adjusted to 0.44/0.58 yuan (-13.7%/-10.7%), maintaining the target price of 20.4 yuan. The 17-year performance fell short of expectations due to a shortage of core raw materials for the home appliance business. The cause of the constraint has now been resolved. Furthermore, the military business is in line with expectations. On February 23, the company announced the 17-year performance report, achieving revenue of 773 million yuan and net profit of 190 million yuan, a year-on-year increase of 15.24%, slightly lower than expected. There are two main reasons for this: 1) The refrigerator inverter controller, which is a staple product of household appliances in '17, was hampered by the shortage of raw material EPCOS common-mode capacitors; 2) The military business with Huaqing Ruida as the main platform developed well in 17 years, in line with expectations, but considering the implementation of restricted stocks and management expenses of nearly 10 million yuan, the contribution profit was offset. Looking ahead to 18 years, the shortage of raw materials such as capacitors is solved as upstream manufacturers expand production, the three major costs will also return to normal, and the military industry business will be further strengthened as the radar simulator industry chain continues. The penetration of energy-saving inverters in refrigerators is accelerating, and the company's inverter controller shipments are expected to resume a high growth rate in the first quarter. The penetration rate of inverter refrigerators in '17 increased to 13% from 9.3% in '16, accelerating penetration. In '17, H1 shipped 890,000 inverter controllers, an increase of 101% over the previous year, driven by a boom in the industry, but shipments were limited in the second half of the year due to a shortage of upstream components. The industry remained booming in 2018, and the company's Q1 inverter controller shipments are expected to return to a high growth channel of more than 40%. Catalyst: refrigerator inverter controller shipments exceeded expectations; new layout of military business. Core risk: There is a risk that new entrants will seize share in the home appliance business.