The predicted profit fell 36.08% year on year. The company disclosed the performance report. In 2017, it is expected to achieve net profit of 198 million yuan and YoY -36.08%, which is close to the lower limit of the performance forecast range (YoY -40% to 0%), which is lower than our expectations and the market's unanimous expectations. Key points of focus The set-top box business was a major drag on the company's 2017 performance. According to the performance report, revenue, operating profit, total profit, and net profit are expected to decline by 17%, 49%, 34%, and 36% respectively in 2017. During the reporting period, prices of some raw materials such as DDR memory chips, flash memory chips, PCB circuit boards, and steel plates used in the set-top box business led to a sharp increase in costs and a sharp decline in gross margin, leading to a sharp decline in profit in the set-top box business. In 2018, we focused on the growth of the military industry and new energy vehicle business. In the military industry, the company benefits from the mechanization and modernization of the army, and is expected to maintain steady growth from 18 to 20; in the field of new energy vehicles, the China Automobile Association expects China's NEV sales to increase by about 40% in 2018, and the new NEV subsidy policy introduced recently will further promote the healthy and steady development of the industry (encouraging the improvement of battery technology and steadily reducing bus subsidies). The share repurchase is complete. Follow the progress of employee shareholding/equity incentive planning. On February 8, the company announced that it has completed the repurchase of 200 million yuan of shares. The cumulative share repurchase accounts for 2.56% of the total share capital, and the transaction price is between 5.45 and 8.28 yuan/share. According to the repurchase bill, the relevant shares will be used for employee stock ownership plans or equity incentive plans. The valuation and recommendations lowered the 2018 profit forecast by 24% to $245 million, giving a profit forecast of $303 million for 2019. The company's current stock price corresponds to 33.2x P/E in '18 and 26.8x P/E in '19. Maintain optimism about the development prospects of the company's military business and new energy vehicle business, keep the target price unchanged at 9 yuan, and maintain the “recommendation”. Risk changes in set-top box costs, and uncertainty in military orders.