Guide to this report: The company's 2017 performance fell short of expectations. We expect the suppressing factors to improve marginally in 2018, and 5G construction will help the performance explode. Key investment points: Lower the target price to 18 yuan and increase holdings. On February 23, the company released a quick performance report. 2017 results fell short of expectations. It is expected that suppressing factors will improve in 2018, and 5G will help the performance explode. Due to the slowdown in 4G construction and the growth rate of the company's consumer goods business, we lowered the 2018-19 EPS to 0.43/0.66 yuan (originally 0.69/0.9 yuan), and gave 42 times PE in 2018, corresponding to the target price of 18 yuan, increasing our holdings. “Communication cycle+exchange losses+new product introduction+military reform” led to a decline in 2017 performance. The company's revenue in 2017 was 2.28 billion yuan (+13%) and net profit of 130 million yuan (-33%). The reasons for the decline in performance: ① Domestic communications construction is in the 4G to 5G shift period, and the growth rate of the company's civilian goods business is slowing down, and rising raw material prices are pressuring the gross profit margin; ② The sharp appreciation of RMB against the US dollar in 2017 led to a loss of 5.1 million yuan on 17H1 exchange, which is expected to be 30 to 40 million yuan for the whole year; ③ The cost of introducing new products is high, and it will still take time to release production capacity; ④ The company's military product growth rate in recent years Soon, due to military reforms, the growth rate slowed down in 2017, and it is expected that the impact of 18Q1 will gradually begin to be eliminated. Oppressing factors welcomed improvements, and 5G helped the performance explode. ① Further increase the overseas layout to hedge the domestic communications industry cycle (overseas revenue accounted for 25% in 2016); combined with Guojun Macro's judgment on the exchange rate, the company's exchange losses will narrow markedly; most new products have achieved break-even, and are expected to contribute to performance in 2018. ② The company's existing products such as RF PCBs, connectors, and beam control chips are all components required for 5G construction, and we expect 2019 to bring performance contributions; on February 1, the stock incentive plan awarded General Manager 800,000 shares at a price of 7.63 yuan. Mr. Yu worked for ZTE, which will bring channel advantages and systematic product upgrades in the future. Risk warning: The transformation has fallen short of expectations; 5G construction progress has fallen short of expectations. Catalysts: military orders resumed; 5G license issued.