In 2017, the company's revenue was 5.473 billion yuan, up 18.66% year on year; net profit was 266 million yuan, up 35.67% year on year. Core view: All businesses operate steadily, and mergers and acquisitions fulfill performance promises to enhance the company's performance. The company's intelligent access, fiber optic cable, and military informatization accounted for 58%, 37%, and 3% of revenue, respectively, and the year-on-year growth rates were 24%, 9%, and 57%, respectively. Tefa Dongzhi and Fourier achieved a total performance of RMB 212.75 million and RMB 88.23 million in three years, respectively, and both fulfilled their performance promises. Management expenses and financial expenses increased 10.04% and 38.55% year on year, respectively, due to the expansion of business scale; sales expenses decreased by 4.83% year on year due to the concentration of sales platforms. Total expenses increased 8.69% year on year, a relatively low increase, which is an important reason for the high profit growth rate. The gross margins of the three major businesses all declined. During the reporting period, the company's comprehensive gross margin was 16.64%, down 0.69 percentage points from the previous year; the gross margins of the three main businesses all declined; the gross margins of the intelligent access, optical fiber and cable, and military informatization businesses declined by 0.27, 1.62, and 1.98 percentage points, respectively. Invest in the establishment of a light bar company to build a complete optical communication industry chain. The company plans to establish a joint venture with Changfei Company to establish Changfeite Glowing Rod Company. The prefabricated bars produced by the joint venture will give priority to meeting the company's production needs, which is expected to effectively solve the problem that the company has not been able to fully utilize its production capacity due to the shortage of raw materials such as prefabricated bars. Through the establishment of a joint venture, the company will build a “optical rod-optical fiber-optical cable-optical transmission and optical distribution product-terminal” optical communication industry chain, which is expected to achieve collaborative development of the industrial chain. It is proposed to issue convertible bonds to raise capital, expand the scale of optical communication production, and promote the development of military information business. The company plans to issue 500 million yuan in convertible bonds for the optical fiber project, the Tefa Dongzhi production line project, and the development of the Fourier data line project. The fiber-optic cable business is a support point for the company's performance, the intelligent access business is a point for increasing the company's performance, and the military informatization business is an important growth point for the company's future performance. By issuing convertible bonds, the company will expand the production scale of optical communication business, accelerate the development of military informatization business, and effectively enhance market competitiveness. Profit forecast and investment suggestions: We believe that the company's optical communication industry chain is complete and has industrial chain synergies. The military informatization business benefits from the PLA's strong informatization army and good growth. The estimated EPS for 18-20 is 0.59/0.83/1.12 yuan, and the PE corresponding to the current stock price is 16/12/9 times, maintaining the “buy” rating. Risk warning: fiber optic cable prices are falling; optical bar companies are not progressing as expected; product gross margin is declining.