Incidental Tianyin Electromechanical released its performance report for the first quarter of 2018. The company achieved operating income of 188 million yuan in the first quarter, a year-on-year decrease of 0.16%; net profit attributable to shareholders of listed companies was 142 million yuan, a year-on-year decrease of 17.47%. Commenting on optimizing the market layout of air conditioning compressor spare parts. The share of inverter controllers continued to rise. In the reporting period, refrigerator compressor spare parts achieved operating income of 168 million yuan, an increase of 12.11% over the previous year, and a net profit of 339 million yuan, an increase of 14.40% over the previous year. The company is actively improving its business and market layout to effectively promote sales of high value-added products. Energy-saving products such as mini PTC starters and frequency conversion controllers are growing rapidly. Among them, the sales revenue of inverter controllers accounted for 28.68% of the revenue of the home appliance business, an increase of 32.83% over the previous year. The company will continue to strengthen its technical advantages, continuously develop new products, and consolidate its leading position in home appliance spare parts. Delivery of some military goods orders was delayed. The rapid increase in on-hand orders was affected by the reform of the military establishment system. Delivery of some military goods orders was delayed, and the operating income and net profit of the military electronics business declined year-on-year. Military Electronics achieved revenue of 220 million yuan in the first quarter, a year-on-year decrease of 48.03%, and realized net profit attributable to the parent company of 0.03 million yuan, a year-on-year decrease of 80.50%. Military orders are subject to strict approval restrictions. Generally, the second half of every year is the centralized delivery period for military products. Although delivery of some military orders was delayed in the first quarter, the amount of money on hand in the company's military electronics business increased 54.81% year on year to 107 million yuan, indicating that the company's military goods business is still growing rapidly. With the gradual delivery of military goods orders, the performance of military electronics will improve markedly in the future. The acquisition of Shenzhou Aviation was suspended. In October 2017, the company disclosed a letter of intent regarding the acquisition of 55% of Shenzhou Aviation's shares in the “land, sea, and air” military electronics industry chain, but decided to terminate the acquisition due to failure to reach an agreement with the acquirer. In the future, the company will continue to seek industrial investment, mergers and acquisitions, and integration opportunities around the military-civilian integration industry chain, and make every effort to build a “land, sea, air and air” military electronics industry chain business. The profit forecast predicts that the main business revenue for 2018-2020 will be $920, 11.04, and $1,325 million, respectively, and net profit of $222, 2.79, and $337 million, respectively, and achieve EPS of $0.52, 0.65, and $0.78, respectively. Corresponding to the closing price of 14.00 yuan on April 24, PE was 27, 22, and 18 times, respectively, maintaining the “increase holdings” rating. Risk warning: Delivery of military orders falls short of expectations, and market expansion for new products is slowing down.