Core views: 1. Incident The company released its 2018 quarterly report. In the first quarter, the company achieved operating income of 3.654 billion yuan, an increase of 52.45% over the previous year; realized net profit attributable to shareholders of listed companies of 291 million yuan, an increase of 40.56% over the previous year; and EPS was 0.09 yuan. At the same time, the company released a performance forecast. Net profit attributable to shareholders of listed companies from January to June 2018 is expected to be 690 million to 800 million, with a year-on-year change of 35.19% to 56.75%. Our analysis and judgment (1) The company's new growth pole is gradually gaining strength in 2018Q1. The company has further strengthened the overall optimal allocation of products and customer resources, the industrial chain layout is more reasonable, and the new electronic paper module, camera module, and fingerprint identification module projects are gradually put into production. Production capacity is further released, and product structure and customer structure are further optimized. At the same time as new projects are being rolled out, in order to maintain the continuous growth of the company's performance, the company continues to increase investment in R&D for major customers and new equipment to expand production capacity. Costs and depreciation expenses for machinery and equipment have increased relatively in the short term. Furthermore, the sale of 100% of Helitai Chemical Company's shares had a partial impact on the company's profit. Looking ahead to the second quarter, production capacity for new construction projects invested earlier will gradually increase, and sales volume and profit are expected to increase at an accelerated pace. (2) The company's future development will have more highlights. The company FPC expects to achieve 550,000 square meters of production capacity in the fourth quarter of this year. With the spread of high-end smart devices and automotive electronics, demand for FPC continues to be optimistic, and it is expected that the FPC business will become a major focus of the company's future development. The company's camera module production capacity has increased rapidly and will become one of the important growth poles this year; the company also has a layout on the wireless charging material nanocrystals, which is expected to benefit from the explosion of the wireless charging market; as the 5G era approaches, the company is also actively expanding into related fields. The company's core customers have expanded smoothly, and its share of revenue continues to rise. In the future, it is not ruled out that it will enter the supply chains of mainstream international manufacturers. 3. Investment recommendations We adjust the company's profit forecast. The company's net profit for 2018-2019 is estimated to be 1,755 billion yuan and 2,321 billion yuan respectively, and the corresponding earnings per share are 0.56 yuan and 0.74 yuan respectively. The current stock price corresponds to a price-earnings ratio of about 17 times in 2018. The company actively expands a number of innovative businesses with good development prospects. It has broad room for growth, low valuations, and maintains a “recommended” rating. Risk warning: The risk of innovative business development and customer growth falling short of expectations.