Event: The company released its 2018 quarterly report. During the reporting period, the company achieved operating income of 3.654 billion yuan, an increase of 52.45% over the previous year, and realized net profit attributable to shareholders of listed companies of 291 million yuan, an increase of 40.56% over the previous year. Net profit attributable to shareholders of listed companies from January to June 2018 is expected to be 690 million yuan to 8.0 billion yuan, an increase of 35.19% to 56.75% over the previous year. Traditional businesses are vertically integrated, and market competitiveness is enhanced. The company's traditional superior products continue to be vertically integrated, and the market competitiveness continues to improve. Products such as touch modules, camera modules, electronic paper, and FPC continue to increase production capacity and actively expand the customer base. At present, the company has evolved from traditional touch modules to a comprehensive business platform for diversified products with intelligent terminal components and formed an integrated platform. We believe that through continuous vertical integration, the company's product quality control and cost control capabilities have been continuously strengthened, and the core technical capabilities of the industrial chain and the accumulation of customer resources have been continuously strengthened. As the trend of concentration in the consumer electronics market intensifies further, the company is expected to reap market dividends in the new era of second consumer electronics integration. The core materials of smart terminals are comprehensively laid out, and new product breakthroughs have brought new growth. With the development of information technology and the digitalization of electronic products, the requirements for soft magnetic materials and components will continue to rise. Thin components, high magnetic permeability, high saturated magnetic flux density, and low loss have become future development trends. The company's card industry trends, comprehensive layout of wireless charging core materials, full-screen core COF ultra-fine circuit boards, and LCP multi-layer flexible circuit core processes, etc., are leading technology, and core materials will become a new driving force for the company's growth. We believe that through the introduction of new materials, the company's core technological advantages are constantly being strengthened, and technology driving has become the core driving force for the company's future development. In the future, the company will form an integrated smart terminal ecological chain for core material R&D and production, material application, and modular production. New product applications will bring new markets and new growth to the company. R&D investment continues to grow, and technology drives transformation. In 2017, the company's R&D investment increased by 31.98% year on year, and R&D personnel accounted for 14.98%, an increase of 2.5 percentage points over 2016. The company continues to increase research and development of emerging technologies such as soft magnetic materials, wireless charging long-distance technology, new printed electronic materials, and 5G smart terminal products, LCP circuit boards, camera-related products, comprehensive bonding, and biometrics. We believe that the company has gradually transformed from a traditional capacity-driven module manufacturer to a technology-driven manufacturer, and that leading technology investment and technical barriers will become a new driving force for the company's future development. Investment advice: Buy-A investment rating. We expect the company's net profit from 2018 to 2020 to be 1,826 million, 2,679 million and 3.682 billion respectively, with growth rates of 54.8%, 46.7%, and 37.4% respectively, and EPS of 0.58, 0.86 and 1.18 yuan respectively, with outstanding growth; 26 times PE in 2018, with a target price of 15.18 yuan for 6 months. Risk warning: the development of the consumer electronics industry is lower than expected, the development of new business is lower than expectations, and macroeconomic development is lower than expectations.