A scarce integrated software and hardware cloud service provider, Funda, the leading smart speaker ODM leader in China, as a provider and service provider of new smart hardware and solutions, accurately responds to engineer dividends. It has now formed the four core competencies of electroacoustics, wireless, software, and precision manufacturing. It is one of the few enterprises that can provide integrated software and hardware cloud services. We believe that smart homes, as hardware products that effectively improve the quality of life of users, are expected to become the next blue ocean market in the electronics industry, while smart speakers positioned as entrances to smart homes are expected to reshape human-computer interaction methods. In 2017, Fenda successfully created popular products such as Tmall Genie and Jingdong Dingdong 2, and cooperated with many major smart hardware manufacturers in smart speakers, becoming the leading smart speaker ODM leader in China. We expect the company's EPS for 2018-20 to be 0.31, 0.36, and 0.42 yuan, covering the first time, giving it an increase in holdings rating. Smart speakers started up quickly. The company's smart speakers, which have audio chips, wireless modules, and sensor development capabilities, add intelligent functions such as voice interaction, Internet services, and smart home control to traditional multimedia speakers. According to Canalys data, the Amazon Echo series shipped 22 million units in 2017, an increase of 323%. In 18Q1, more than 9 million smart speakers were shipped worldwide, up 220% year on year. Among them, the Google series shipped 3.2 million units, up 483% year on year. Fenda has the ability to independently develop audio chips, wireless modules, and sensors. It has self-developed core technology in the operating system and hardware fields. Facing the rapidly emerging smart speaker terminal market, the company can help customers quickly create ideal hardware products through one-stop service. With the acquisition of Apple metal parts suppliers, the new machine stocking market was gradually launched. In August 2016, the company announced to raise 2,895 billion yuan to acquire 100% of the shares of Apple metal exterior supplier Fuchengda. The merger was completed in 17Q3, and Fuchengda promised profits of 200 million yuan, 260 million yuan, and 350 million yuan respectively in 2017-19. According to the company's announcement, Fuchengda accounted for more than 85% of Apple's revenue in 2017, adding more than 40 product number orders to the iPhone, totaling more than 80. Judging from the 18Q1 global smartphone sales data, the brand competition pattern is being concentrated at both ends. In the high-end camp, we are optimistic that Apple and Huawei will increase their market share in the second half of the year under the catalyst of new machines. Since Fuchengda's performance is highly correlated with Apple, it is expected to benefit from the performance and sentiment boost brought about by the preparation of new iPhone models in the second half of the year. Hairdressing Home Appliances is Funda's stable cash flow business company that has always focused on hairdressing professional products in the small home appliance market. It continues to innovate products around customers' “safe, efficient, and intelligent” consumer demands. It is the main supplier of hair straighteners, hair dryers, and other products in the high-end professional market. Its main customers include Farouk System, Sally Beauty, HOT, etc. According to the company's research feedback, at present, in addition to traditional hairdressing products, the company has also achieved mass production and shipment of some beauty and health products, which is expected to form a new performance growth point. Optimistic about the rise of the smart speaker industry and the sales volume of new iPhone models, for the first time, we expect the company's 2018-2020 revenue to be 5.194 billion yuan, 6.357 billion yuan, and 7.6 billion yuan respectively, and corresponding net profit of 635 million yuan, 745 million yuan, and 872 million yuan. Referring to the average PE valuation of comparable companies in the same industry in 2018, considering the valuation premium brought about by the rapid growth of the company's smart speaker business and the stability of the small metal parts business margin, the company was given 2018 The annual PE valuation was 21-23 times, corresponding to the target price of 6.45-7.06 yuan. For the first time, coverage was given an increase in holdings rating. Risk warning: The penetration rate of smart speakers is lower than expected, and the gross margin is lower than expected due to increased competition.