Event: In the first half of the year, the company achieved revenue of 1,369 million yuan (YoY +28.46%), net profit of 91.22 million (YoY -18.65%), and net profit of 84.7 million (YoY -23.45%). Investment review: 1. The interim report performance was generally in line with expectations. Revenue growth accelerated. During the reporting period, the company accelerated the promotion, expansion and continuous investment in new projects and markets, which in turn led to an accelerated growth in the company's revenue. In the first half of 2018, the company achieved revenue of 1,369 billion yuan, a year-on-year increase of 28.46%, and the growth rate was higher than the same period in 2017. In terms of net profit, net profit of 91.22 million was realized, a year-on-year decrease of 18.65%. Beginning in the second half of last year, the company's gross margin declined due to factors such as price increases for raw materials. Since the first half of this year, the company has gradually absorbed the impact of fluctuations in raw material prices on product gross profit by promoting fine management and providing new solutions to core customers. Among them, the Q2 gross margin was 24.41%, up from 0.21 percentage points in the same period last year, and the results of business management optimization have begun to show. 2. The acceleration of R&D investment has led to a marked increase in management expenses. In terms of management and sales expenses, sales expenses have been effectively controlled. Facing 5G development opportunities, the company's total R&D investment in the first half of the year reached 90.99 million, an increase of 152.17% over the previous year, and led to a 54.88% year-on-year increase in management expenses to 122 million yuan. Sales expenses were effectively controlled. Sales expenses increased 25.98% year over year, which was lower than the revenue growth rate. In terms of financial expenses, as of the end of the reporting period, the company's total short-term loans were 2,056 billion yuan. The increase in interest on loans led to a year-on-year increase of 30.24% in financial expenses. 3. The new 5G and military product layout is progressing steadily, opening up the next stage of growth. The company continues to lay out around 5G and the core fields of military industry. The company has established three research institutes (Optical Communication Research Institute, 5G Communications Research Institute, and Connector Research Institute) at the headquarters, forming an overall layout of 12 R&D centers around the world, including the PCB Research Institute, the RF Device Research Institute, and the Electromagnetic Compatibility Technology Research Institute, providing strong support for commercialized operation. At present, some new 5G and military products and projects are progressing smoothly. In terms of high-frequency multi-layer PCB board research and development, the construction of an R&D test platform has been completed and sample research and development has been actively promoted; the underwater integrated defense system has obtained first-level qualification (system category), and obtained R&D results and field verification results for subsystems and submodules. We believe that the development and development of the company's new products has laid the foundation for the company to open up room for growth. 4. An inflection point has emerged. The 5G wireless explosion can be expected. Mid-term layout opportunities are coming. Companies that maintain a highly recommended -A rating are entering a stage where performance is recovering quarterly, and opportunities for mid-term layout are coming. Looking ahead to the second half of the year, factors such as the impact on prices last year are expected to gradually be digested, and growth can be expected in the second half of the year. At the same time, in the medium term, the company is in the product introduction period. In the future, as the company continues to enter new fields, and the gradual release of new 5G and military products and new production capacity, growth space will be determined. We expect the company's net profit from 2018 to 2020 to be 178 million, 266 million, and 362 million respectively, corresponding to the current stock price PE of 28x, 19x, and 13x, respectively, and will continue to maintain a highly recommended-A rating. Risk warning: The development of the 5G and military markets falls short of expectations, the promotion of new products falls short of expectations, and market competition intensifies.