Key investment performance summary: The company released the 2018 semi-annual report. During the reporting period, it achieved operating income of 2,557 billion yuan, a year-on-year increase of 2.75%, net profit of 98 million yuan, a year-on-year decrease of 7.92%; basic net income per share was 0.16 yuan, which is basically in line with expectations. The results for the first half of the year were in line with expectations, operating income increased steadily, and net profit declined. During the reporting period, the company achieved operating income of 2,557 billion yuan, an increase of 68 million yuan over the same period of the previous year, an increase of 2.75% over the previous year. Benefiting from the continuous rise in domestic demand for optical fiber cables in recent years, Tefa Dongzhi grasped the timing to expand production capacity, further opening up market space; achieved net profit of 114 million yuan, a decrease of 210 million yuan over the same period last year, a decrease of 8.26% over the previous year. Affected by trade friction between China and the US and the ZTE incident, the rise in prices of raw materials such as chips, resistors and capacitors led to a decline in Tefa Dongzhi's profit. Furthermore, in the first half of the year, Chengdu Fourier The increase in projects and the increase in personnel and investment led to a year-on-year decrease in profit for the current period. Sales expenses decreased by 16.31 percentage points year on year, mainly due to a decrease in transportation costs; management expenses increased 2.63 percentage points year on year, mainly due to an increase in R&D investment in new projects; financial expenses decreased by 1.17 percentage points year on year, and the company was doing well. The fiber optic cable industry has maintained a high level of prosperity, and the company has enjoyed the dividends of increased demand. Due to the steady growth of FTTH construction and the new demand for 5G driving operators to continue to expand the scale of fiber-optic cable collection, the domestic market demand for optical fiber cables continues to rise, and it will still take some time for domestic optical rod production capacity to rise. According to estimates, the gap rate of domestic light bar supply by the end of 2018 will be about 5%, and industry prosperity is expected to continue. During the reporting period, the company and Changfei Optical Fiber and Cable Co., Ltd. decided to jointly invest in the establishment of an optical rod joint venture. The fiber cable industry chain will be extended to the field of supplying optical fiber prefabricated rods, which will further enhance the profitability of the company's optical fiber optic cable business. The military informatization business is growing rapidly and is expected to further increase valuation. The military industry itself has the characteristics of high threshold, large investment, and high profit. The company has successfully entered the military communications field through the acquisition of Chengdu Fourier and plans to acquire Beijing Shenzhou Flight Technology Co., Ltd. The new business market expansion is beginning to bear fruit, which is expected to further enhance the company's profit margin. Profit forecasts and investment advice. The EPS for 2018-2020 is expected to be 0.47 yuan, 0.53 yuan, and 0.64 yuan respectively, with a compound growth rate of 14.6% in net profit over the next three years. It was covered for the first time, and a “increase in holdings” rating was given. Risk warning: Risks such as changes in the industrial environment, increased market competition, shortage of raw materials, and price fluctuations.