The core view is that profit for the first half of the year was in line with expectations: the company released its 2018 semi-annual report. The first half of the year achieved revenue of 8.5 billion yuan, an increase of 40% over the previous year, and net profit of 700 million yuan, an increase of 37% over the previous year, which is basically in line with the market's previous expectations of a 40% growth rate. The gross margin for the first half of the year was 17%, which was basically the same month-on-month and year-over-year, and the net profit margin was 8.2%. The increase in the first half of the year was mainly due to the increase in the share of domestic and foreign first-tier brands, including HOVM. The slow growth of the FPC business is mainly due to the failure to release the production capacity of the Jiangxi Xinfeng plant in the first half of the year. It is expected that production capacity will grow rapidly after release in the second half of the year. Net profit from non-return accounts was 5.1 billion yuan, an increase of 22% over the previous year. The slightly lower growth rate was mainly due to the development of major US customers, which led to an increase in R&D expenses compared to the same period last year. At present, the company has mastered shielding materials for 5G applications and core materials for high frequency and high speed. The outlook for the first three quarters establishes full-year expectations: the company predicts net profit of 1.18 billion yuan to 1.28 billion yuan in the first three quarters, an increase of 30%-40% over the previous year, with a median value of 1.23 billion yuan in the range. Q1 has net profit of 290 million yuan, and Q2 is 400 million yuan in a single quarter. The median value in the range for the first three quarters corresponds to Q3's net profit of 540 million yuan. Previously, the market expected net profit in 2018 to be in the range of 1.7-1.8 billion yuan. Normally, Q4 is the peak consumer electronics season, so we think the annual performance is worry-free. The balance ratio is low, so there is no need to worry about investment pressure: operating cash flow in the first half of the year was 500 million yuan, Q1 was -290 million yuan. Compared with Q2, there has been a marked improvement over Q1. The company's current customers are mainly large customers such as HOVM. Although the account period is relatively long, the bad debt rate is low. The company's balance ratio is only 57%. Previously, the market feared that the company's capital pressure to build a factory in India was high. We don't think there is any need to worry. The company's domestic production capacity layout was basically completed in the previous two years. Since then, apart from building a factory in India, there has been no significant capital expenditure. In addition to building a factory in India, the construction of a factory in India is also conducive to further cooperation between the company and first-tier brands such as OPPO. Financial forecasting and investment recommendations We predict that the company's EPS for 18/19/20 will be 0.57/0.81/1.05 yuan, respectively. According to comparable companies, the company was valued 17 times PE in 18 years, and the corresponding target price was 9.69 yuan, maintaining the buying rating. The risk suggests that the development of the touch screen business and the camera business may fall short of expectations, and the progress of wireless charging is slower than expected.