The core view is that the semi-annual performance was in line with expectations and continued high growth: the first half of 2018 achieved revenue of 1.62 billion yuan, an increase of 36% over the previous year, and net profit of 3.1 billion yuan, an increase of 45% over the previous year. It is in line with expectations in the median value of the previous forecast range. Since the company has US dollar bonds, Q2 was affected by foreign exchange and caused losses of nearly 45 million yuan, so the actual operating conditions of the company are better. Revenue growth in the first half of the year was slightly lower than net profit growth, mainly due to the merger offset of Azurite's sapphire business in Q2, which had a slight impact on revenue growth. The company's operating cash flow for the first half of the year was 260 million yuan, compared to 34.59 million in the same period last year. The cash flow situation has improved dramatically. Gross margin increased steadily, reflecting the competitiveness of the company's products and technology: the gross profit margin for the first half of the year was 34.27%, up 0.55% from the same period last year, up 1.4% from the same period last year, and the net profit margin was 19.30%, up 1.19% from the same period last year. Overall, although LED chips experienced inventory adjustments and price adjustments in the first half of the year, the capacity utilization rates of LED chips and sapphire substrates still reached 86% and 91%, respectively. The company has offset the impact of falling LED chip prices to a certain extent by reducing costs and improving light efficiency, and has maintained a better gross margin level and a healthier inventory level. Downstream LED demand is good, and we are actively preparing for new Mini&Micro LED applications: In the first half of the year, demand in downstream industry segments such as small-pitch LED, urban landscape lighting, and automotive LED lighting was strong, leading to high growth in the company's chip demand, and the downstream demand CAGR remained stable at more than 10%. The new Micro LED and Mini LED technologies used in consumer electronic displays such as mobile phones and televisions are being actively promoted at home and abroad. Once the chip space is used, the company's Mini LED products have taken the lead in entering the market in batches. Meixin Semiconductor merged, and the semiconductor platform has been formed: during the reporting period, the company officially completed the restructuring of Meixin and contributed 27 million dollars in profits. Meixin Semiconductor's products are mainly accelerometers and geomagnetic sensors. Downstream products include consumer electronics and automobiles. Customers include first-class manufacturers such as Xiaomi, Ford, GM, and BMW. Since 18-20, the promised profit has been 1.1/13/ 180 million yuan, respectively, with rapid growth. Financial forecasting and investment recommendations We forecast EPS for 18/19/20 to be 0.77/1.08/1.39 yuan. According to comparable companies, the company was valued 24 times PE in 2018, and the corresponding target price was 18.48 yuan, maintaining the buying rating. Risks suggest that the LED chip industry is fiercely competitive; there is some uncertainty about the growth of the sapphire business; the progress of investment in new businesses may not meet expectations; and the performance of the US and New Zealand may not meet expectations.