Incident: The company received the “Notice of Winning Bid” issued by China Unicom's centralized bidding agency for 3G/4G IoT customized communication modules, confirming that it won the bid for China Unicom's 3G/4G IoT customized communication module centralized bidding project, with a bid amount of about 50 million yuan. Unicom won the bid for Unicom's 4G module project, and its competitive strength in the module field has been further verified. China Unicom now estimates that it will purchase 300,000 3G general communication modules, 4G general communication modules, 3G POC communication modules, and 4G POC communication modules, for a total of 1.2 million pieces. The companies both won the first place in the bid for the 4G general communication module (package 2) and the 4G POC communication module (package 4). Based on the price guide of the maximum unit price of standard package 2 and package 4 including tax, which is RMB 95 per piece, the company estimates that the winning bid amount is about 50 million yuan. Based on Unicom's eligibility requirements for the bidding target (for example, the bidding enterprise module must have experience in the six major IoT fields of Internet of Things, smart home, finance, and wearables), we believe that the company's winning bid for Unicom's 4G IoT module fully demonstrates Unicom's recognition of the application of the company's high-speed modules in various fields of the Internet of Things, and lays a good foundation for the company to further deepen cooperation with operators. Expanding smart terminals and IoT solutions, the profit level of single module products is expected to improve the company's acquisition of Longshang Technology and Xinxuntong to establish a leading position in the global module market, reduce costs and increase efficiency through resource integration and collaboration (including management improvement measures such as R&D collaboration and integrated supply chain), and gradually expand to smart terminals and IoT solutions with higher added value based on leading advantages in the module field, increasing the profit level of single module products. As the subsidiary Longshang Technology and Xinxuntong merged in November '17 and March '18, and the synergy with listed companies continues to be highlighted, the company's subsequent contribution to IoT business performance is expected to further increase. The multi-application scenarios of the Internet of Things continue to mature. The advantages of the “cloud-+terminal” integrated layout are expected to gradually show the rapid explosion of demand for IoT applications, the continuous release of favorable policies, the continuous improvement of NB-IoT network coverage by operators, and the gradual implementation of related subsidies to promote the gradual maturity of IoT application scenarios in smart cities, smart homes, and the Internet of Vehicles. The company successively acquired Longshang Technology and Xinxuntong in 2017 and took a stake in Ayla in the US, taking the lead in achieving a “cloud plus end” IoT strategic layout in China. It is expected that its advantages in the era of the Internet of Everything will gradually become apparent. Maintaining the “increased holdings” rating We continue to be optimistic about the development potential of the company to build a “cloud+terminal” IoT solution provider. Considering the downward pressure on the IoT module market price and the company's terminals and solutions still in the expansion period, we lowered the company's EPS from 18 to 20 to 0.67/0.92/1.20 yuan, respectively, to maintain the “increase in holdings” rating. Risk warning: the risk that the development process of the Internet of Things will not meet expectations, and the risk of mergers and acquisitions integration