Incident: Company announcement. On October 15, a number of executives, including Mr. Liu Ping, chairman of the company, Mr. Wu Yongping, director and deputy general manager, Mr. Li Wei, deputy general manager and secretary of the board of directors, and Mr. Yuan Shu, deputy general manager, plan to increase their holdings of the company by no less than 600,000 shares or less than 11 million yuan within the next six months. On October 9, the company announced that Sun Company Longshang Technology signed a framework procurement contract with China Mobile IoT Company. China Mobile IoT plans to purchase all modules and accessories from Longshang Technology. The maximum procurement contract limit is 200 million yuan. On September 19, the company announced that its subsidiary Xinxuntong received a winning bid notice from China Unicom and won the bid for China Unicom's 4G Internet of Things public communication module. The estimated total bid amount is about 50 million yuan. Comment: (1) The increase in the holdings of core executives, the controlling shareholder Yun Liangtai, and the shareholding of employees in the previous and subsequent phases were all based on optimism about the company's future development prospects and building confidence. Core executives increased their holdings plus Runliangtai's previous shareholding increase (announced on August 3, the proposed increase ratio of not less than 0.5%, not higher than 2%), and the two previous and subsequent employee stock ownership plans: completed the first phase of the employee stock ownership plan purchase in May 2017 (accounting for 6.1789% of the total share capital, average price 21.49 yuan/share), and completed the second phase of employee stock ownership plan purchases in July 2018 (accounting for 3.15% of total share capital, average price 28.22 yuan/share), all mainly covering the IoT business group, highlighting the company's entry into the Internet of Things Strong confidence in future development. (2) The IoT sector already has a “cloud-+terminal” framework, continues to innovate and launch new smart IoT products, and promotes smooth implementation. From September to November 2017, the company successively completed: acquiring a total of 73.84% of shares in Longshang Technology, a leading domestic wireless communication module manufacturer; controlling Ella IoT, the world's leading AEP manufacturer through a share subscription; acquiring 100% of the shares supplied by Silicon Communications, which leads the global wireless communication module shipment volume; and signed strategic cooperation agreements on the Internet of Things with all three operators. At this point, Nikkai's “cloud plus terminal” IoT strategic layout framework has been fully completed. According to a report on the company's official website, in the first half of 2018, the company launched the world's first mobile intelligent computing terminal with AI processing capabilities to adapt to the smart IoT era of integrated development of the Internet of Things and artificial intelligence. Recently, it has continued to land orders for connectivity, mobile, etc., and has promoted smooth implementation. (3) With cloud-side thickening, new terminal product breakthroughs+implementation of new application cases, the leading advantages of the Internet of Things have been further consolidated, and the major achievements of the Internet of Things era are progressing steadily. In 2018, the company continued to advance in various IoT sub-fields: (1) On the cloud side, the company established an IaaS artificial intelligence supercomputing center with partners to empower artificial intelligence modules and strengthen SaaS layer software capabilities; on the end side, it continued to consolidate the market position of the number one IoT module in global shipments, and launched a communication module with AI capabilities in May this year; on the solution side, the company has now implemented smart cities, smart transportation, smart agriculture and other IoT solutions or pilots in Shanghai, Pujiang, Zhengzhou, Dalian and other cities. With cloud-side thickening, new terminal product breakthroughs, and implementation of new application cases, the new leader in the Internet of Things continues to advance in consolidating its advantages. Profit forecasting and investment suggestions: The company's traditional business has achieved results, and the company's profitability has also entered an inflection point and returned to positive growth, and the development trend is good; the key IoT sector has initially completed the “cloud plus end” strategic layout. In 2018, all sub-sectors made breakthroughs and continued to launch new products and solutions adapted to the era of intelligent IoT, which are forward-looking and strong in implementation, in line with the development trend of the Internet of Things (IoT) industry. It is worth looking forward to under the upcoming wave of the Internet of Everything. We are optimistic about the company's business model and long-term development. It is estimated that net profit for 18-20 will be 227, 3.63, and 509 million yuan, corresponding to PE 23, 14, and 10 times, maintaining an increase in holdings rating. Risk warning: operator capex declines, new business development falls short of expectations, risk of poor merger and acquisition asset integration