Event: The company released its 2018 three-quarter report. Revenue for the first three quarters was 2,681 billion yuan, up 48.58% year on year, net profit attributable to shareholders of listed companies was 103 million yuan, up 46.40% year on year; among them, revenue for the 2018 Q3 single quarter was 853 million yuan, up 8.28% year on year, and net profit attributable to shareholders of listed companies was 54 million yuan, up 29.35% year on year. At the same time, the company expects net profit of $150 to 200 million yuan for the full year of 2018, an increase of 47.03%-96.04% over the previous year. Comment: 1. Longshang+Xinxuntong showed a merger effect, and revenue continued to grow; the synergy effect increased the overall gross profit margin. Longshang Technology merged in November 2017 and Xinxuntong merged in March 2018, and continued to increase the company's revenue and profits since the merger. Judging from the 2018 mid-year report, Xinxuntong merged revenue of 285 million yuan in the first half of the year, and Longshang Technology merged revenue of 330 million yuan in the first half of the year, contributing 21,326 million yuan in net profit. Furthermore, last year, through the acquisition of minority shareholder shares of Nikkai Express and management adjustments, the integration of resources in the integrated communication service business was strengthened, the quality and efficiency of the business was improved, and contrarian growth was achieved in an environment where the overall capital expenditure of operators declined. The integrated communication service business achieved revenue of 696 million yuan in the first half of the year, an increase of 38.47% over the previous year. In terms of gross margin, the overall gross profit margin for the first three quarters was 20.60%, and the Q3 single quarter gross profit margin was 25.70%, up from Q2 (17.62%) and Q1 (19.47%). We judge this is because the company continues to promote R&D sharing between Longshang Technology and Xinxuntong to enhance supply chain synergy, and it is expected that the month-on-month increase in gross margin will continue. 2. The increase in the holdings of core executives, the controlling shareholder Run 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. Recently, the company announced that core executives (announced on October 16, the chairman and other core executives intend to increase their holdings by no less than 600,000 shares or 11 million yuan), controlling shareholder Run Liangtai's shares (announced on August 3, the proposed increase ratio is not less than 0.5%, not higher than 2%), and the two previous and subsequent employee stock ownership plans: the first phase of the employee stock ownership plan purchase was completed 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 shareholding plan purchases in July 2018 (accounting for 6.1789% of the total share capital, average price 21.49 yuan/share). book 3.15 %, average price of 28.22 yuan/share), all mainly cover the IoT business group, demonstrating the company's strong confidence in development after entering the IoT racetrack. 3. With cloud-side thickening, new terminal product breakthroughs, and implementation of new application cases, the leading edge of the Internet of Things has been further consolidated, and the rapid growth of cellular M2M has been welcomed in the IoT era. In 2018, the company continued to advance in various IoT sub-fields: (1) on the cloud side, established an IaaS artificial intelligence supercomputing center with partners to empower artificial intelligence modules and strengthen SaaS layer software capabilities; (2) end side, continued to consolidate the market position of the number one IoT module in global shipment volume, and launched a communication module with AI capabilities in May of this year; (3) on the solution side, the company has now implemented IoT solutions or pilots such as smart cities, smart transportation, and smart agriculture in many cities such as Shanghai, Pujiang, Zhengzhou, and Dalian. With cloud-side thickening, new terminal product breakthroughs, and implementation of new application cases, the new IoT leader consolidates its advantages and welcomes the Internet of Things era. According to estimates by GSMA and the Chinese Academy of Information and Communications Technology, it is estimated that the current compound growth rate of global cellular M2M terminal equipment is expected to reach more than 25% in the next few years, reaching 2 billion in 2020, and the industry is expected to usher in an era of continuous rapid growth. Profit forecast and investment advice: After two years of layout, the company's IoT sector has initially completed the “cloud-+end” strategic layout. It is forward-looking and strong implementation, and is in line with the development trend of the IoT ToB industry. It is worth looking forward to in the upcoming Internet of Everything wave. We continue to be optimistic about the company's business model and long-term development. Considering the impact of the decline in operators' capital expenses on traditional business, we adjusted the company's net profit from 227, 3.63, and 509 million yuan in 18-20 to 1.82, 3.03, and 431 million yuan, corresponding to PE 32, 19, and 13 times, maintaining an increase in holdings rating. Risk warning: operator Capex is declining, new business development falls short of expectations, risk of poor merger and acquisition asset integration