Incident: The company recently disclosed a draft acquisition plan to acquire 99.73% of Baixin Blueprint's shares and 100% of Zhejiang Hexin's shares through the issuance of shares and cash payments. The transaction will enable the application of the company's satellite big data in the geographic information industry and agricultural insurance field, further improve the industrial and regional layout of listed companies, and help promote the application and implementation of the “satellite spatial information platform”. Comment: The proposed acquisition of two downstream application companies has significant synergy effects. The company plans to acquire 99.73% of Baixin Blueprint's shares, 100% of Zhejiang Hexin's shares, and raise no more than 136 million yuan in supporting capital by issuing 23.4 million shares and paying cash at 1280 yuan/share. The acquisition cost of the two companies corresponds to the 2018 performance promise PE of about 12 times. The performance promise compensation terms are strict, and the company's rights and interests for the next three years are protected to a certain extent. (See figure below for details) Baixin Blueprint has been deeply involved in the geographic information industry and agricultural insurance for many years. It has rich project experience and an accurate industry leading position in the field of industrial segmentation. It has laid a solid foundation for the extended application of satellite big data by listed companies in the geographic information industry and agricultural insurance fields, and has greatly promoted the expansion of the satellite industry chain by listed companies. Zhejiang Hexin is fully qualified in the field of geographical surveying and mapping services, and has made breakthroughs in the “military and civilian integration” of surveying, mapping and geographic information services. We believe that strong synergy between the target company's business and the listed company's business can promote the application of company data in the geographic information industry and agricultural insurance industry, and improve the industrial and regional layout. In 2020, China's commercial remote sensing output value will reach 22 billion, and the “Zhuhai No. 1” constellation has a first-mover advantage in the industry. Although China's commercial remote sensing satellite industry started late, it has developed rapidly in recent years. China's commercial remote sensing satellite industry will maintain a growth rate of 35% in the next few years. It is estimated that by 2020, the domestic commercial remote sensing output value will reach 25 billion yuan. The company's “Zhuhai-1” constellation group 02 satellites were successfully launched, and successfully networked with the 01 group 2 video satellites launched in orbit last year, greatly improving the constellation's ability to collect remote sensing data. The development mission for the 03 group of 5 satellites has started. It is currently progressing smoothly, and coordination of the launch of this batch of satellites has already begun. We believe that with the gradual networking of the company's remote sensing satellites and the continuous improvement of commercial satellite big data application service capabilities, we are optimistic about the future application prospects of the satellite big data business in the fields of civil-military integration, smart cities, and land resources. Promote the upgrading of aerospace electronics products and consolidate the competitiveness of core technology. The rapid development of China's aerospace industry places higher demands on autonomous and controllable aerospace core components, and the company continues to strengthen technology accumulation in the aerospace electronics business with traditional advantages. Since this year, the company's aerospace electronics SOC/SIP/EMBC has continued to promote product upgrades, continuously expand its market share, improve the product line, and achieved a series of results. We believe that China's domestic autonomous controllable chips will enter the fast track of development. The company has technical advantages in space-grade chips. As the company's products continue to be upgraded, its dominant position in the industry will become more prominent, and the future will fully benefit from the opportunities for autonomous and controllable domestic chips and the accelerated development of the aerospace industry in China. The proposed repurchase of more than 1% of the shares shows confidence in the company's long-term development. The company plans to repurchase the company's shares within 12 months with capital of 50 million to 100 million yuan at a price of no more than 14 yuan/share, accounting for about 1.02% of the company's total share capital. The repurchase of shares is intended to be used to implement employee stock ownership plans or equity incentive plans. The company's repurchase reflects the recognition of the company's intrinsic value by management and major shareholders. It is conducive to using this as an opportunity to motivate employees, protect the interests of small and medium-sized investors, and enhance the confidence of small and medium-sized investors. Set up an artificial intelligence research institute to accelerate the AI business layout. The company funded the establishment of an artificial intelligence research institute to improve the design capabilities of AI chips and AI algorithm data processing capabilities. In the future, it will further cooperate with universities and scientific research institutions to carry out technical research and industrial application of artificial intelligence chips and algorithms. Currently, the company has carried out extensive preliminary research work on AI chips, communicated market needs with artificial intelligence research and application units related to aerospace systems, and stepped up research and development of AI chips/modules. The company's layout artificial intelligence will form a synergy effect with existing businesses, and has broad application prospects in the fields of satellite big data processing, security, and aerospace electronic chips. We believe that the company relies on its multiple technical advantages to lay out AI chips/modules and other fields, which will help the company seize artificial intelligence development opportunities and broaden the company's potential profit growth points in the future. Profit forecasts and ratings. Driven by policy and order demand, the company's overall performance will continue to grow steadily, and the company's aerospace electronics and satellite big data business will bring great benefits. We are strongly optimistic about the company's future development prospects. We expect the company's revenue from 2018 to 2020 to be 1,110 billion yuan, 1,482 million yuan, and the net profit attributable to the parent company from 2018 to 2020 will be 184 million yuan, 246 million yuan, 325 million yuan, EPS 0.26 million yuan, 0.35 yuan, and 0.46 billion yuan respectively. The PE corresponding to the current stock price is 36 times, 27 times, and 21 times, respectively, to maintain a “buy” investment rating. Risk warning: Aerospace electronics orders fall short of expectations; satellite big data business is not progressing smoothly