1. Recently, the company announced that it plans to transfer 100% of the shares of Changkang Environmental Protection, a wholly-owned subsidiary, to five natural persons including Monday. After that, the company will no longer hold shares in Changkang Environmental Protection. 2. Our analysis and judgment (1) Refocus on the main business, launch light duty and start sailing again. The company is mainly engaged in the development of photoelectric heat transmission products for national defense and military use, including high-end transmission cables, components, and optoelectronic transmission systems, etc., with steady growth in recent years. In 2016, the company acquired 100% of Changkang Environmental Protection's shares, and the underlying assets are engaged in reverse osmosis seawater desalination equipment business for national defense and military industries. The performance promises from 2016 to 2018 are not less than 48,800, 599, and 67 million yuan respectively. The target company successfully completed its performance promise for the previous two years, but it received a contract cancellation notice from a customer unit in July 2018, which directly affected the contract amount of nearly 20 million, accounting for about 13.68% of the 2017 operating income, adding great uncertainty to the achievement of the 2018 performance promise. In the context of the promotion of competitive procurement of military products and the tightening of military price reviews, future orders from Changkang Environmental Protection may continue to be affected. We believe that this time Quanxin Co., Ltd. plans to transfer 100% of its shares, the meaning of stopping losses in a timely manner is obvious, which will help listed companies refocus their main business of optoelectronic heat transmission products and start developing lightly. (2) Long-term development is improving. There is still a risk of short-term goodwill impairment. The company has certain technical barriers in the field of high-end transmission cables and optoelectronic transmission systems, and has been limited by recent adjustments in the scientific research and production catalogue. With the mass production of various main aircraft models, the future development of the company's main business is still improving. In the short term, the company's goodwill balance is about 521 million, of which the acquisition of Changkang Environmental Protection contributed about 515 million yuan. However, the latter is still under pressure to impair goodwill at the listed company level due to order variables, future performance growth or poor expectations. (3) The company plans to repurchase shares, demonstrating confidence in development. In December, the company announced that it plans to repurchase some of its shares for employee stock ownership plans or equity incentive plans. The total repurchase amount is not less than 600 million yuan, not more than 120 million yuan, and the repurchase price is no more than 15 yuan/share. We believe this move shows the company's confidence in future development and helps boost market confidence. 3. The investment proposal assumes that the equity transfer of Changkang Environmental Protection is completed in the first half of the year. Considering the impact of impairment of goodwill, the company's net profit in 2018, 2019 and 2020 is estimated to be 23 million, 118 million and 129 million yuan respectively, EPS is 0.07 yuan, 0.38 yuan and 0.41 yuan, and the current stock price corresponding to PE is 146x, 28x and 25x. Following the divestment of Changkang Environmental Protection, the company launched in a lightweight manner. Optoelectronic transmission systems and components have great potential for development. Future development can still be expected, maintaining a “recommended” rating. Risk warning: The risk of military market expansion falling short of expectations and significant impairment of goodwill.