Event: On April 13, 2019, the company released its 2018 and 2019 first quarter reports. In 2018, the company achieved operating income of 2,584 billion yuan, an increase of 55.34% over the previous year, net profit of 162 million yuan, an increase of 237.74% over the previous year. In the first quarter of 2019, the company achieved operating income of 540 million yuan, an increase of 23.38% over the previous year, and realized net profit of 23 million yuan, an increase of 198.99% over the previous year. Comment: We continue to recommend the company from the bottom up. We continue to be optimistic about the company's long-term development prospects. We are optimistic that the company is making simultaneous efforts in mergers and acquisitions of Chinese optical post-civilian products+military products. At the same time, we have entered the Huawei P30 supply chain and shipped high-end models for the first time. Performance has entered a path of high growth, once again reaffirming the company's long-term development prospects. The company's acquisition of China Optics and the restructuring was successfully completed. Afterwards, the company will change its name to “China Optics”, which will form upstream products in the optoelectronics industry, such as precision optical components, optical accessories, and photoresistors, as well as downstream products in the optoelectronic industry such as optical devices, optoelectronic complete machines, and optoelectronic system integration, and form a trend of parallel development of military and civilian goods business lines. Gross margin increased year on year, and operating cash flow improved markedly. In 2018, the company achieved a gross profit margin of 20.89%, an increase of 1.05pct over the previous year. The company's gross margin has continued to grow since 2016, indicating that the company's business profitability has increased. Meanwhile, in 2019Q1, the company achieved a gross profit margin of 17.36%, a year-on-year increase of 2.10pct, and a decrease of 4.32pct over the previous year, mainly due to the concentration of the company's military business orders in the fourth quarter, so compared to 2018Q1, the company's gross margin continued to increase. In terms of cash flow, in 2018, the company achieved net operating cash flow of 327 million yuan, a year-on-year increase of 307.29%, mainly due to the company's strengthened accounts receivable management and a year-on-year increase in payment recovery; the company's accounts receivable management strategy continued to work. In the first quarter of 2019, the company achieved a net operating cash flow of 262 million yuan, which is close to the full year of 2018 performance in a single quarter. The company's cash flow improved markedly compared to previous years, and profit quality was significantly optimized. In terms of operation, the company's inventory turnover ratio and accounts receivable turnover ratio have been continuously optimized for the past three years, 9.69/11.61/14.64 times and 3.66/3.67/4.47 times, respectively. In terms of inventory, the company's product sales have continued to be optimized, and inventory management efficiency has continued to improve; in terms of accounts receivable, the company's capital flow efficiency has improved markedly, and working capital recovery has accelerated. The civilian goods business has reached a new level, and the military business is integrated into optics. In 2018, the company achieved a major breakthrough in its military and civilian business. The annual production and sales of 131 million optical components, 1.92 million lenses, and projector production and sales exceeded 300,000 units. The sales revenue of the Chinese optical specialty business increased dramatically, and the strategic development goals of the optical components and special products business were achieved first. In terms of civilian products, the company entered the Huawei P30 supply chain and entered the high-end brand supply chain for the first time. As of April 14, 2019, at 7:40 a.m. on April 14, 2019, the monthly sales volume of the Huawei P30 and Huawei P30 Pro at the official flagship store of HUAWEI JD had reached 82140/62245 units respectively, exceeding 144,000 units in total. The Huawei P30 sale is expected to drive the company to exceed expectations. The successful supply to Huawei is expected to bring more high-quality orders to the company in the future. In terms of military products, the company was restructured and merged into China Optics, which completed its performance promise in just 11 months. The restructuring effect was remarkable, and we continue to be optimistic that the company's further integration and synergy in 2019 will increase its performance. Investment advice: Give the company a profit forecast of 216/2.74/371 million yuan for 19-21, maintaining a “buy” rating. Risk warning: R&D progress falls short of expectations, orders fall short of expectations, and integration results fall short of expectations