Report summary: Traditional ICT business is growing steadily, reducing costs and increasing efficiency through multiple channels to improve profitability. According to ICCSZ statistics, global fixed broadband users have maintained a growth rate of 2.5% in recent years, and the domestic penetration rate is 86%. In the future, the upgrade to gigabit network access will drive growth; home gateways have grown rapidly in recent years, and the domestic penetration rate is still low at around 20%; and the global WIFI equipment market has maintained 4.5% growth. The global ICT business is still booming. The company is deeply connected to major suppliers of global ICT terminals. The sales share of the top five customers is stable at around 85%, and growth is sustainable. In addition to stabilizing demand, the company has achieved results in cost control and increased profitability through technological innovation (the BOB concept was introduced earlier in the industry), capacity transfer (ICT terminal business moved to Wuhan and Xi'an), intelligent production automation, and procurement model adjustment (JIT model reduces inventory). The merger and acquisition of leading optical module assets is expected to usher in a huge profit explosion. The high-speed construction of data centers for global cloud vendors and 5G construction are driving steady growth in the optical module market. According to Lightcounting's forecast, the global optical module market will reach $12 billion by 2022, maintaining a growth rate of around 10% for the past three years. The company invested in the high-speed optical module business in 2017, and successively acquired Macom's Japanese assets and OC Laro's Japanese assets in 2018/3 2019, greatly enhancing the design and packaging capabilities of optical modules and components. With the company's good cost control capabilities and customer resource advantages, the future is expected to explode. The field of small base stations is deeply cultivated, and there is much to be done in the 5G era. Everything is interconnected in the 5G era. The high density, easy deployment, and low cost characteristics of small base stations are highly suited to 5G development needs. The number of small base stations deployed in China during the 5G period may reach the level of 10 million. The company launched a full range of indoor and outdoor micro base stations and micro base stations as early as the 4G era, forming stable supply channels in regions with developed small base stations such as Japan and South Korea. Co-developing small base stations with Nokia during the 5G period can be smoothly upgraded to 5G technology, which is expected to share the big opportunities in the small base station market. Profit forecast: Net profit from 2019 to 2021 is estimated to be 1.29/2.34/325 million yuan respectively. The PE corresponding to the current stock price dynamic is 36X/20X/14X, which is covered for the first time, giving it a “buy” rating. Risk warning: M&A integration falls short of expectations; 5G and digital communication markets fall short of expectations.