Net profit increased 11.19% year on year. Growth is expected to accelerate in '19 and maintain the “buy” rating. On April 23, 2019, the company released its 2018 annual report and achieved operating income of 994 million yuan (YOY +29.57%); realized net profit of 136 million yuan (YOY +11.19%); and basic earnings per share of 0.12 yuan. Revenue is in line with expectations, and net profit is lower than our expectations. The main reason is that the company's R&D investment has increased dramatically. We fine-tuned our performance. EPS for 2019 to 2021 was 0.19/0.27/0.33 yuan respectively (before adjustment, it was 0.19/0.25 yuan for 19-20, respectively). The company is in a period of rapid development, has a lot of room for growth, and maintains a “buy” rating. Management capacity was improved, period expenses were reduced, R&D investment increased, operating cash flow correction company expense ratios all declined during 2018. The sales expense ratio was 2.52%, a decrease of 0.22pct, and the management expense ratio was 16%, a decrease of 0.14pct. The company's management capabilities improved. R&D expenses were 91.91 million yuan, an increase of 86.61% over the previous year, accounting for 9.25% of the year's revenue. The sharp increase in R&D expenses affected the company's profit for the year. Net operating cash flow was 25.1 million yuan, compared with 160 million yuan for the same period last year, achieving a positive reversal of losses. The ROE was 3.63%, up 0.16pct year on year, and the asset turnover ratio and equity multiplier increased. The business sector has been reorganized, and military products have entered the production and measurement period. It is expected that they will enter the Beidou Ordnance Industry Company's business segment and be reorganized into radar system business, intelligent ammunition, satellite applications, secure storage, and intelligent connectivity services. The business line is more clear. Some of the company's military products have entered the finalization period. According to the 18th annual report, the company's two special radars have entered small-batch production, with an output value of about 40 million; 520 prototypes of missile-mounted computers have been delivered, with an output value of about 50 million; and a certain type of radar guide has been completed, with an output value of about 30 million. After military products enter the formalization stage, they begin to enter the upper measurement period, and this part of the performance is expected to grow rapidly. On April 23, 2019, the company announced and Oriental Lianxing Company, a subsidiary of the weapons industry, established a company in Hefei. This move is an important layout of the company in the Beidou navigation field and expectations for future development. The intelligent connectivity business is expected to become the company's new performance growth point. The millimeter-wave car radar developed by the company is the only domestic partner of Baidu's driverless program, and is actively participating in the construction of smart city road network monitoring systems in various regions. The automatic emergency braking system for automobiles (AEBS) developed by the company is currently being marketed. The state introduced a new national standard for “Technical Conditions for Motor Vehicle Operation Safety” in 2017, which requires mandatory installation of LKA/AEB systems on specific models. By the end of 2018, China had a stock of more than 300 million motor vehicles and a large market space. The company is leading technology in the 77G millimeter wave automotive radar field, which is expected to become a new growth point for the company's performance. Technology is leading, and military products are entering the release period. Civilian goods are expected to achieve breakthroughs, maintain the technological lead of “buy” rating companies, and have a high reputation in industry segments. Radar and intelligent ammunition products are gradually entering the mass production and volume period, and the intelligent connectivity business is being promoted in the market. We have fine-tuned the company's performance. The net profit from 2019 to 2021 is estimated to be 222 million, 303 million, and 376 million yuan respectively (216 million and 290 million yuan in 19-20 years before adjustment), and the corresponding EPS is 0.19/0.27/0.33 yuan (0.19/0.25 yuan for 19-20 years before adjustment, respectively). Comparable company Wind unanimously predicted that PE would be 45.6 times in 2019. We consider that the company's market expansion will still take some time. We gave the company 39 to 41 times PE in 2019, with a target price of 7.41 to 7.79 yuan, maintaining the “buy” rating. Risk warning: military spending growth falls short of expectations, new product development falls short of expectations, and general aviation development falls short of expectations.