Key Investment Companies released the 2019 quarterly report: the company achieved operating income of 173 million yuan, a year-on-year increase of 35.60%; net profit of 15.34 million yuan, a year-on-year decrease of 44.73%; net profit of 6.78 million yuan after deducting non-recurring profit and loss, a year-on-year decrease of 75.13%; and a weighted average return on net assets of 0.42%, a year-on-year decrease of 0.35 percentage points. The company's operating income continues to grow rapidly. The 2018 Annual Report revealed that major breakthroughs have been made in the fields of military and civilian radar and embedded real-time information processing, and that the military radar business has blossomed a lot, providing strong support for the company's revenue growth. The company accrued equity incentive expenses of 1,9013,800 yuan in the first quarter of 2019. If this part of the expenses were recovered, the company's actual operating profit would be 34.36 million yuan, an increase of 23.76% over the previous year. The company's comprehensive gross profit margin was 46.11%, down 11.71 percentage points from the previous year. The company's total period expenses were 59.27 million yuan, an increase of 63.26% over the previous year, accounting for 34.17% of operating income, an increase of 5.79 percentage points over the previous year. Among them, management expenses were 45.76 million yuan, an increase of 114.53% over the previous year. The main reason was that the company terminated the implementation of restricted stock equity incentives. According to relevant accounting standards, the remaining amortization expenses of equity incentives were exercised and recorded in advance. The company issued an announcement on the same day. At the inaugural meeting of the Transportation Safety Equipment Branch of the China Safety Industry Association held on April 25, 2019, the company was elected as the chairman unit of the Transportation Safety Equipment Branch, and Mr. Liu Feng, the general manager of the company, was elected as the branch chairman. This incident shows that the strength and technical level of the company and management are highly recognized by the industry. The establishment of an industry branch will help coordinate and promote the development of intelligent connected vehicles at the industry level. The company converted military millimeter wave radar technology to civilian use, successfully developed a 77 GHz automotive millimeter wave radar, and became the only domestic partner of Baidu's “Apollo Program” and BYD's Dlink program. Intelligent driving is an important focus for the future development of the automobile industry, and there is huge market space. At the same time, with breakthroughs in intelligent connected vehicle technology and the implementation of industry applications, it will open up a broad market space for the company's automotive millimeter wave radar business, and the company's civilian radar business is expected to enter the fast track of rapid growth. We maintain our profit forecast for the company. We expect net profit for the period 2019-2021 to be $200/3.03/393 million, corresponding to the closing price of PE on April 29, 2019, 36/24/18 times, maintaining a “prudent increase in holdings” rating. Risk warning: Revenue recognition progress is lower than expected; competition in the civilian market has intensified and gross profit has declined; new business development has progressed less than expected.