Incident: The company released a performance forecast for the 1st quarter of '18, achieving net profit of 125 to 145 million yuan, an increase of 55%-80% over the previous year, including non-recurring profit and loss of 55-75 million yuan. Key investment points: Market demand is better than expected. The company's production capacity expansion shows that the company is a leading domestic LED chip company. Since 2016, the LED industry has ushered in a boom cycle. The LED lighting market penetration rate has increased rapidly, and the LED display market technology progress is better than expected. With this, the company has greatly expanded production by Dongfeng. Currently, it has expanded production capacity from 700,000 tablets/month to nearly 2 million tablets/month. Production will continue to expand at the Zhangjiagang and Yiwu bases in the next 3 years, and production capacity will reach 3 million tablets/month. The company's production capacity has increased dramatically, providing a strong guarantee for the company's revenue growth. Product yield and production efficiency have improved, the company's profitability level has increased continuously, and the company's continuous R&D investment has increased, and technological innovation capabilities have improved significantly. On the one hand, the company will increase the proportion of light-efficient products, and plans to increase the overall sales price of products from 15% to 30%; on the other hand, reduce costs by eliminating old equipment to improve product yield and production efficiency. At the same time, Blue Crystal's LED sapphire production is also expanding simultaneously, leveraging synergistic effects to increase overall gross profit levels, and the company's gross margin is expected to increase further. The 10.8 billion investment layout Advanced Semiconductors and Devices Company signed an investment framework agreement with the Yiwu Information Optoelectronics High-tech Industrial Park Management Committee to invest 10.8 billion yuan to lay out advanced semiconductor and device projects. It indicates that the company plans to expand its business into the field of advanced semiconductors to lay the foundation for the company's sustainable development. The profit forecast does not take into account growth and dilution. We expect the company's net profit for 18-19 to be 795 million and 1,061 million yuan, corresponding to EPS of 0.94 and 1.26 yuan/share, respectively, giving it a “recommended” rating. Risk warning LED chip demand falls short of expectations, and the company's new business expansion falls short of expectations.