Incident: The company released its 2016 annual report and 2017 quarterly report forecast. In 2016, the company achieved operating income of 2,407 billion yuan, a year-on-year increase of 16.82%, net profit to mother of 125 million yuan, an increase of 29.81% year-on-year, and net profit after deducting non-scale net profit of 5.54.96 million yuan, a year-on-year decrease of 120.13%. At the same time, the company predicted a net profit loss of 21-28 million yuan in the first quarter of 2017, a year-on-year decrease of 187.9-217.2%. Against the backdrop of 4G construction gradually coming to an end, the company maintained a stable RF business with continuous technology research and development, and maintained a high level of gross margin. The company has begun to invest in research and development of 5G-related technology. 5G is expected to be gradually launched by the end of 2018, and the growth rate of the company's RF business is expected to increase. In 2016, 926,000 new base stations were added in China, a year-on-year decline of 37%. Against the backdrop of the gradual slowdown in 4G construction, the company, as a leader in RF filters, has relied on technical advantages to maintain steady growth in the communications business revenue in a weak industry environment, and gross margin continues to remain stable. As China Mobile revealed that it began building a 5G core network on a small scale in 2018, 5G construction is gradually getting closer. The company already has the capacity to produce small base station filters, and the growth rate of the company's RF business is expected to increase. The company has long realized that the RF business is affected by the wireless construction cycle, so it actively combines the main business to transform and apply precision processing technology to the manufacture of precision parts for consumer electronics and new energy vehicles, and the ERA (consumer electronics, radio frequency, automobile) strategy is progressing steadily. In 2016, a fixed increase of 3.45 billion dollars was invested in OLED modules, USB connectors, and precision metal structural components, which will further escape the impact of the wireless construction cycle, and long-term growth is worth paying attention to. In 2016, the company's consumer electronics revenue of $630 million increased 91% year over year, and auto parts revenue of 77.45 million decreased 14% year over year. The smartphone metal structural parts market space exceeds 70 billion. The company's precision manufacturing production line has 95% self-control capacity and is extremely capable of responding to customer customization needs. The supply of smart video modules from the subsidiary Daling Industrial to mobile phone manufacturers has grown rapidly, and has successfully entered the supplier chain of many automobile manufacturers such as BAIC and Zotye to begin shipping. Automobile business companies focus on precision manufacturing of chassis, structural parts, and other parts for new energy vehicles. Affected by fraudulent investigations, performance declined in 2016. After new subsidy policies are implemented one after another, the auto parts business is also expected to grow steadily. The company actively promotes asset securitization, has an advanced strategic layout vision, and focuses on subsequent capital operations. The company has three newly listed subsidiaries: Daling Industrial, Huayang Microelectronics, and Sanzhuo Hanyi. Among them, Sanzhuo Hanyi has already begun the IPO process. At the same time, in addition to listed companies, there are high-quality assets such as industrial equipment and automatic control. In recent years, the company has actively deployed in the fields of industrial automation, the Internet of Things, graphene, etc., ahead of its strategic vision, and is focusing on subsequent capital operations. The company calculated 32 million impairment provisions for Huayang Microelectronics's long-term equity investment in 2016, Dasheng Graphite's performance compensation of 42.89 million yuan, and an impairment provision of 20 million yuan. Excluding the above effects, the company's net profit after deduction in 2016 was 89.34 million yuan, an increase of 224% over the previous year. After getting rid of this impact in 2017, the RF business is expected to remain stable. Focus on business growth brought about by the release of production capacity such as consumer electronics in 2018-19. EPS in 2017-2019 is expected to be 0.20, 0.25, and 0.32 yuan, respectively, giving an “additional” rating. Risk warning: The decline in the RF business exceeded expectations, and the decline in NEV policies exceeded expectations