Core view: Xinguang Optoelectronics is a leading enterprise in the field of optoelectronic technology and equipment in China. Strong profitability Xinguang Optoelectronics focuses on providing high-precision components, devices, systems and solutions in the direction of optical target and scenario simulation, optical guidance, optoelectronic special testing, and laser confrontation. In 2018, it achieved revenue of 208 million yuan, an increase of 14.48% over the previous year, and realized net profit of 73 million yuan, an increase of 80.80% over the previous year. Affected by factors such as military price compensation, customer procurement plan adjustments, and product structure adjustments, the company's comprehensive gross margin showed a short-term downward trend, but it still has strong profitability. Benefiting from the development strategy of national defense informatization and civil-military integration, optoelectronic equipment is expected to rapidly advance the construction of China's national defense army, and the construction of national defense informatization has become an important direction. The national strategy for civil-military integration is advancing at an accelerated pace, bringing opportunities for private enterprises to participate in the development of weapons and equipment. Missile weapon systems benefit from demand from the Air Force, Navy, Army, and Rocket Force, and the military trade market is fluctuating and growing. The field of laser applications is gradually expanding, driving the demand for laser equipment to continue to grow. The company is a leading domestic enterprise in the field of optical target and scenario simulation, and is in the position of an industry leader; the optical guidance system is at the advanced level in China, and the field of optoelectronic special testing and laser countervailing systems is in the first tier of the national segment, and is expected to fully benefit from the rapid development of the industry. The 19-21 results are 0.80/0.90/1.00 yuan/share, respectively. The forecast for the company's earnings per share for the period 2019-2021 is 0.80/0.90/1.00 yuan/share. According to the valuation results of comparable company valuation methods, we believe that the reasonable value range for each share of the company is 36-40 yuan/share, corresponding to 45-50 times the PE valuation in '19. The company is a high-quality optoelectronic technology and equipment enterprise, which is expected to benefit from the construction of national defense informatization. Risks indicate the risk of a high concentration of the company's customers; the risk of declining gross margin; the risk of product structure changes; the risk of uncertain military tax rebates; and the risk of civilian market expansion.