Key investment points: An established optical lens manufacturer, originating from the military industry and cultivating civilian use. 1) Military products are widely used in major national defense missions such as the “Shenzhou series” and drones, and advanced weapons and equipment. The core customers include scientific research institutes and enterprises under the Chinese Academy of Sciences and major military industrial groups, making it one of the most important military optical lens and optoelectronic system providers in China. 2) Civilian products are widely used in safe cities, smart cities, Internet of Things, Internet of Vehicles, intelligent manufacturing, etc., and are the main camera providers for well-known domestic and foreign companies such as Huawei, Axis, Bosch, Honeywell, Haikang, and Dahua. According to the TSR report, in 2017, the company's market share of global security lens sales reached 11.8%, ranking third in the world. Among them, the varifocal lens is the company's dominant product, ranking second in global sales, with a market share of about 8.9%. Civil-military integration development is the company's unique competitive advantage. The company originated from the state-owned 8461 factory established in 1958. It has accumulated deep military optical technology and human resources, explored an effective development path for civil-military integration, and has achieved great results in the sharing of R&D resources and mutual conversion of military and civilian technology. In 2018, the sales growth rate of the company's customized products reached 88%, accounting for 12.7% of revenue, and gross margin as high as 62.3%. Military products became an important growth pole for the company. At the same time, the company has mastered a number of core technologies through military product research and development, and after applying them to the civilian field, it has promoted a leap in the performance of civilian products. Actively develop customers in emerging fields. Optical systems and lenses have evolved into core devices in the front-end sensing layer of the Internet of Things and artificial intelligence systems, and the company has fully entered various application scenarios, such as face recognition, in-vehicle imaging, machine vision, smart cities, and smart homes. At present, the company has established cooperative relationships with companies such as Huawei, Kuangshi, Yitu, Yuncong, Horizon, Haikang, and Dahua in the field of artificial intelligence. Moreover, with the implementation of 5G construction, the development of ultra-high-definition video has accelerated. The company has taken the lead in developing an 8K high-definition continuous zoom lens in China, so you can enjoy the dividends brought by the ultra-high-definition upgrade. Profit forecast and valuation: The company is expected to achieve net profit of 1.08/1.21/133 million yuan respectively in 19-21, and the EPS corresponding to the total share capital after issuance is 0.70/0.79/0.86 yuan, respectively. Considering that the company has continued to be profitable and its business is relatively mature, the PE valuation method was used, referring to the valuation levels of comparable companies such as United Optoelectronics and China Optoelectronics, etc., to give the company a PE range of 33-43 times in '19. The corresponding reasonable stock price range was 23.1-30.1 yuan/share, and the corresponding reasonable market value range was 35-4.6 billion yuan. IPO premium effect: According to historical statistics, IPOs on the first 30 days of listing have obvious premium characteristics. According to electronics industry statistics, the premium rate is 2%-34%, so the likely price fluctuation range at the beginning of a company's listing is 23.6-40.3 yuan. Risk warning: R&D project progress falls short of expectations; non-customized product market competition intensifies; new product certification for major downstream customers falls short of expectations. Special Reminder: The reasonable stock price range predicted in this report is not the price performance at the beginning of listing, but rather the reasonable price range when the current market environment remains basically unchanged.