Company News Company News The company is a high-quality military and civilian integration enterprise incubated by Beijing Institute of Technology. It has a complete industry-university-research system. We sort out the company's business and update the recent situation. Comment on Joining up with the North Electronics Research Institute of the Weapons Industry Group to further cooperate on the military “Beidou+”. The company established a joint venture with Dongfang Lianxing (North Electronics Research Institute Holdings of the Weapons Industry Group) and Hefei Hi-Tech Construction Investment Group in April to focus on the development of military Beidou navigation basebands and RF chips, and cooperate deeply in the fields of military “Beidou+” and civil-military integration. The company has been deeply involved in the Beidou field for many years, developed a series of Beidou-2 military baseband processing chips and complete machine products, and received honors such as the “Beidou-2 Outstanding Contribution Group Award”. With the successful networking of Beidou-3, the company will help the industrialization development of autonomous controllable chips in China, and we are optimistic about the growth prospects of its “Beidou+” business. Actively expand the civilian sector and pay attention to business progress. The company actively lays out the fields of autonomous driving and ADAS (Advanced Driving Assistant System), joined Baidu's driverless development platform, and formed leading domestic millimeter-wave radar products and AEB (Autonomous Emergency Preventive) automatic emergency braking systems. The company took the lead in this field. The “AEBS Rear Assembly Technical Specification and Performance Test Requirements for Commercial Vehicle Automatic Emergency Braking Systems (T/CSIA001-2019)”, which participated in the formulation, was officially released and implemented on May 15, 20191. As the penetration rate of AEBS in operating bus installations continues to increase, we believe that AEBS's aftermarket business is expected to become a new growth point for the company's civilian products. Follow the progress of Hengda Microwave's acquisition. The company previously announced that it plans to acquire Hengda Microwave (100% of the shares of Xi'an Hengda and 100% of Jiangsu Hengda) to achieve the layout of the entire radar communication industry chain. Hengda Microwave has been deeply involved in the microwave field for more than 20 years, mainly involving antennas, turntables, and active and passive devices in the radar communication industry, which can form a good synergy with the company's existing business. Hengda Microwave expects a total net profit of 40,000/5200/65 million yuan from 2019 to 2021, with a compound annual growth rate of 27% and steady growth (we expect this acquisition to increase the 2019/20/21e EPS by 16%/17%). The valuation proposal takes into account the early termination of the equity incentive plan and adjusts the cost rate forecast for the period to reduce the 2019/2020 net profit forecast by 6%/8.8% to 172 million yuan/223 million yuan. The company's current stock price corresponds to 34x/26x 19/20e exam preparation P/E. We lowered our target price by 9% to 7.12 yuan, corresponding to 39x/30x 19/20e exam preparation P/E, with a potential increase of 14%. Maintain a neutral rating. Uncertainty about risky acquisitions; civilian goods business falling short of expectations; uncertainty about military orders and deliveries.