Incident: The company released its 2019 semi-annual report. From January to June 2019, the company achieved operating income of 312.032 million yuan, down 1.22% from the same period last year; net profit attributable to shareholders of listed companies was 71.1813 million yuan, an increase of 20.77% over the same period of the previous year. Focus on the field of military information transmission and promote the optimization and upgrading of the industrial structure. During the reporting period, the company concentrated its superior resources on the field of military information transmission to accelerate industrial restructuring around core products such as optoelectronic cables, components, optoelectronic systems, and optical fiber networks. From January to June 2019, the company's cable products achieved operating revenue of 134 million yuan, an increase of 30.75% over the same period of the previous year; gross margin reached 57.02%, an increase of 9.01% over the same period of the previous year; gross margin of module and optoelectronic system products reached 57.93%, an increase of 7.84% over the same period of the previous year, and profitability increased steadily. During the reporting period, the company initiated the transfer of 100% of the shares of the subsidiary Changkang Environmental Protection and participated in the 40.26% share auction of Quanxin Optoelectronics held by the Chengdu Aircraft Design Research Institute of China Aviation Industry Corporation, making Quanxin Optoelectronics a wholly-owned subsidiary, thus promoting the optimization and upgrading of the industrial structure. Investment in R&D continues to be increased, and independent innovation capabilities are steadily improving. During the reporting period, the company continued to increase its investment in scientific research. From January to June 2019, the company invested 30.05 million yuan in R&D, an increase of 26.14% over the same period last year. Through measures such as process optimization, equipment upgrades and technical condition curing, the company has further improved the production capacity and efficiency of traditional cables and components, and quality consistency has been effectively controlled and guaranteed. The successful development of the FC adaptive network system marks the transformation of the company's products from module solutions to system solutions, and from the underlying network to platform application; in the field of cable research and development, a total of 3 new independent product certifications have been completed, and 1 new aerospace product certification has been obtained. In the future, it will become a new growth point for the company's cable products. On the basis of optimizing and upgrading traditional component processes, the company focuses on investing in and developing new optical transmission link products. Next-generation optical transmission interface and component product technology is more mature, meets the development needs of new equipment, and is the first to be applied in key models, and its independent innovation capabilities have been steadily improved. Profit forecast and investment rating: The company's net profit for 2019-2021 is estimated to be 133 million yuan, 156 million yuan, 186 million yuan, EPS 0.46 yuan, 0.53 yuan, and 0.64 yuan, corresponding PE is 25 times, 21 times, and 18 times, maintaining a “buy” rating. Risk warning: Orders for military goods fall short of expectations; there is uncertainty about the transfer of subsidiary shares.