Peace viewpoint:

Transformation of distribution, into the domestic first-class echelon: the company has acquired Hua Shanglong and Lianchuangtai, transformed the electronics industry distribution. In 2018, the company's revenue passed the 10 billion mark, ranking third in China. From the perspective of the development path of the international distribution leaders Ari Electronics, Amway and UnionPay, M & An integration is the only way for enterprises to grow rapidly in the distribution market. Compared with the global market, the market share of global CR3, CR10 and CR20 is 14.72%, 18.40% and 19.36% respectively, while the domestic market share is only 2.41%, 5.22% and 6.84%. On the one hand, because the domestic market starts late, it is compared with the developed countries. The whole electronic components distribution industry in China is relatively scattered. On the other hand, distribution companies are under little pressure in terms of capital in the early years, and the Chinese mainland supply chain, the world's largest electronic market, has come to the fore in recent years. With the continuous expansion of the scale of domestic distribution enterprises, the demand for funds is becoming stronger and stronger. At the same time, the M & An integration of head enterprises is gradually increasing, and the entry of large capital will accelerate the integration and development of the industry and enhance the concentration of the industry more quickly.

Sit on the strength of the original factory, the distribution territory is constantly expanding: the company is actively engaged in resource integration and cooperation. On the one hand, Shenzhen Huashang Dragon continues to provide more targeted technical support services and supply chain management services for downstream customers while authorizing agents of upstream original products, increase market development efforts, constantly improve brand influence, and win more authorized distribution from upstream original factories. In the horizontal integration of the industrial chain, the company has absorbed many high-quality brands such as SK Hynix, MTK, Lou, Roma, Xinsi, Huiding and many other high-quality brands; on the other hand, by improving the company's electronic distribution product line, enhance the company's resource advantages, provide customers with a more comprehensive package of services, increase the stickiness of the core large and medium-sized customers, so as to improve the company's comprehensive market competitiveness and profitability. At present, the company's customers in the field of cloud server infrastructure include BAT, which is the only memory supplier of SK Hynix in BAT. It is expected to benefit from the dividend of cloud servers and 5G by signing a contract with China Mobile Limited for the purchase of MTK main chip products.

Hand in hand with Seg Group, relying on state-owned assets to solve the capital bottleneck: the company intends to introduce strategic investor Seg Group through this non-public offering. As a holding enterprise under Shenzhen SASAC, Saige Group not only has strong financial strength, but also has a strong synergistic effect between its business layout in the semiconductor and e-commerce market and the development of the company's main business: on the one hand, it is beneficial for Yingtang Intelligence Control to make use of the business resources of Saige Group to open up new customers and strive for high-quality electronic components brand agency qualification. On the other hand, the technology accumulation of Saige Group in semiconductors can effectively enhance the technical service capability of Yingtang Intelligence Control; finally, relying on state-owned enterprises will help to broaden the company's financing channels, upgrade its credit rating, and thoroughly solve the company's capital bottleneck. lay the foundation for the company's long-term development.

Investment suggestion: Yingtang Intelligence Control entered the field of electronic distribution through the acquisition of Huashang Dragon and Lianchuangtai, and absorbed many high-quality brands such as SK Hynix, MTK, Lou, Roma, Xinsi, Huiding and many other high-quality brands in the horizontal integration of the industrial chain; customers have BAT, China Mobile Limited and other top customers At the same time, holding hands with Seg Group, relying on state-owned assets is conducive to solving the capital bottleneck, can effectively enhance the credit and anti-risk ability of listed companies, and help listed companies to accelerate to become the leading enterprises in the electronic distribution industry. We expect the company's revenue from 2019 to 2022 to be 14.295 billion yuan, 17.868 billion yuan and 22.335 billion yuan, corresponding to EPS 0.23,0.33 and 0.44 yuan, and corresponding PE to 27 times, 19 times and 14 times. Cover for the first time and give a "recommended" rating.

Risk tips: 1) the lower-than-expected implementation of capital expenditure by Internet companies will make the growth of the IDC operating services market less than expected: if the capital expenditure of these Internet companies purchasing servers is not as expected, the growth of the entire IDC operating services market will fall short of expectations; 2) the risk of macroeconomic fluctuations: the global GDP growth rate is expected to continue to decline due to the impact of the economic downturn in the United States and the slowdown in the Chinese economy.

In the context of the macroeconomic downturn, the global consumer electronics demand is expected to decline; 3) Product technology renewal risk: industrial chain companies belong to the mobile communications industry, product technology upgrading fast, new technologies and new processes emerge in endlessly. If the company can not continuously update the products with market competitiveness, it will weaken the company's competitive advantage; 4) the risk of uncertain trend of trade friction between China and the United States: if the trade friction between China and the United States worsens further in the future, restricting the export of high-end chips to China or imposing high tariffs on related products will have a certain impact on industrial chain companies. 5) 5G progress is not as expected: 5G as a hot spot in the future development of the communications industry, although communications equipment manufacturers and telecom operators have already begun to lay out the next generation communication technology, they are also advancing in an orderly manner at this stage, and there may be lower-than-expected risks in the future.