Event: On October 21, 2019, the company released its 2019 three-quarter report. The first three quarters of 2019 achieved revenue of 1,431 million dollars, an increase of 60.13% over the previous year; net profit from the mother was 98 million yuan, an increase of 282.56% over the previous year. Comment: The performance is in line with expectations, continues to maintain steady growth, and the company's performance is within the range of previous forecasts. Compounding expectations, it continues to maintain a steady growth trend. The reason for the sharp increase in performance is that the continuous cultivation of domestic 4G networks, the gradual increase in 5G network construction, and the expansion of overseas markets have led to rapid growth in the company's mobile communication equipment products, leading to an increase in sales of the company's mobile communication equipment related products. In the first half of 2019, the three major operators built 800,000 new base stations. Continued 4G cultivation effectively led to an increase in the company's communications business revenue. Affected by industry sentiment, quarterly growth slowed slightly in the third quarter, and the company achieved revenue of 522 million yuan in the third quarter, an increase of 49.59% over the previous year, a slight decline from the previous month; realized net profit of 377.5556 million yuan, an increase of 207.89% over the previous year and a decrease of 6.8366 million over the previous year. The gross profit margin for the third quarter was 18.81%, up 4.51 pct from the third quarter of last year, down 3.86 pct from the second quarter of this year; the net profit margin was 8.19%, up 4.39 pct from the third quarter of last year, down 1.3 pct from the second quarter of this year. In terms of expense ratio, sales expense ratio is 2.13%, management expense ratio is 2.95%, and R&D expense ratio is 4.4%, which is not much different from the second quarter. In preparation for 5G, active expansion of the filter business will begin in the fourth quarter. The pace of 5G base station construction across the country will gradually accelerate, and the prosperity of related industrial chains is expected to rise sharply. In the 5G era, the demand for single-price filters has risen sharply compared to the 4G period, and the market size has doubled. As a core supplier of ZTE, the company plans to purchase land use rights from Hushu Guan Economic and Technological Development Zone in Suzhou City, Jiangsu Province, and plans to invest 195 million yuan to build the “Sega Technology New 5G Ceramic Waveguide Filter Project” and plan ceramic waveguide filter production capacity to prepare for 5G in advance. Investment recommendations and profit forecasts At this stage, 5G will usher in a period of large-scale construction, and the company's performance will grow rapidly. In 2019-2021, the company's revenue is estimated to be 2.146 billion, 3.72 billion, and 4,317 million, and net profit of 167 million, 275 million, and 348 million, respectively. The PE corresponding to the current stock price is 37.19, 22.53, and 17.81 times, which is clearly underestimated compared to companies in the same industry, giving it a “buy” rating. Risks suggest that 5G construction falls short of expectations, and industry competition is intensifying