In the first three quarters of 2019, Chongda Technology's revenue was 2,777 billion yuan, up 0.2% year on year, and realized net profit to mother of 340 million yuan, a decrease of 9.8% year on year. The Q3 quarterly performance fell short of expectations, and gross margin declined significantly. Q3 alone achieved revenue of 925 million yuan, a year-on-year decrease of 3.3%, and realized net profit of 126 million yuan, a year-on-year decrease of 17.7%. The Q3 gross profit margin for a single quarter was 28.33%, down 4.04% month-on-month and 4.79%; sales expenses ratio of 4.0% and management expense ratio rose slightly year-on-year; R&D expenses ratio was 6.0%, up 1.6 ppts year on year; operating margin was 15.2%, down 4 ppts year on year, and 1.5 ppts month-on-month. The overall operating cash flow is steady, and investment in R&D continues to increase. The company's Q3 net operating cash flow was 267 million, up 70% month-on-month, down only 4.1% year-on-year, and the absolute amount was much higher than net profit attributable to mother. The overall operation of the company is relatively healthy. The company spent 163 million on R&D in the first three quarters, an increase of 36.68% over the previous year. The PCB product line was gradually improved. Chongda Technology uses small-batch PCBs as its main product, and a small amount of HDI production capacity is mainly located in Jiangmen Chongda Phase II. On July 3, 2018, the company announced the acquisition of 20% of Sandeoguan's shares for 180 million yuan. On April 1, 2019, the company announced that it will continue to acquire 20% of Sandeoguan's shares, holding a total of 40% of the shares. Established in 2003, Sandeguan provides flexible circuit board products to customers around the world. The products are widely used in mobile phones, tablets, laptops and automobiles. Outreach and endogenesis, and advance into IC carrier boards. On May 28, the company announced the establishment of a subsidiary of Chongda in Nantong, which will carry the mission of the company's “semiconductor component manufacturing and technology research and development center” and achieve the transition from IC carrier boards to IC related industries. In June 2019, Zongda Technology acquired 40% of Prowin's shares to achieve the layout of MEMS sensor packaging substrates. At present, Chongda Technology has formed a multi-product line layout for multi-layer PCBs, HDI, FPCs, and packaged substrates. The company gradually transformed its business from a small batch to a large volume of business. Entering the 5G circuit is expected to benefit from order spillover effects. In the first half of the year, the company successfully entered the 5G industry chain and became one of the core suppliers of ZTE 5G base station PCBs. At the same time, the supercomputing project progressed smoothly and continued to achieve order breakthroughs. As 5G base station construction will reach its peak next year, in the context of tight 5G base station PCB production capacity in the supply chain, the company is expected to fully benefit from order spillover effects, accept spillover orders from leading manufacturers, and contribute marginal production capacity. The profit forecast was lowered to the rating for increasing holdings. In view of the decline in new business falling short of expectations, the revenue forecast for 2019/20/21 was lowered from $44/61/78 billion yuan to $37/43/53 billion, and the net profit forecast for 2019/20/21 was lowered from $6.8/97/1.3 billion to $51/5.7/670 million yuan. The current market value corresponds to 2019 PE 30X and has been lowered to an increase in holdings rating. Risk warning: The downstream PCB boom falls short of expectations, and the expansion of new product customers falls short of expectations.