Incidents: The company issued an announcement in the evening that it plans to use 100% of the shares of Wuhan Chengmai, a wholly-owned subsidiary, for RMB 204 million; Wuhan Shenzhidu (abbreviation: Deepin Technology) plans to price the total 100% of its shares in Wuhan Shenzhen for RMB 255 million; to jointly increase the capital of Tongxin Software with equity and replace the parties' earlier cash contributions to Tongxin Software's registered capital with equity investment. After the transaction is completed, Chengmai Technology will hold 44.44% of Tongxin Software's shares after the capital increase, and Wuhan Chengmai and Wuhan Shenzhidu will become wholly-owned subsidiaries of Tongxin Software. Comment: Integrate deep technology to enter the domestic operating system industry. The company continues to steadily advance investment projects that integrate deep technology. It is worth noting that the company's previous announcement plan on September 30 was temporarily suspended due to the evaluation agency's evaluation work not being completed as expected, yet this announcement clearly stated that the evaluation agency had issued an evaluation report on Wuhan Chengmai and Wuhan Shenzhen's 100% equity, and gave corresponding evaluation values. After the subsequent transaction is successfully completed, the company will indirectly own 44.44% of Deepin Technology's shares. Deepin Technology is the top domestic operating system manufacturer. In the global open source operating system ranking, Deepin Operating System is the first domestic operating system product to enter the top ten international rankings. It is also the domestic operating system with the largest number of actual users and the highest international ranking. At the same time, Deepin is also the only domestic operating system manufacturer that has not relied on government subsidies or financial support to date. By integrating in-depth technology, the company will enter the domestic operating system market and embark on a new journey. Deepin Technology will become an important enterprise in an autonomous and controllable system. The in-depth operating system has passed the Ministry of Public Security's secure operating system certification, the Ministry of Industry and Information Technology's domestic operating system adaptation certification, and has been shortlisted in the central procurement list of the State Administration Bureau. At the same time, as an important partner of Huawei, a pioneer in localization, Deepin Technology is expected to work together to build a localized ecosystem and actively promote the better development of the localized application ecosystem. In-depth cooperation with Huawei in the civilian market has progressed beyond expectations. Recently, Huawei has begun selling laptops that come pre-installed with in-depth operating systems, not only the Honor Magic notebook that was previously in the news, but many Huawei notebooks, including models such as the MateBookX Pro, MateBook 13, and MateBook 14, have begun to come pre-installed with deep operating systems. The annual sales volume of Huawei notebooks reaches 5-6 million units. Regardless of sales volume and brand leadership, it is of great significance to the promotion of domestic operating systems on the C side. Deepin Operating System has established the most ecologically rich app store in China, Deepin Store. As the number of terminals pre-installed with Deepin Operating System continues to increase, more software vendors will adapt and enter Deepin Store, and the company's strategic value in the future will be immeasurable. Investment suggestion: After the subsequent transaction is successfully completed, the company will indirectly hold 44.44% of the shares in Wuhan, a top domestic operating system manufacturer, to fully benefit from the wave of operating system localization. The one-time investment income brought about by the transaction is not taken into account yet. The EPS in 2019 and 2020 is expected to be 0.37 or 0.62 yuan, maintaining the buy-A rating. Risk warning: The deep cooperation with Wuhan falls short of expectations; there is a risk that gross margin will decline due to increased competition in the industry; and a formal agreement on asset injection has not yet been signed.