Incident: The company announced on the evening of June 11 that it signed the “Kunpeng Server Authorization Cooperation Agreement” with Huawei. The two sides will cooperate in a white label server model, that is, Huawei will provide complete server machines and component products (except TaiShan K series). On this basis, the company will install software, provide value-added services, form integrated software and hardware and solutions, and sell them to end users. This cooperation is conducive to promoting the further implementation of the company's Pengxiao server. At the beginning of 2020, the company and Huawei jointly launched the first batch of “Pengxiao” servers based on Kunpeng processors. They have now signed contracts with Ningbo and Qingdao. They will invest in the construction of “Pengxiao” bases in the two places, expand server production and development of supporting software, and promote large-scale commercial applications of “Pengxiao” servers. The signing of the Kunpeng server licensing cooperation agreement with Huawei Technology Co., Ltd. is conducive to promoting the further implementation of the company's Pengxiao server, more effectively enhancing the company's market influence and competitive advantage, and promoting the business development and value creation of both parties. Recently, Huawei's Kunpeng ecosystem business has been gaining strength one after another, showing a good momentum of development. According to data from the Procurement Network, the Huawei Kunpeng server has recently made gains in major industry fields such as the China Telecom Server (2020) centralized procurement project and the Agricultural Bank of China's key server project in 2020, showing a good momentum of development. As an important partner in the Huawei Kunpeng ecosystem, the company is expected to fully benefit. It is proposed to raise 4,013 billion yuan in additional capital to increase the Kunpeng ecosystem. The company recently announced a fixed increase plan. The total amount of capital to be raised is not more than 4,013 billion yuan. One of the major fund-raising projects is the Xinchuang Pengxiao project. Based on the background of the national information technology application innovation strategy or “innovation strategy”, the company will rely on the Kunpeng computing industry, use Huawei Kunpeng processors to build Donghua's own Pengxiao server, carry out R&D, production and adaptation of independent innovative products related to the Pengxiao server as the core, create a “Pengxiao ecosystem”, and promote the development of the company's innovation business. Investment advice: The company's business cooperation with Huawei continues to deepen. We are optimistic about the company's development prospects and are not considering fixed growth and dilution. We expect the EPS in 2020 and 2021 to be 0.4 or 0.51 yuan, maintaining the buy-A rating, and the target price for 6 months is 15 yuan. Risk warning: Cooperation with Huawei falls short of expectations.