Abstract: Shenzhen Huaqiang is a well-known high-end service provider in the domestic electronic information industry chain. Since entering the field of authorized distribution of electronic components through mergers and acquisitions in 2015, the company has rapidly emerged as a leading local distributor. In 2019, the company achieved revenue of 14.355 billion yuan, with a five-year compound growth rate of 47.82%, ranking first among domestic listed distribution companies. The company's main business is mainly divided into three blocks: offline authorized distribution of electronic components (86.08%), online trading platforms (4.66%), and physical trading markets (3.29%) (2020 semi-annual report data). Authorized distribution of electronic components: Focus on the high-volume, blue-chip enterprise offline distribution market. The company acquired Xianghai Electronics in 2015 and entered the authorized distribution field. Since then, it has successively acquired Pengyuan Electronics, Qinuo Technology, and Xinfei Electronics, and formed Huaqiang Semiconductor Group to deeply integrate the authorized distribution business to achieve a comprehensive layout of multiple products, sectors, and at home and abroad. Online trading platform: Focus on small-batch, small and medium-sized long-tail trading markets. At the end of 2019, the company formed Huaqiang Electronics Network Group to integrate the electronic component long-tail demand service business. Based on the efficient intelligent trading system built by Jieyang Xunke, combined with the website system of Huaqiang Electronics Network, the company created the most unique online electronic components and related products spot trading platform in China. Physical trading market: Led by “Huaqiang Electronic World”, it aims to provide suppliers and customers with an interactive market space. From an industry perspective, the electronic component distribution industry has broad space. On the one hand, it will benefit from the overall electronics industry growth opportunities brought about by emerging market demand such as downstream 5G, automotive electronics, and the Internet of Things. On the other hand, “domestic substitution” will win the industry's countercycle and ride the trend of the semiconductor industry moving eastward, and local market demand will expand more and more. Judging from the competitive landscape, mergers and acquisitions have promoted the increase in resources and concentration in the distribution industry. Leading manufacturers have benefited from Hengqiang, which has a strong scale effect. Shenzhen Huaqiang has completed deep integration of online and offline electronic components, and has core competitiveness in terms of location, technology, scale, business line, customer resources, etc., and is expected to continue to grow in the field of electronic components distribution. We are optimistic about the company's future growth opportunities as a leading local distribution leader. The estimated revenue for 2020-2021 is 162.41 billion yuan and 18.632 billion yuan, and net profit to mother is estimated to be 6.56 billion yuan and 750 million yuan, corresponding to 24.24 and 21.18 times PE, respectively, giving it an “increase in holdings” rating. Risk warning: Downstream demand in the electronics industry continues to be sluggish; corporate mergers and acquisitions fall short of expectations; long-tail demand spot trading platforms fall short of expectations; sharp impairment of goodwill; rise in short-term liabilities; inventory and accounts receivable risks; and operating and financial risks caused by related transactions.