The company released a performance forecast. The first three quarters are expected to achieve net profit of 225 million yuan to 240 million yuan, a year-on-year increase of 13.51-21.08%, and an increase of 21.78% to 29.35% after adjusting for convertible debt factors. Benefiting from the steady progress of various projects in the power sector, military sector, railway and rail transit sector, and the official commercial operation of new energy projects, it is expected that the annual performance will maintain steady growth. The company's Zhiliang Electronics acquisition plan was accepted by the Shenzhen Stock Exchange. Demand has increased under practical training, and the prospects for the electric reactor equipment business are improving. Furthermore, considering that demand for microwave components continues to rise due to the accelerated installation of new models of aircraft and the increase in missile consumption due to practical trends, the company's performance is expected to accelerate in the future and maintain the “buy” rating. The performance growth rate for the first three quarters increased by 21.78% to 29.35% after adjusting for convertible bond factors. The company released a performance forecast. It is estimated that the net profit of the mother from 1 to 3Q will be 225 million yuan to 240 million yuan, an increase of 13.51-21.08% over the previous year, and the growth rate will increase from 20H. Among them, Q3 will achieve net profit of 64 million yuan to 80 million yuan, an increase of 14.48% to 43.09% over the previous year. During the reporting period, the company's various projects in the power sector, military industry sector, and railway and rail transit sector progressed steadily. The 100MW wind power project built by Sun Company's Zhongning County Yinbian New Energy Co., Ltd. passed 240 inspections and was officially put into commercial operation. The company's convertible bonds generate book financial expenses of about 18 million yuan, and the actual interest that the company needs to pay is about 1.6 million yuan based on the 0.5% coupon interest rate. After adjusting for convertible bond factors, the company's net profit for the 1st to 3rd quarter is estimated to be about 241.4 million yuan to 256.4 million yuan, an increase of 21.78% to 29.35% over the previous year. Zhiliang Electronics's acquisition plan was accepted by the Shenzhen Stock Exchange. The prospects for the reactor equipment business are improving under practical training. Electronic warfare is the key to modern information warfare. The main purpose is to disrupt the normal use of the enemy's electronic equipment and guarantee one's own electronic equipment. As our military's practical training continues to deepen, the demand for electronic warfare equipment continues to rise. The company announced that it plans to acquire Zhiliang Electronics. Zhiliang electronic products cover the four major segments of electronic reconnaissance, electromagnetic protection, radar anti-jamming, and simulation training, forming a complete business system. At the same time, Zhiliang's overall technical support level is high, and the supporting relationship is stable after product finalization. Furthermore, the company's subsidiary Starwave Communications is an upstream supplier to Zhiliang, and it is expected that the two sides will collaborate more closely after the restructuring is completed. The competitiveness of Zhiliang products will further improve, and it is expected that the electronic competition will become an important support point for the company's future development. The acquisition plan has now been accepted by the Shenzhen Stock Exchange. Driven by aircraft loading and missile loading, microwave component performance is being released at an accelerated pace. The company's microwave component business is carried out by its subsidiary Starwave Communications. Microwave components are mainly used in fields such as military and civilian communications, radar, and missile guidance. Demand for microwave components continues to improve as new models of aircraft are being installed at an accelerated pace and missile consumption increases under the practical trend. Microwave components such as filters produced by Starwave Communications have been widely recognized by the market, and stable supporting relationships have been formed with downstream research institutes, military industry groups, etc. Military orders are strong. At the same time, Starwave Communications is actively expanding production capacity. The new production line is expected to be put into operation in the second half of the year. In July 2020, the company announced that Starwave had signed a major contract with a cumulative amount of 500 million yuan. It is expected that the results will be released at an accelerated pace. Risk factors: military orders fall short of expectations; equipment installation progress falls short of expectations; civilian development falls short of expectations; equity mergers and acquisitions are progressing less than expected. Investment suggestion: The company is a rookie in China's military industry. Benefiting from the steady progress of various projects in the power sector, military industry sector, railway and rail transit sector, and the formal commencement of commercial operation of new energy projects, it is expected that performance will grow steadily throughout the year. The company announced that it plans to acquire Zhiliang Electronics. Demand has increased under practical training, and the prospects for the electrical reactor equipment business are improving. Furthermore, considering the accelerated installation of new models of aircraft and the increase in missile consumption under the trend of practical use, demand for microwave components continues to improve, and the company's performance is expected to be released at an accelerated pace. Maintain the company's 2020/21/22 EPS forecast of 0.71/1.34/1.70 yuan, and the company's current price of 28.85 yuan. The corresponding PE for 2020/21/22 is 40/21/17 times, maintaining the “buy” rating and target price of 40.25 yuan.