The company achieved operating income of 1.037 billion in the first three quarters of 2020, + 8.39% of the same period last year, and net profit of 225 million yuan, an increase of 13.67% over the same period last year. The growth rate of the company's income increases quarter by quarter, and the business scale of gradually landing production capacity is expected to continue to expand. Zhiliang Electronics acquisition plan is accepted by the Shenzhen Stock Exchange, which is expected to provide new momentum for the company's long-term development. Under the actual combat training, the demand increases, and the business prospect of reactance equipment is better. in addition, considering the accelerated loading of new models of aircraft and the increase in missile consumption under the trend of actual combat, the demand for microwave components continues to rise, and the company's performance is expected to accelerate release in the future. maintain a "buy" rating.

Income growth increased quarter by quarter, excluding the impact of convertible bonds, the performance increased by 18.09%. The company's 2020Q1-Q3 realized operating income of 1.037 billion, + 8.39% year-on-year, and home net profit of 225 million, + 13.67% compared with the same period last year. The growth rate of Q1/Q2/Q3 revenue of revenue-end companies is 1.56%, 9.06% and 14.67%, respectively, and the revenue growth rate continues to increase. The profit side of the company's gross profit margin is from + 2.45pcts to 47.60% year-on-year. Due to the interest sharing of convertible bonds and the financial lease interest of Zhongning wind power project, the financial expenses have changed from + 275.09% to 87.97 million yuan over the same period last year, and the expense rate has increased by 4.48pcts to 25.23%. But the company's government subsidy income has increased, and other income has increased by 56.21% to 26.7 million yuan? after the completion of Xingbo Communications minority equity acquisition. The profit and loss of minority shareholders decreased from 14.56 million yuan to-4.3 million yuan. Combined with the above factors, the growth rate of the return net profit of the company was higher than that of income.

The balance of bonds payable by the company at the end of the reporting period was 510 million yuan, and it was calculated that the convertible bonds generated 11.92 million yuan of interest at the market interest rate, but the actual interest that the company should pay was about 1.6 million yuan. If calculated on the basis of the actual interest payable and 15% income tax, the company's net return to the parent is about 234 million yuan, an increase of 18.09% over the same period last year.

Sufficient orders and active production performance are expected to accelerate the release, and the conversion capacity of projects under construction may be enhanced. The company has sufficient orders on hand, with a contract debt of 59 million yuan, an increase of 43.90% over the same period last year. In order to ensure that production companies actively prepare goods, the parent company and subsidiary Xingbo Communications increased their raw materials, and Q3 inventory increased by 56.32% to 381 million yuan. As the raw materials corresponding to the prepaid payment at the beginning of the year have been checked and accepted into the warehouse, the prepaid payment is 70 million yuan, a decrease of 50.21% compared with the beginning of the year. As the future production and delivery continues to advance, the company's performance is expected to accelerate the release. In the first three quarters, the company's operating net cash flow was 131 million, a year-on-year increase of 1488.08%. Of this total, the cash received in selling goods and providing services was 845 million, + 3.16% compared with the same period last year, and 439 million in cash paid for goods and services, + 1.37% in the same period last year. Cash flow continues to improve. The company's projects under construction decreased by 50.36% to 68.23 million yuan compared with the reported month-on-month, while fixed assets increased by 11.62% to 1.244 billion yuan compared with the reported month-on-month, or it shows that the company's production expansion projects are gradually being converted into shares, and the production capacity is expected to continue to increase.

Give up the redemption of convertible bonds, short-term share prices may be supported. The company issued 5.85 million convertible corporate bonds in March 2020, with a total issue of 585 million yuan. as of October 16, the company's stock price has satisfied that the closing price of at least 15 of the 30 consecutive trading days is not less than 130% of the current conversion price (that is, 24.44 yuan per share). Triggered the redemption clause of "red phase convertible bonds", and on October 19, the company announced that it would not exercise the early redemption of convertible bonds in the next three months. On the one hand, this behavior avoids dilution of performance after the conversion of convertible bonds into shares. It is calculated that if all convertible bonds are converted into shares, the company's equity will increase by 31 million shares and EPS will be diluted by about 8%; on the other hand, some convertible bondholders will not be able to hold company shares for a long time, and the conversion of shares will cause fluctuations in the company's stock price, and abandoning early redemption will help to maintain the stability of the company's stock price. Combined with various factors to give up redemption is expected to support the stock price in the short term.