The core view is that Guang Hong's profit level is industry-leading, and the core competitive advantage is outstanding: the company has a profit margin and growth rate that is significantly higher than the average of the EMS industry. The company's net profit in '19 was 429 million yuan, and the CAGR in 13-19 was 50%. Because of the incoming material processing model, the company's gross margin far exceeded that of its rivals in the industry, reaching more than 30%. Refined production management, first-class quality control capabilities, specialized strategies, and rapid response capabilities have built the company's core competitive advantage. In 2019, the company entered the top 50 global EMS industry for the first time, ranking 44 globally, and mainland manufacturers ranked sixth. The trend of healthy customer structure and localization is driving Guanghong's continuous growth: the top six in the mobile phone market, domestic manufacturers occupy four seats, and the top three ODMs are domestic manufacturers, yet the share of domestic EMS companies is low. This mismatch has given domestic EMS manufacturers huge opportunities. The changes in the international environment in the past two years have further encouraged domestic terminal manufacturers and ODM manufacturers to embrace domestic EMS manufacturers. Guanghong has terminal customers of major domestic Android brands and leading ODM customers, and has profoundly benefited from the trend of localization of major customers. At the same time, along with Huawei's split of customers such as Honor and Xiaomi, the company's customer structure is expected to become even healthier. With the launch of 5G commercialization, Guanghong has ushered in growth opportunities in various fields: 5G mobile phone components have increased, PCB board processes have improved, bonding and assembly problems have increased, and the value of OEM has increased significantly. The pandemic has affected mobile phone shipments in the short term, but for a long time, driven by the wave of 5G switches, mobile phone sales are expected to recover rapidly. According to IDC's latest forecast for May 2020, global mobile phone sales are expected to increase 11% year-on-year in 2021. At the same time, Guanghong is also forward-looking in fields such as wearables, network equipment, the Internet of Things, and automotive electronics, with broad profit prospects. The expansion of production capacity has opened up the company's growth ceiling, and the overseas layout has embarked on a firm pace of globalization: the biggest bottleneck in the company's development is production capacity. Before going public in 2018, the capacity utilization rate was over 110%, and production capacity was released through public investment in '18 and '19, helping the company take off for the first time. In 2019, the company continued to set a fixed increase of 2.184 billion dollars and began three phases of the project. The master plan is equivalent to the sum of phase I and phase II projects in the North District. In addition, the company has accelerated its international layout, and the establishment of a mobile phone manufacturing base in India and the rapid release of production capacity. While relieving some of the pressure on production capacity, it is also focusing on emerging overseas markets; furthermore, it has jointly invested and established subsidiaries in Vietnam with related parties, relying on Vietnam's more mature electronics manufacturing industry supporting environment and customer resources, laying a solid foundation for the strategic layout facing globalization and consolidating the company's position in the industry. Financial forecasting and investment recommendations We forecast the company's earnings per share for 20-22 to be 0.5/0.69/1.0 yuan, respectively. According to the valuation of comparable companies 26 times in '21, the corresponding target price is 17.94 yuan, which is a buying rating. Risks indicate that fund-raising projects are not progressing as expected; risk of major customer dependency; risk of falling gross margin; risk of investment in the Indian market.