1. Event Overview: The company released its 2020 annual performance forecast. Net profit from the mother is expected to be 70 million yuan to 75 million yuan for the whole year, up 177.62%-197.45% from the previous year.

2. Integrate the detailed management of departments. The period expense ratio declined year-on-year: in the first three quarters of 2020, the company's sales expenses rate was 5.47%, down 2.17 pct from the previous year, and the management expenses rate was 4.90%, down 1.04 pct from the previous year. In 2020, the company increased cost control, integrated departmental resources, carried out fine management, improved management standards, and saved unnecessary expenses, making current management expenses lower than last year. At the same time, due to the impact of the epidemic on travel expenses, the company has actively adopted more reasonable online marketing methods, and sales expenses have decreased while receiving stable orders.

3. New domestic and foreign relay orders are signed, and future performance is guaranteed: In September 2020, the wholly-owned subsidiary Tongyu Hong Kong signed a sales agreement with Russian Modern Communications Technology Co., Ltd. The company expects to sell base station antenna products totaling 100 million US dollars to Hyundai Communications, which will help the company's foreign order performance to recover. Since the outbreak of the global COVID-19 pandemic, the pace of infrastructure communication construction in some regions abroad has slowed, and the company's export revenue in the first half of the year has declined sharply year-on-year. The company has now signed a sales agreement with Hyundai Communications, and the company's sales share and market position in Europe have been further enhanced. In addition, in November 2020, the company disclosed the “Notice on Receiving the Selection Results of the Smart Power Exchange Cabinet Project”. The company signed an intensive e-commerce procurement project agreement with Tower Energy Co., Ltd. on December 24 as the first choice. The execution amount of the contract was about 76.7656 million yuan, accounting for about 4.69% of the company's most recent audited annual revenue, which is expected to have a positive impact on the company's future business performance.

4. 5G network construction drives a boom in demand for base station antennas and RF device products: The company is committed to developing and producing base station antennas, microwave antennas and radio frequency device products. The microwave antenna series products cover the 5GHz-80GHz frequency range and are widely used in main line networks and terrestrial relay network systems for digital microwave relay communication. The main customers are domestic and foreign communication system operators and equipment suppliers. In 2020, the total number of mobile communication base stations nationwide reached 9.31 million, 5G network construction progressed steadily. More than 600,000 5G base stations were built, all more than 718,000 5G base stations have been opened, and 5G networks have covered cities above prefectural level and key counties and cities across the country. The construction of 5G base stations is expected to further drive the company's business growth.

5. The equity incentive plan shows confidence: In October 2020, the company issued an announcement on granting stock options for the first time to incentive recipients of the 2020 Stock Options Incentive Plan. It plans to grant 3.835 million stock options to incentive recipients at a price of 23.85 yuan/share. The types of underlying stocks involved are RMB A-share common shares, and the incentive targets are 154 core managers and core technical (business) personnel. The incentive plan is conducive to further improving the corporate governance structure, improving the company's incentive mechanism, and contributing to the continuous development of the company.

6. Investment advice: The company's 2021-2022 EPS is expected to be 0.31/0.35 yuan/share, respectively, and the corresponding dynamic price-earnings ratio is 49/43 times, respectively, covering the “increase in holdings” rating for the first time.

7. Risk warning: risk of 5G base station construction falling short of expectations; exchange rate risk; risk of impairment of goodwill.