Event description: the company received a "notification letter" from Sun Jiexiao, the controlling shareholder and actual controller, and Yuan Jing, who acted in unison, promising to terminate the reduction from the date of the announcement and not to reduce the company's shares in the next 12 months.

Core viewpoints

Terminate the reduction plan and safeguard the interests of shareholders. On September 3, the company issued an announcement on the intention of the actual controller and concerted actors to reduce their shareholdings in the Company, which is expected to reduce no more than 100 million shares due to the need for cash flow. So far, the reduction plan has not been implemented. The termination of the reduction plan and the commitment not to reduce the holdings in the coming year fully shows that the actual controllers are full of confidence in the future development of the company and safeguard the interests of the majority of minority shareholders. We believe that the termination of the reduction plan will not have an impact on the development of the company, but also gave the market a reassurance.

Consumer electronics capacity is expanding rapidly and will be the main growth force next year. After the success of this year's fixed growth project, the company invested first with its own funds to expand the production capacity of consumer electronics metal parts and prepare to quickly enter the market for smart phone metal casings next year. At present, the company has rapidly laid out its factory in Guangdong, purchased a large number of CNC metal processing equipment, and closely communicated and negotiated with downstream mobile phone manufacturers. It is expected to receive substantial orders next year and start to make a profit. We believe that with the steady growth of the main communications industry, consumer electronics products next year will be another main force of the company's performance growth.

The pace of epitaxial mergers and acquisitions has not stopped, and the belief in transformation is still firm. At present, Chunxing is already a leading enterprise in communication radio frequency devices. as an expert in precision processing enterprises, the company has made use of its own advantages to expand its processing business to various fields, including communications, consumer electronics, smart cars, military industry and aerospace. Since the beginning of this year, the company plans to acquire Beijing Cilong, Xi'an Xinghang, Kai Mao Technology and Zehong Technology by means of capital increase and transfer to the target company with its own funds. We expect that when these acquisitions are completed, they will be able to quickly put into operation and generate revenue. The road to transformation of the company is very firm, and we are still optimistic about the development prospects of the company in other areas.

Financial forecasts and investment suggestions

We predict that the company's earnings per share from 2016 to 2018 will be 0.27,0.34,0.42 yuan respectively. Short-term reference RF devices, housing processing and Tesla, Inc. concept can be compared with the company valuation, corresponding to 16 years 45 times PE, we give the target price of 12.15 yuan, maintain the buy rating.

Risk hint

The localization rate of RF devices and the permeability of metal casing slowed down, and the progress of fixed production expansion was lower than expected. The progress of automobile, military and aerospace business was lower than expected.