Abstract: National security requirements drive the modernization and informatization of military equipment. Information technology plays an important role in improving the combat capability of active weapons and equipment. By installing a guide head, the strike accuracy of tactical missiles has been greatly improved. The company is a guide head development base for precision guided weapons in China. It has a leading domestic technical level, and its production capacity is the largest in the country and the highest in the world. Its products include lasers, televisions, composites, etc. The company's domestic competitors are mainly enterprises belonging to the Ordnance Group and enterprises affiliated with other military central enterprise groups, and there is little competition from civilian enterprises. The company has an important position in the field of army equipment manufacturing. According to rough estimates, during the “13th Five-Year Plan” period, the growth rate of new demand and replacement demand in the military army equipment manufacturing industry is expected to match the compound annual growth rate of China's defense spending. The company is a designated national production base for multi-purpose missile launchers and armored reconnaissance vehicles in China. The product model is unique, and there are no domestic competitors. Since 2014, the company's gross margin has shown a trend of falling first and then rising. Among them, the military goods business has played a positive role. The company's gross margin level is expected to stabilize at the current level. Profit forecast: It is predicted that the company's revenue will increase by 10%, 10% and 10% respectively in 2017-2019, with net profit attributable to mother reaching 62 million yuan, 68 million yuan and 76 million yuan respectively, and EPS of 0.12 yuan, 0.13 yuan and 0.14 yuan. Combined with the company's current stock price, the company is given an “increase in holdings” rating. Risk warning: 1) the risk that the equipment update and replacement process falls short of expectations; 2) the risk that the company's main military demand falls short of expectations.