Event: the company recently announced that the company's controlling shareholder, Tibet Jinzhan, signed a share transfer agreement with Zhejiang Futong Technology on Xinmao Science and Technology. Tibet Jinzhan plans to transfer all its 11.09% stake in Xinmao Technology to Fortis Technology. The transfer price is 8.5013 yuan per share, which is about 60% premium to the current price.

At the same time, the company announced that it would stop planning to issue shares to buy the minimally invasive network.

Comments:

I. the controlling shareholder and the actual controller have changed, and Fortis Technology has become a major shareholder of the company.

According to the agreement, after the above-mentioned shares are transferred, Fortis Technology will directly hold the shares of the company to become the new largest shareholder of the company, and the actual controller of the company may be changed from Xu Hong to Wang Jianyi, the actual controller of Fortis Technology.

Wang Jianyi is the founder of Fortis Group and the current chairman of Fortis Group.

Second, terminate the previous restructuring and Fortis will take over, the company will enter a new stage of development, the future is full of expectations

According to the announcement, the company terminated the acquisition of the minimally invasive network, mainly as Fortis Technology became the company's largest shareholder, the company's future strategic layout and business arrangements will also change. As an industrial investor, Fortis Technology has become the largest shareholder, and the future development of the company is full of expectations.

Fortis Technology is a wholly owned subsidiary of Fortis Group. According to the credit rating report of Fortis Group in April 18, Fortis Group, as one of the six major optical fiber and cable manufacturers in China, has a significant leading position in the field of optical communications. Fortis Group achieved an operating income of 28.86 billion yuan and a net profit of 584 million yuan in 2017, an increase of 18.33% and 550.52% respectively over the same period last year.

Fortis Group has two major businesses, according to Fortis's credit rating report:

1) the whole industry chain of optical communication, Fortis Group is one of the earliest manufacturers in China to master the full synthesis technology of optical rods, forming a complete optical communication industry chain from the core technology of optical fiber industry chain, optical fiber prefabricated rod standard formulation, to optical fiber prefabricated rod research and development, manufacturing, to optical fiber, to optical cable, to optical devices. As of September 2017, the company's annual production capacity of optical rods, optical fiber and optical cable has reached 1500 tons, 40 million core kilometers and 35 million core kilometers, respectively. In addition, the company has a production capacity of 500000 sets of optical communication network equipment.

2), the field of metal cables, including precision copper, marine engineering cables, medium and low voltage to high voltage and ultra-high voltage cables, high temperature superconducting cables and civil wires.

3. Profit forecast and valuation:

The company will terminate the minimally invasive network restructuring and Fortis will take over, and the future development strategy is expected to change. Fortis Group, as a leading company in the field of optical communications, has large-scale and high-quality optical communications and energy power cable assets, the company may enter a new stage, the future development is full of expectations. The company is expected to maintain an "overweight" rating of 0.12,0.14 and 0.17 yuan from 2018 to 2020.

Risk hint: uncertain development direction; uncertain share transfer