Acquisition of Singapore Airlines Technology for 1.53 billion yuan in cash: The company plans to purchase 100% of Singapore Airlines Technology's shares through its wholly-owned subsidiary Orient Limited through cash payment at a transaction price of 1.53 billion yuan. At the same time, Singapore Airlines Technology promised that net profit after deduction in 2016-2018 will not be less than 160 million yuan, 205 million yuan and 255 million yuan. The acquisition will help the company extend the sapphire industry chain, integrate superior industry resources, exert synergy, and optimize the company's product structure, increase sustainable profitability, and reduce operating risks. The cost advantage is expanding, and the short-term oversupply of sapphire is beneficial to industry integration in the medium to long term: due to falling electricity costs, falling high-purity alumina prices, and shortening the long crystal cycle, we expect the company's Changjing costs to be reduced by about 20% in 2015, far better than the industry average. As demand for downstream consumer electronics products falls short of expectations, the price of sapphire will drop 25% in 2015. We believe that the vast majority of companies in the industry will not be profitable at this price, which will help eliminate uncompetitive companies in the sapphire crystal field and achieve industry integration, and the company's market share is expected to increase. Revenue and net profit grew rapidly in the first three quarters: in the first three quarters of 2015, the company achieved operating income of 880 million yuan, an increase of 189% year on year; realized net profit of 2.06 yuan, an increase of 345% year on year. The company's performance was in line with expectations. The main reason for the increase in performance was the impact of the sharp increase in sales of sapphire crystal materials and sales of sapphire crystal growth equipment in the current period. Profit forecast and investment suggestions: We expect the company to achieve operating income of 130 billion yuan, 1,887 billion yuan and 2,847 billion yuan in 15, 16 and 17 respectively, and net profit of 290 million yuan, 424 million yuan and 641 million yuan, corresponding to EPS of 0.37 yuan, 0.53 yuan and 0.81 yuan respectively. If we consider Singapore Airlines Technology's performance commitments, we expect the company's corresponding EPS for 15, 16, and 17 to be 0.37 yuan, 0.76 yuan, and 1.10 yuan, respectively. Referring to comparable company valuations, we gave the company a target price of 40 yuan, corresponding to 36 times PE in 17 years, maintaining a “buy” rating. Risk warning: The amount of sapphire used in consumer electronics falls short of expectations, and the price of sapphire is lower than expected