The report guides the leaders in the power equipment inspection and monitoring industry. In recent years, through extension, they have further strengthened their traditional main business and opened up new fields such as railways and military electronics. Benefiting from the increase in arms procurement, orders from Starwave Communications (mainly in microwave hybrid integrated circuits) have exceeded expectations, and Zhiliang Electronics (used in the field of radar electronic warfare) is far short of expectations. The performance of the military sector is expected to explode during the “14th Five-Year Plan” period. Key investment factors that exceeded expectations: military weapons and equipment purchases during the 14th Five-Year Plan period are expected to exceed expectations; Starwave Communications orders exceed expectations; and the actual business situation of Zhiliang Electronics exceeds expectations. If a merger is achieved by the end of 2020, the company's military electronics business revenue will reach 44% and profit will reach 65% in 2021. Path exceeding expectations: 1) The market believes that the probability of a hot war is low, and the scale and growth rate of weapons and equipment procurement is limited. We believe that uncertainty about the peripheral environment is increasing, and the number and total amount of orders received by military industry chain companies are expected to exceed market expectations. 2) The market believes that the purchase price of Zhiliang Electronics is high (price of 860 million yuan, net profit of 0.4 million in 2019, 22 times the static valuation). We believe that the company's actual operating conditions are good, there are sufficient orders on hand, performance growth can be expected during the 14th Five-Year Plan period, and the dynamic valuation is not high. 3) The market believes that the company's military business revenue is relatively low (accounting for only 10% in 2019). We believe that with the implementation of the acquisition of Zhiliang Electronics, the revenue and profit share of the military business will increase markedly in 2021, and the military industry attributes will be greatly strengthened. Catalysts: Complete the acquisition of Zhiliang Electronics; the number or amount of military orders exceeded expectations; and financial performance exceeded expectations. Profit forecasts and valuations estimate that the company's net profit for 2020-2022 will be 3.1/5.4/650 million yuan, with a year-on-year growth rate of 32%/75%/19%, respectively, and corresponding PE of 42/24/20 times, respectively. Considering that there are obvious differences in the growth of different businesses, the company is assessed by segment. Referring to the PE valuation level of comparable companies, the reasonable market value of listed companies is 16.5 billion yuan, which is 30 times that of PE preparation for the 2021 exam. This is the first time a “buy” rating has been given. Risks suggest that the scale of railway or power grid investment falls short of expectations; Zhiliang Electronics mergers and acquisitions have failed; military order delivery progress is lower than expected; major shareholders' equity pledge risk; and the risk that restricted shares will be lifted.