Group 1: Acquisition and Synergy - The acquisition of Ligon Technology is expected to create strong synergy effects due to low overlap in agency rights and customer groups, allowing for resource complementarity [1] - The company has a competitive advantage in passive component sales, while Ligon Technology excels in the automotive sector, enabling mutual enhancement of capabilities [1] - The collaboration will extend Ligon Technology's technical advantages in the automotive field to other industry markets [1] Group 2: Semiconductor Industry Outlook - The semiconductor industry is expected to maintain a prolonged boom, driven by AI computing demand and the certainty of domestic substitution [2] - Short-term fluctuations may occur due to inventory adjustments or external policy changes, but long-term growth is anticipated [2] Group 3: Financial Performance - The company's gross margin is higher than that of other distributors due to superior operational capabilities in supply chain management and inventory turnover [3] - Post-acquisition, the overall gross margin may slightly decline, but the lower expense ratio of Ligon Technology is expected to enhance net profit margins [3] Group 4: Risk Management - The probability of bad debts is low due to a stable customer base primarily composed of B-end manufacturing enterprises with strong payment capabilities [4] - A strict internal control mechanism is in place to manage bad debts, ensuring a low bad debt rate [4] Group 5: Cash Flow Challenges - Negative operating cash flow is primarily due to mismatched payment terms and the accounting treatment of commercial bill discounts [5] - The company has secured sufficient bank credit to support cash flow needs and is working with core customers to improve payment efficiency [5] Group 6: Long-term Development Goals - The company aims for significant revenue breakthroughs through a dual strategy of 70% organic growth and 30% acquisitions [6] - Future growth will focus on expanding into overseas markets, particularly in Southeast Asia along the Belt and Road [6] - The company plans to balance its industry structure across automotive, consumer, AI, and server sectors [6] - There will be an emphasis on increasing the share of active components and optimizing product structure to enhance industry influence [6]

Core Viewpoint - The military electronics sector is experiencing a clear order recovery, with an acceleration in domestic and military trade directions due to the impact of "reciprocal tariffs" [1][7]. Group 1: Domestic Control in Military Applications - The demand for domestically controlled components in military applications is a hard requirement, with significant room for domestic production of chips and sensors in the internal assembly and military trade sectors [2]. - The importance of domestically produced military chips is increasing due to potential embargo risks and security threats posed by foreign components [2]. - The economic viability of imported chips has diminished following multiple rounds of tariffs, making domestic alternatives more attractive [2]. Group 2: Military Demand and Order Recovery - Military electronics demand is currently in a clear recovery phase, with most companies reporting significant order improvements for Q1 2025 [3]. - Companies like AVIC Optoelectronics and Aerospace Jiangnan Group have reported strong growth in defense-related orders, indicating a robust recovery trend [3]. - The order recovery is expected to be sustainable, with a positive outlook for Q2 2025 and the entire year [3]. Group 3: Civilian Expansion Opportunities - The automotive and industrial sectors are primary areas for military electronics companies to expand into, benefiting from the favorable impact of tariffs [4][5]. - The willingness of customers in these sectors to adopt domestic alternatives is improving, particularly for analog chips and sensors [4]. - The "reciprocal tariffs" policy is expected to facilitate faster growth in civilian applications for military electronics companies [5]. Group 4: Investment Strategy - Key areas of focus for investment include the ammunition supply chain and new material directions, with a strong emphasis on mixed-label targets that show higher recovery certainty and potential for exceeding expectations [7]. - Specific components of interest include digital chips, analog chips, sensors, connectors, modules/components, and passive components [7].