Purple core matters Comments: capital increase Purple and create a research and development center in Chengdu

Ziguang Tongchuang capital increase to promote FPGA research and development. 'Purple light to create' is a wholly owned subsidiary of the company 'Maoye Chuangxin' subsidiary, in order to ensure continuous investment in R & D Purple Light to speed up the process of market-oriented products and promote The healthy development of its business, the company decided to capital increase Tongchuang. Investors for the new purple and purple Tongchuang original shareholders 'Juren investment', the original controlling shareholder of the same industry with a ray of light core does not participate in this capital increase, capital increase For the cash .In this capital increase, the company held a 73% stake in Ziguang Tongchuang through wholly-owned subsidiary Maoye Chuangxin, and Juren Investment held 27% of its equity. After this capital increase, Core holds 36.5% equity of Tongchuang and 27% equity of Juren Investment Co., Ltd. Ziguang was newly established as a wholly-owned subsidiary of Beijing Ziguang Capital Management Co., Ltd., a wholly-owned subsidiary of Ziguang Group, an indirect controlling shareholder of the Company, After the replenishment, Purple Light is not included in the scope of the consolidated statements of the company, to a certain extent, reduce the impact of its follow-up R & D investment on the company's operating performance.Violet Light is mainly engaged in FPGA product design and EDA tool development business, is currently Line series of new product development, and actively expand the application of the relevant market. The capital increase is required and healthy development of purple Tongchuang business, beneficial to the smooth progress of research and development projects, enhance competitiveness and be beneficial to their long-term development.

To set up R & D center in Chengdu to enhance R & D strength To meet the needs of sustainable development of the Company in the future, the Company intends to make full use of the resource advantages of Chengdu High-tech Zone in terms of human resources and industrial environment, and its wholly-owned subsidiary Chengdu National Micro Technology Invest in the R & D center in Chengdu and build a R & D platform integrating R & D and testing with a total investment of Rmb597 million, of which construction cost is Rmb460 million. The project construction capital is self-raised by Chengdu Guochao Technology Co., The project construction period is three years and is expected to be completed in 2020. After the completion of the project, the company's research and development strength and technological innovation will be further enhanced.

Consider the cooperation with the Yangtze River storage.Volk Kwok Core (49.710, 4.52, 10.00%) said recently in the interactive platform, in the future if the Group's subsidiary of the Yangtze River Storage DRAM DRAM manufacturing capacity, the company will consider its cooperation.In 2016, the company Through the acquisition of Xi'an Ziguang core into the field of memory chip design, Xi'an Ziguang Guoxin mainly engaged in the design of DRAM storage wafer, the current products mainly for the professional foundry production.In recent years, due to the rapid development of downstream smart phones and other intelligent terminal industries, storage Chip demand has greatly increased, while the current number of foundries on the market less, in order to obtain limited capacity, the company raised the cost to the foundry, resulting in demand is strong, the company's memory chip margins have continued to decline.Changjiang Storage and purple core are the Group, if the future of the Yangtze River storage with wafer manufacturing capacity and reach a cooperative relationship, then the company's chip manufacturing will be less controlled by other foundries, the company's future business performance improvement is very Great role in promoting.

Earnings forecasts and ratings: We estimate that the operating revenue of the Company from 2017 to 2019 will be 18.46, 25.02 and 33.45 billion respectively. The net profit attributable to the parent company will be 3.21, 4.20 and 5.10 billion respectively. Based on the latest share capital of 607 million shares, earnings per share Respectively, 0.53, 0.69, 0.84 yuan, the latest share price corresponding PE were 85, 65, 54 times, maintain 'overweight' rating.