Maintain the communications stock (NASDAQ:SPRD) Buy rating

The following is a summary of the contents of the report:

We expect that the share price of the exhibition will be close to 31 US dollars, that is, the Tsinghua Violet bid. It should be pointed out that RDA Microelectronics has also signed a merger agreement with Tsinghua University, reflecting the Chinese government's support for the industry's leading companies. To this end, we believe that the communications will continue to become China's smart phone IC card market major suppliers.

Third-quarter results are higher than we expected: in the third quarter of fiscal year 2013, the communications revenue for 293 million U.S. dollars, the chain growth of 5.6%, year-on-year growth of 56%, higher than our expected 255 million dollars. Gross margin of 37.4%, lower than the second quarter of 37.8%, mainly under the pressure of pricing burden. Net profit of 35.7 million U.S. dollars, the chain growth of 2.4%, year-on-year growth of 53%, higher than our expected 7%. In the first three quarters of this year, the exhibition of communications per share diluted earnings of 1.64 U.S. dollars, an increase of 26%.

The quarter is still strong: The company is expected to be driven by new products, the fourth quarter will continue to grow revenue. The communication also says the market for entry-level smartphones (priced below $40) is heating up again and will continue into 2014 years. In the third quarter, the communication has begun to produce a single core wcdma/hspa+ chip, and began to provide mobile phone customers with four of nuclear products.

Valuation: We continue to maintain the "buy" rating of the communications stock, while maintaining a 31 dollar target share price unchanged.