Investment points: Scope of inquiry: Dengyun Co., Ltd. belongs to the automobile engine valve industry. It uses parts companies with commercial vehicle business and passenger car business as comparable companies. The PE corresponding to the 2014 Wind consensus forecast was 19 times, the initial discount was 20% as the reserve price, the inquiry range was 15-19 times PE, and the corresponding price was 7.29 to 9.24 yuan (if issued within this price range, Dengyun shares would not be able to meet the capital raised). We believe that the reasonable pricing range of Dengyun shares is centered around 19 times PE, between 17 and 21 times, and the price is 8.27 to 10.29 yuan. According to the total amount of capital to be raised (taking into account the 3% issuance fee) and the upper limit of shares to be issued, the pricing threshold value for this listing is 9.97 yuan, corresponding to our estimate of the 2014 EPS of 0.49 yuan, which is 21 times PE. How big is the market? On average, each commercial vehicle (basically a diesel car) requires about 12 valves and a passenger car has 13 valves. In 2013-2015, the automobile valve market demand was 2.8 million, 3.1 million, and 330 million units, and Dengyun's market share was about 5%. However, the current market is generally relatively stable, and we believe that Dengyun is expected to increase its market share through the launch of a fund-raising project. How competitive is it? Dengyun is currently the third largest in the industry in China. Annual R&D expenses account for more than 3%, and continue to increase. R&D investment is large, and R&D centers with provincial standards are in place. The three largest foreign companies, Eaton, TRW, and MAHLE, are large in scale and strong, and the companies are still relatively weak in comparison. What is the growth rate? 1) After the implementation of the national four standards for diesel engines, the technical and process requirements for valves increased, and small enterprises in the industry withdrew, and the company used this to increase its share. 2) Increasing the profit level of gasoline engine valves can bring about significant improvements. The 2013 interim report shows that the gross margin of gasoline engines is only 5.5%. According to this level, gasoline engine valves should be at a loss. Fund-raising project: The production capacity of 20 million valves was added, an increase of 74%. After production is put into operation, the company's insufficient production capacity can be effectively alleviated, but there is also depreciation pressure. Risk warning: 1) Depreciation pressure is high after the fund-raising project is put into operation. 2) Survive big. 3) The risk of an overall downturn in the automotive industry. 4) Risk of exchange rate fluctuations.