1. Sales of new energy buses are growing rapidly, and an inflection point in the performance of the main business has reached an inflection point. The company's net profit for the first three quarters of 2015 was 598.27 million yuan (after deduction - 169.262 million yuan). The current performance forecast shows that the net profit for the whole year was 113.685 million yuan (after deduction - 409.35 million yuan), that is, the company's net profit for the fourth quarter was about 173.512 million yuan, the highest value in a single quarter since the past three years, and an inflection point in the main business performance has been established. The reversal in performance is closely related to the annual sales volume of 1,705 new energy buses reaching a record high (of which 1,498 were sold in the fourth quarter), and the company has successfully completed the transformation from a traditional bus manufacturer to new energy. The acquisition of Yineng Electronics cuts into the battery management system (BMS) business, and the battery system integration (pack) business helped the company achieve a three-level jump. The company's acquisition of 70.4% of the shares of Huizhou Yineng Electronics, a leading domestic BMS company, through a non-public offering, entered the BMS business as the first jump, and the pack business with Samsung SDI, which has more market space, was the second jump. Achieving higher market competitiveness for new energy buses and logistics vehicle products through battery systems that are higher than the market average and lower prices was the third leap. The three-level leap is in line with the transformation and upgrading of the company's business, providing a solid foundation for the company to accumulate battery system development experience and enter the largest new energy passenger vehicle market. 3. Short-term policy adjustments do not change long-term trends, and the company's strength in pack development ensures a leading position. Currently, the market's concerns about the company are mainly that YiNeng Electronics' pack business mainly targets buses, and at this stage it mainly uses ternary batteries supplied by Samsung SDI. However, as the Ministry of Industry and Information Technology suspends acceptance of ternary battery buses for inclusion in the NEV promotion catalogue, Yineng Electronics' pack business will be greatly affected. We have different views on this: (1) The advantage of 100 million energy lies in the development capabilities of BMS and PACK. After nearly 8 years of technical upgrades, its BMS products are now clearly superior to similar products in performance and consistency. This is also the key for Samsung to choose it as a pack partner. Therefore, Yineng can avoid the impact of this incident by purchasing high-quality domestic lithium iron phosphate battery products to avoid the impact of this incident; (2) another major customer of Yineng pack products is logistics vehicles. The Ministry of Industry and Information Technology's approval of the application of ternary batteries in logistics vehicles and the explosive growth in the probability of pure electric logistics vehicles in 2016 mean that a significant part of the company's business was not substantially affected in 2016; (3) the “suspension” is not a “ban”. Market demand determines that policy adjustments will not take too long. We believe that whether it is the top-down performance plan (the energy density of a single battery reaches 350 Wh/kg in 2020) and the fine-tuning of the 16-20 subsidy rules (introduction of the Ekg index), or consumers' demand for higher range from the bottom up, it has determined that ternary batteries are still the best technical solution for power batteries for new energy vehicles at this stage, including buses. The company's accumulation in the development of ternary battery systems is conducive to maintaining the company's first-mover advantage in the rapid growth of future business. 3. Investment proposal: The acquisition of Yineng Electronics enters the battery management system business, and the battery system integration business helps the company achieve a three-level jump. Regardless of additional distribution and dilution, we expect the company's EPS for 15-16 to be 0.18 and 0.34 yuan respectively, corresponding to PE 59 and 32 times (performance may increase), which is recommended. 4. Risk warning: Production line shipments of partner battery companies are lower than expected. Demand for battery systems from partner automakers fell short of expectations.