Key investment points: The company issued a semi-annual performance forecast, and the performance grew steadily. The company predicts that 16H1 will achieve net profit of 5632 to 65.7 million yuan, +20% to 40% over the same period last year. During the reporting period, the company stepped up its market development efforts. On the one hand, it broadened the supply system for the new car market for domestic joint venture brands, and on the other hand, optimized the sales revenue structure of its main products and increased profitability. Benefiting from joint venture brand customer expansion, product structure optimization, etc., the company's revenue and profit have maintained steady growth. The electrification of logistics is a definite hot topic in the second half of the year. Logistics electrification is the next hot spot for new energy vehicles. The year-on-year growth rate in July-September is expected to reach 200%, and the growth rate of electric logistics vehicles will be as high as 10 times; with high subsidy support and rich application scenarios, logistics electrification is expected to have huge space and the strongest flexibility. The company shares 51% of Shanghai Lixin and shares electric logistics vehicles. Shanghai Lixin is mainly engaged in R&D, production, sales and service of motors and motor drive control systems for new energy vehicles, supplying Suzhou Jinlong and Nanjing Jinlong. Potential customers include Zhongtong, etc. Related electric logistics vehicles are expected to enter the catalogue from late July to August, and shipments are expected to double. The gambling agreement shows confidence in performance and is likely to exceed expectations. Self-production of components significantly saved costs, and assembly products contributed to increased profits, and performance flexibility was high; the company acquired Shanghai Lixin and had net profit of 1,650, 2860, and 41.8 million yuan and compensation agreements after gambling tax in 16-18, demonstrating confidence in future performance; increased gross profit and doubled combined shipments, and the probability of completion of performance exceeded expectations. Investment advice. The leading domestic vehicle rectifier and regulator market is deeply involved in the middle and high-end passenger car OEM/AM market. The product is modular and upgraded, and the determination to transform is firm. It will continue to benefit from the release of new energy vehicles in the next 2 years, and profits are expected to increase significantly, and growth is good. Assuming that Shanghai Lixin 16H2 is merged, and considering the dilution effect of completing the increase in 2016, we expect the corresponding EPS to be 0.50 yuan, 0.73 yuan, and 1.09 yuan in 2016-2018, corresponding to the closing price of PE on July 12, 2016, 63 times, 43 times, and 29 times. With comprehensive reference to A-share auto parts, new energy vehicles, etc., the average dynamic PE of comprehensive comparable companies in 2016 and 2017 was 76 times and 55 times, respectively. The company's dynamic PE in 2016 and 2017 was 62 times and 42 times respectively, which is at the bottom of the industry. Referring to the average dynamic PE of comparable companies, the company was given a PE valuation of 76 times in 2016, with a target price of 38 yuan, maintaining the purchase rating. Risk warning. Systemic risk; risk of mergers and acquisitions, and emerging businesses falling short of expectations.