Events:

Jiangsu pterodactyl, a wholly owned subsidiary of Wuxi pterodactyl, signed a "zone entry agreement" with Wujin high-tech zone on October 12, 2016. among them, Wujin high-tech zone sold 80 mu of industrial land to Jiangsu pterodactyl. Jiangsu pterosaur invested 1 billion yuan in aircraft and automobile tire remanufacturing.

Wuxi pterosaur accelerates development with huge investment

Wuxi pterosaur is mainly engaged in the remanufacturing and sales of aviation tires, automobile tires and industrial vehicle tires. it is the only enterprise in China that has been approved by the CAAC to engage in aviation tire business, and has a number of invention patents. The company acquired its 36% stake in July 2016 and said it would continue to increase its stake to become the controlling shareholder of Wuxi pterosaur within two years of the completion of the transfer. We believe that Wuxi pterodactyl has invested heavily to accelerate its development in the field of automobile and aircraft tire remanufacturing, and is expected to become a leader in this field in the future, while the company as the future controlling shareholder of Wuxi pterosaur is expected to fully benefit.

Continue to promote the transformation, the follow-up is worth looking forward to

The company joined Pan-Asia in January 2015 and dabbled in the field of new materials. The latest "full-frequency sound-absorbing cotton" project invested by Pan-Asia Micro-access Company is mainly used in the automobile market. it is the first material to achieve lightweight and sound absorption and noise reduction of automobiles, which can not only replace imports but also be widely used in the domestic automobile market. In November 2015, he took an 18.18% stake in Sichang Telecom, dabbled in the field of communication technology, and devoted himself to the research, development, production and sale of high-end wireless network communication chips in areas such as smart home. In July 2016, he joined Wuxi pterosaur and engaged in the remanufacturing of automobile tires. We believe that the company acts frequently and intends to open up new areas and create new growth points for the company's profits.

Give a buy rating with a 6-month target price of 18.5 yuan

The company's main business can be stable, and the transformation is expected. The EPS from 2016 to 2018 is expected to be 0.21,0.24 and 0.28 yuan, with a buy rating of 18.50 yuan.

Risk hint: automobile production and sales have fallen sharply; the transformation is not as expected.