The company released its three-quarter report. In the third quarter, it achieved operating income of 1.2 billion yuan, a year-on-year increase of 46.8%; net profit attributable to shareholders of listed companies was 60 million yuan, a year-on-year decrease of 35.2%. The first three quarters achieved operating income of 3.43 billion yuan, up 34.6% year on year; net profit attributable to shareholders of listed companies was 260 million yuan, down 20.7% year on year; and earnings per share of 0.35 yuan, slightly lower than our expectations. The revenue growth in the first three quarters was mainly due to the combined performance of Jilin Huayi and others. The decline in profit was mainly due to losses caused by the shareholding company Shenzhen Wuzhoulong due to factors such as the NEV policy. Furthermore, the sharp increase in financial expenses brought about by issuing bonds also dragged down performance. Excluding the influence of Shenzhen Wuzhoulong, the net profit of Huimu will increase 7% year over year. New energy vehicles are the future development direction. The company buys 35% of Jiangsu Kawei's shares and Shenzhen Wuzhoulong's 48% shares, subscribes for 35% of Changchun New Energy's shares, and the controlling shareholder Zhonghuan invests in the acquisition of 75% of electric vehicles in Stuttgart, Germany. Furthermore, the company plans to issue no more than 250 million additional shares and raise no more than 7 billion yuan to invest in the construction of a high-end electric vehicle R&D and production base in Germany. The layout of the NEV industry is perfect, and the prospects for development are bright. The new energy vehicle policy is expected to be implemented soon. Both Wuzhoulong and Jiangsu Kawei have a variety of electric logistics vehicles and bus products, which are expected to sell well and drive the company's performance growth. We expect the company's earnings per share in 2016-2018 to be 0.88 yuan, 1.11 yuan and 1.26 yuan respectively, giving the company 20 times the price-earnings ratio in 2017, a reasonable target price of 21.60 yuan, and maintaining the buying rating. Key points supporting ratings The NEV industry layout is perfect, and the development prospects are promising. The company acquired 35% of Jiangsu Kawei's shares and Shenzhen Wuzhoulong's 48% shares, subscribed for 35% of Changchun New Energy's shares, and the controlling shareholder Zhonghuan invested in acquiring 75% of electric vehicles in Stuttgart, Germany. Furthermore, the company plans to issue no more than 250 million additional shares and raise no more than 7 billion yuan to invest in the construction of a high-end electric vehicle R&D and production base in Germany. The layout of the NEV industry is perfect, and the development prospects are promising. The new energy vehicle policy is expected to be implemented, and the products are expected to sell well and drive performance growth. Sales of electric distribution vehicles etc. were sluggish in the first three quarters due to reasons such as subsidy checks and policy adjustments. It is expected that the new energy vehicle policy will be implemented in the near future, and electric distribution vehicles, etc. are expected to explode. Both Wuzhoulong and Jiangsu Kawei, which have shares in the company, have a variety of electric logistics vehicles and bus products, which are expected to sell well and drive the company's performance growth. The main risks faced by ratings 1) The development of the NEV business fell short of expectations; 2) The development of the interior and exterior parts business fell short of expectations. The valuation was affected by the NEV policy. We slightly lowered the company's profit forecast. The estimated earnings per share for 2016-2018 were 0.88 yuan, 1.11 yuan and 1.26 yuan respectively, giving the company 20 times the price-earnings ratio in 2017, a reasonable target price of 21.60 yuan, and maintaining the buying rating.