This report is read as follows:

The company announcement identified November 29th as the grant date of stock option incentives, and the total cost of equity incentives was locked at 32.195 million yuan. This time, the equity incentives are strong, the cost is high, and the exercise price is high, which demonstrates the confidence in the future development of the company.

Main points of investment:

The company announced that the grant date of stock option incentives is November 29, 2016. the total cost of stock options is locked at 32.195 million yuan, of which 21.86 million yuan is amortized in 2017, which is a little more stressful. This equity incentive is strong, the cost is high, and the exercise price is high, which demonstrates the management's confidence in the future development of the company. Due to the lock-in of equity incentive costs, we slightly raised the company's 2016-2018 EPS to 0.31Universe 0.34 yuan (up 0.00Gash 0.01Universe 0.00), and maintained the "overweight" rating, with a target price of 24.91 yuan.

It is determined on the date of grant that the cost of equity incentive is locked and the condition of performance exercise is a high probability event.

The number of stock options is no more than 13.7 million, reaching 5% of the total share capital. The incentive is strong and the cost is relatively high. After the award date is determined, the total cost of the equity incentive is locked at 32.195 million yuan, of which the amortized cost in 2017 is 21.86 million yuan, equivalent to 33% of the company's 2015 net profit, which has a certain pressure on achieving the performance exercise conditions in 2017. Benefiting from the exchange gains generated by the devaluation of the RMB + the pull of the income side, and superimposing the reduction of the company's financial expenses brought about by the fixed increase of funds raised, we believe that it is a high probability event for the company to achieve the performance exercise condition of equity incentive. The strength of the equity incentive, the high cost and the high exercise price demonstrate the management's confidence in the future development of the company.

Fixed increase landing + equity incentive landing to promote the company to achieve great-leap-forward development. The company's first capital market refinancing and the first equity incentive have landed, which shows that the company has begun to strengthen the use of this capital platform of listed companies. In the future, the company is expected to achieve great-leap-forward development with the help of major shareholders'in-vitro high-quality assets (Tongrun auto parts + Tongrun drive equipment) + high equity ratio (54.62%).

Catalyst: asset securitization or extension is expected to advance.

Core risk: asset securitization or extension expansion is blocked.