Incident: The company plans to purchase 100% of the shares of Chaoda Equipment, an automobile interior and exterior mold company, by issuing shares, at a price of 840 million yuan at an issue price of 650 yuan/share. At the same time, it is proposed to raise no more than 469 million yuan of supporting capital for the non-public offering of shares from no more than 10 specific investors through inquiries for quotations. Horizontal expansion, collaboration, and collaboration between the company and Chaoda Equipment belong to the automobile mold manufacturing industry. This industrial merger and acquisition can achieve a strong alliance. Among them, the company's mold products are automobile cover molds, while Chaoda Equipment's mold products are automobile interior and exterior molds. The business nature of the company and Chaoda Equipment is highly similar, the products complement each other, and there are significant synergies in industrial layout, sales market, technology and management. This industrial integration enabled the company to quickly enter the automotive interior and exterior mold business field, expand product categories, and improve the industrial layout, which is a key measure for the company to achieve its long-term strategic development goals. The original shareholders of Chaoda Equipment promised net profit of 57.5 million yuan, 66 million yuan, and 75.7 million yuan for 2016-2018, respectively, corresponding to PE 15 times, 13 times, and 11 times, respectively, which is beneficial to the increase in the company's performance. We believe that mergers and acquisitions exceed equipment and enhance performance. Collaborative development is also beneficial to the long-term development of the company. Expanding and strengthening the main business, diversified expansion, and it is worth looking forward to the development prospects of the main mold business. The company has grown bigger and stronger through overseas expansion, horizontal mergers and acquisitions, etc. At the same time, the company said it will continue to actively seek cooperation projects in high-tech fields and emerging industries such as aerospace, military industry, new energy, intelligent manufacturing, and high-end equipment manufacturing. On November 24, 2016, Shenyang Tianqi Model, a wholly-owned subsidiary, was reviewed by the Liaoning Provincial Weapons Equipment Research and Production Unit Confidential Qualification Examination and Certification Committee and decided to approve it as a third-level confidential qualification unit for weapons and equipment research and production, indicating that the company is continuing to explore a diversified strategic layout, and subsequent development is worth looking forward to. With the purchase rating, the target price of 8.5 yuan for 6 months is based on molds, actively extending the industrial chain, and laying out emerging industries, the performance valuation is expected to both improve. Assuming that mergers and acquisitions and supporting capital raising are completed in the beginning of the second quarter of 2017, we expect the company's EPS from 2016 to 2018 to be 0.20 yuan, 0.24 yuan, and 0.29 yuan, respectively. The purchase rating is maintained. The target price for 6 months is 8.5 yuan, corresponding to 35 times PE in 2017. Risk warning: The number of new models launched on the market falls short of expectations, and the progress of mergers, acquisitions and restructuring falls short of expectations.