Incident: In order to meet the needs of the company's strategic transformation and development, Kuangda New Energy, a wholly-owned subsidiary of the company, signed an “Investment Framework Agreement” with Fulin Industry and Trade, Fubon Electric, and Fuwo Electric. The company plans to invest no more than 400 million yuan in cash acquisitions, and will directly or indirectly own 100% of the shares in the three companies. Key investment points: The target enterprise products have been recognized by international first-tier enterprise customers, and future revenue is expected to continue to grow. The investee has been engaged in R&D, production and sales of automobile motors for more than 12 years. The products have passed the strict certification of international first-tier auto parts assembly manufacturers, and their production quality and development capabilities have been widely recognized by customers, and participated in early project research and development by some customers. More than 95% of the company's products are sold to major European auto parts assembly plants. Indirectly supplies products to many internationally renowned automobile manufacturers. Thanks to the increase in industry demand and the development of customers in new markets, it is expected that the investee's income and profit will continue to grow in the future. This acquisition is in line with the company's strategic transformation plan, and mutual advantages complement each other's core automotive parts business. Kuangda Technology's strategic plan has made it clear that auto parts are one of the new strategic footholds. The company will gradually realize the continuous upgrading and transformation of the company from automotive fabrics to automotive trims and auto parts. Through cooperation with investors, it is possible not only to make better use of the investee's product development and production quality control expertise in the field of automotive micromotors, but also to make better use of the customer resources of domestic automobile OEMs accumulated by Kuangda Technology in automotive fabric trim and the strong financing capabilities of listed companies, so as to achieve complementary advantages between the two sides and strengthen and expand the new business sector for core automotive components represented by motor and electronic control. Control the scale of the photovoltaic business and adjust the focus of the new energy business. Up to now, the total number of the company's grid-connected photovoltaic power plants is 410MW. This scale will remain stable in the future due to problems such as power restrictions and delays in subsidies. Furthermore, the company cancelled three pre-project companies for photovoltaic power plants located in Xinjiang. In the future, the company's new energy business will focus on developing the company from electricity to automobile components, especially in the direction related to new energy vehicles. The majority shareholders' increased holdings and fixed price increases are close to current prices, and stock prices are marginal to safety. The majority shareholders increased their holdings by more than 115 million yuan to an average price of 5.60 yuan/share, promising not to reduce their holdings for 12 months. On January 18, 2016, the actual controller of the company advocated for employees to increase their holdings of the company's shares and promised to fully reimburse those who met the conditions for stock prices or losses; it is estimated that the adjusted cost of the increase in employee holdings during the period is about 5.48 yuan/share. The fixed increase of the company was completed on November 6, 2016. The fixed price increase was 6.52 yuan, and the net capital raised was 1.15 billion yuan. The company currently has sufficient capital to support subsequent development. Maintaining profit forecasts and investment ratings: Regardless of the performance contribution of the acquisition target, the company's net profit for 16-18 is estimated to be 3.21, 4.54, and 471 million yuan respectively. Fully diluted earnings per share are 0.20 yuan/share, 0.29 yuan/share, and 0.31 yuan/share, respectively. PE corresponding to the current stock price is 31 times, 23 times, and 21 times, respectively. Keep the “Overweight” rating unchanged.