According to the 2016 report released by the company, the total operating income for the whole year was 4.81 billion yuan, an increase of 33.1% over the same period last year; the net profit belonging to shareholders of listed companies was 640 million yuan, up 40.1% from the same period last year; the net profit attributable to shareholders of listed companies was 420 million yuan, down 5.7% from the same period last year; earnings per share were 0.85 yuan, slightly lower than we expected. The rapid growth of the company's income is mainly due to the rapid growth of the main business, as well as the performance of Jilin Huayi. The rapid increase in net profit is mainly due to the rapid growth of the main business and the 270 million compensation paid to the company by German shareholders for violating the agreement. The decline in net profit after deduction is mainly due to the losses caused by factors such as Shenzhen Wuzhoulong and Jiangsu Cawei, which are affected by the new energy vehicle policy. In addition, the substantial increase in financial expenses caused by bond issuance has also weighed on the performance. New energy vehicle is the future development direction, the company in the new energy vehicle industry layout is perfect, the development prospect is bright. New energy vehicle policies have been introduced one after another, and the stability of the policy is conducive to turning losses into profits of Wuzhou Dragon and Jiangsu Carway, and promoting the company's performance growth. We expect the company's earnings per share from 2017 to 2019 to be 1.11,1.31 and 1.49 yuan respectively, and the target price will be raised to 25.00 yuan to maintain the buy rating.

Support the main points of rating

The performance is growing at a high speed, and the prospect of customer quality is promising. For the whole year, the company achieved a total operating income of 4.81 billion yuan, an increase of 33.1% over the same period last year, mainly due to the rapid growth of the main business and the performance of Jilin Huayi. The net profit belonging to shareholders of listed companies was 640 million yuan, an increase of 40.1% over the same period last year. Affected by the new energy policy and other factors, the performance is slightly lower than we expected. The gross profit margin of the main business was 29.3%, down 0.7% from the same period last year, mainly due to the rapid growth of 189.8% revenue from the interior decoration system with relatively low gross profit margin, while the gross profit margin of the outer decoration system increased by 2.4% compared with the same period last year. The company's customers are domestic high-quality vehicle enterprises, revenue and profits are expected to maintain steady growth.

New energy policies have been introduced one after another, and improving the layout is expected to benefit. New energy vehicles are the future development direction, subsidy policies and recommended catalogues have been introduced one after another, and policy stability is conducive to the healthy development of the industry. The company has a perfect layout in the new energy automobile industry, Wuzhoulong and Jiangsu Carway are expected to turn losses into profits, and the development prospect is bright. In addition, the company strives to promote the listing of Wuzhoulong, Jiangsu Cawei, Wuxi Xingyi and other participating companies, which is expected to obtain rich investment returns and promote the rapid growth of the company's performance.

Main risks faced by rating

1) the business development of new energy vehicles is lower than expected; 2) the business development of internal and external accessories is lower than expected.

Valuation

We expect the company's earnings per share from 2017 to 2019 to be 1.11,1.31 and 1.49 yuan respectively, and the target price will be raised from 21.60 yuan to 25.00 yuan to maintain the buy rating.