Unique opinion: The company began to lay out the rail transit vehicle industry in 2011 and has mastered the most advanced third-generation 100% low-floor vehicle technology in the industry (this is the only one in China except for medium vehicles). The company's 300 low-floor vehicle fund-raising projects have all been completed. The future will benefit from the industry dividends brought about by the booming development of rail traffic in southwest China, and the first PPP project signed by the company with Xinjin County and the subsequent accumulation of project experience will actively promote the continuous implementation of new orders. Investment Essentials 1. The rail transit industry in southwest China is booming. The company has directly benefited from the company's layout of the rail transit industry, which has taken shape. It has become the second domestic enterprise with production capacity for urban rail vehicles (including subways, trams, etc.) other than CRVs. All 300 low-floor vehicle fund-raising projects have been completed. Urbanization development is actively promoting urban rail construction. Judging from the 13th Five-Year Plan, the rail transit industry in the southwest region is booming; we estimate that the four southwest provinces and cities (Yungui, Sichuan, and Chongqing) will add 489 kilometers of subway traffic mileage in the next two years (2017-2018), and the subway car market size will reach 13.2 billion to 17.6 billion yuan; in addition, the streetcar mileage under planning or construction in the four southwest provinces will reach 800 billion yuan during the 13th Five-Year Plan. The cumulative investment scale is expected to reach 104 billion yuan to 120 billion yuan, and the tram market size will reach 198-279 billion yuan. As a local enterprise, the company directly benefits from location advantages. 2. “Small and medium vehicles” are located in the southwest, and with the power of PPP, the company has mastered the most advanced third-generation 100% low-floor vehicle technology in the industry. With the exception of CRRC, this is the only one in China. Since CRRC has a small market share in the southwest region, the company is expected to rely on technology to gain a competitive advantage. In addition, the company participated earlier in the construction of the R1 line of the modern streetcar demonstration project in Xinjin County and pioneered the PPP cooperation model, laying the foundation for the company to presumably obtain the remaining 5 lines in Xinjin County (about 60 kilometers, with an investment of about 7 billion dollars) and the Chengdu tram project (total planned mileage of about 100 kilometers), with huge potential for future development. At present, the construction and operation of the first demonstration line streetcar project in Yibin City has been signed. The length of the line is about 20 kilometers. 3. The traditional business structure has been optimized, and new business growth points have been ushered in. At the same time, the company has successfully divested its construction machinery business. At the same time, it has successfully developed bridge inspection vehicles and other protection systems based on technical reserves for functional components in bridges. It can carry out daily maintenance service business, bring long-term stable income to the company, and grow steadily with the increase in highways or rail bridges. On the other hand, the company strategically acquired 51% of Aowei Technology's shares into the supercapacitor field. Its supercapacitor product range is rich, technologically advanced, and has a good market foundation. At the same time, supercapacitors, as one of the important subsystems of modern trams, help the transformation and upgrading of the company's rail transit industry, and are expected to become one of the new growth points in performance. 4. Investment suggestions: In 2017-2019, the company is expected to achieve net profit of 74 million, 156 million, and 302 million dollars attributable to shareholders of listed companies. The corresponding EPS is 0.11, 0.24, 0.47, and the corresponding PE is 88X, 42X, and 22X, maintaining a strong recommendation rating. 5. Risk warning: PPP projects have not progressed as expected, and investment in the rail transit industry has fallen short of expectations.