Key investment events: The company announced that it achieved operating income of 678 million yuan in 2016, an increase of 118.79% over the previous year; net profit of 155 million yuan, an increase of 118.88% over the previous year, net profit after deduction of 153 million yuan, an increase of 116.36% over the previous year; and net cash flow from operating activities of 46 million yuan. At the same time, the first quarter report was released, achieving operating income of 134 million yuan, an increase of 56.65% over the previous year, and net profit of 35 million yuan, an increase of 34.01% over the previous year. Motor controllers are growing at a high rate, and the fee rate for the period has declined markedly, showing a scale effect. Benefiting from the rapid development of the NEV industry, the company has achieved high growth in its main business. Electric vehicle motor controllers are 555 million, accounting for 81% of the company's business, an increase of 165.4% over the previous year. The medium and low voltage inverter and servo drive business achieved total revenue of 11,002.2 million yuan, up 15.2% and 26.6%, respectively, from the previous year. The company's comprehensive gross profit margin in 2016 was 44.75%. Affected by the decline in gross profit of motor controllers, the overall gross margin fell by 1.84 pct. ; Sales/management/finance expenses were 0.49/0.67/-01 million yuan, a change of 116.71%/50.83%/-0.29% over the same period last year, and the corresponding rate changed -0.07/ -4.44/ 0.12 pct over the same period last year. , the three expenses are well controlled. The original A-share electronic control target waits for downstream electric logistics vehicle sales to be released. The company's motor controllers are mainly used in the fields of electric logistics vehicles and electric buses. The new energy vehicle subsidy policy has been implemented, and the subsidy is still economical even when the subsidy falls by 20%. The first three batches of special purpose vehicles in the NEV recommendation catalogue accounted for a total of 20.87%. As a major member of the “Watermar Innovation Alliance”, most of its business revenue comes from this alliance, and has accumulated a large number of high-quality NEV customers and parts suppliers. Currently, the company's customers in the bus sector include mainstream car companies such as Jinlong, Ankai, and Wuzhoulong. Customers in the logistics vehicle sector mainly include Dongfeng, FAW, and Universiade. Future growth in logistics vehicle volume is expected to bring greater flexibility to the company's performance. Outstanding R & D capabilities, and layout in the field of electronic control for passenger cars. The company's founding team comes from Huawei and Emerson. The company attaches importance to research and development. Currently, the company's R&D technicians account for a high proportion, accounting for 40.37% of the total number of employees, and annual R&D expenses account for 7.23% of total revenue. In the new energy vehicle market, the main growth in the future will come from passenger cars. The company lays out the field of passenger vehicle electronic control, actively expands the R&D team for motor controllers for new energy passenger vehicles, increases R&D investment and technical reserves, and seizes opportunities in the passenger car market. Furthermore, benefiting from industrial recovery and increased demand from traditional industrial manufacturing industries such as downstream machine tools, lifting, and textile machinery, the company's medium to low voltage inverters and servo drives business achieved steady growth in 2016, and it is expected that this recovery will be sustainable. Investment suggestion: The company targets pure A-share logistics vehicle motor controllers, new energy vehicle subsidies have been implemented, and the company lays out motor controllers for passenger cars. It is expected that in the future, priority will be given to benefiting from the increase in logistics vehicle volume. We expect the company's net profit from 2017 to 2018 to be 210 million yuan and 295 million yuan respectively, up 34.88% and 40.63% from the previous year. The corresponding EPS is 2.01 yuan and 2.83 yuan, respectively, and PE is 35 times and 25 times respectively, giving an investment rating of increased holdings, with a target price of 80 yuan for 6 months. Risk warning: NEV policy falls short of expected risk, NEV efficiency is not as high as expected, market competition intensifies