Key investment points: 2016 revenue increased 118.79% year on year, and net profit to mother increased 118.88% year on year. The company announced its 2016 annual report, achieving revenue of 678 million yuan, up 118.79% year on year; net profit to mother of 155 million yuan, up 118.88% year on year; income per share of 1.59 yuan; comprehensive gross profit margin of 44.75%, down 1.84 pct year on year; period expense ratio of 16.96%, down 4.39 pct year on year; plans to distribute a cash dividend of 3.00 yuan (tax included) for every 10 shares, an increase of 10 shares for every 10 shares. Motor controllers, medium and low voltage inverters, and servo drivers all drive growth in performance. The rapid increase in performance in 2016 is mainly due to the smooth progress of product market development and capacity expansion. Among them, 1) the company's electric vehicle motor controller revenue was 555 million yuan, a year-on-year increase of 165.44%; 2) the medium- and low-voltage inverter and servo drive business achieved total revenue of 110 million yuan, an increase of 16.39% over the previous year. Results continued to grow rapidly in the first quarter of 2017. In the first quarter of 2017, the company achieved revenue of 1.34 yuan, an increase of 56.55% year on year; net profit to mother was 35.57 million yuan, an increase of 34.01% year on year; the increase in performance was mainly due to the continuous rapid growth of the motor controller business. The motor controller business continues to grow rapidly, and electronic control of logistics vehicles is gaining momentum. In 2016, the company's electronic control business revenue was 555 million yuan, an increase of 165.44% over the previous year, accounting for more than 80% of total revenue, of which electronic control of logistics vehicles is expected to account for more than 50%. The Watermar Innovation Alliance leasing model is being promoted very rapidly, and at the same time cooperates with local governments to form strong competitiveness. The company is a major member of the alliance and has established excellent cooperative relationships with most mainstream domestic manufacturers such as Dongfeng and FAW Group. The gross profit margin of the product was 44.88%, down 3.66 pcts from the previous year. The company will hedge against the impact of price declines to a certain extent through measures such as scaling and cost control. The inverter & servo business is growing steadily. In 2016, medium and low voltage inverter & servo achieved a total revenue of 110 million yuan, an increase of 16.39% year on year, gross profit margin of 42.95%, and an increase of 1.89 pct year on year. The company has advanced vector control technology without speed sensors and vector control technology with speed sensors. The technical level is excellent. The developed asynchronous servo drives are widely used in the domestic hydraulic system transformation market such as injection molding machines and die-casting machines. Based on the recovery of the downstream industry, we expect that this part of the business is expected to grow by around 30% in 17 years. Research and development continues uninterrupted, and passenger car electronic control is expected to inject new impetus. The company attaches great importance to R&D and continues to promote product innovation. The core technical team has strong R&D capabilities. In 2016, the company launched a variety of products in the fields of integrated power drive systems for new energy vehicles and highly integrated pure electric logistics vehicle controllers. In the field of passenger car electronic control, the company has carried out in-depth research and reserves, and is expected to launch a prototype in '17, injecting new impetus into development. Profit forecasting and investment advice. We expect the company's net profit to be 2.05, 2.63, and 334 million yuan respectively in 2017-2019, up 31.86%, 28.60%, and 26.93% year-on-year, and diluted earnings per share of 1.97, 2.53, and 3.21 yuan. Taking into account the valuation of the same industry, and the company's performance related to electric vehicles accounts for a relatively large share, 42 times PE was given in 2017, corresponding to a target price of 82.74 yuan/share, increasing the rating. Uncertainties. The NEV industry is developing faster than expected.