Key investment events: The company achieved operating income of 680 million yuan in 2016, an increase of 118.8% over the previous year, and achieved net profit of 150 million yuan after deduction, an increase of 116.4% over the previous year. In the first quarter of 2017, we achieved operating income of 130 million yuan, an increase of 56.7% year on year; net profit after deduction was 34.02 million yuan, an increase of 33.4% year on year. Industry boom, marketing service system upgrade: The sharp increase in the company's performance is mainly due to (1) the explosion of the logistics vehicle market, and the company's electric vehicle motor controller business achieved revenue of 550 million yuan, a year-on-year increase of 165.4%; (2) joining the “Watermar Innovation Alliance” to upgrade and optimize the marketing service system. New energy vehicles are moving forward, and the industry is booming: sales of new energy vehicles showed a gradual rise in 2017:5,423 units were sold in January, 17,000 units were sold in February, and 28,000 units were sold in March. Three months of continuous growth prove that new energy vehicles have entered a stage of explosive growth. Among them, sales of pure electric vehicles reached 23,000 units in March, up 120% year on year, and sales of 1,600 plug-in hybrid vehicles, up -9% year on year, creating a state where pure electric growth is high and plug-in hybrids are relatively weak, and the overall prosperity of the industry is high. There is huge room for development of logistics vehicles: We believe that logistics vehicles are the most flexible model in the NEV structure. There are three reasons: (1) according to the normal vehicle type ratio, China's logistics vehicle sales volume should be above 1.2 million units in 2015, and the actual sales volume was only 50,000 units, and the penetration rate is extremely low; (2) the reduction in operating costs of electric logistics vehicles has become an important driving force for operation and promotion; (3) The subsidy standard for special vehicles in '17 is clear (the subsidy is based on how much electricity the special vehicle has, the upper limit is 150,000). A core member of the Watermar Innovation Alliance, with strong orders: The “Watermar Innovation Alliance” covers more than 600 core component companies such as NEV power batteries, motors, electronic controls, connectors, smart meters, and charging equipment. The company is a core member of the Watermar Innovation Alliance. Benefiting from the rapid promotion of electric logistics vehicles and the innovation of leasing models, the company has established stable cooperative relationships with many logistics vehicle companies using this platform and has won rich orders for electric logistics vehicle motor controllers. Profit forecasting and investment advice. In view of the 2016 performance exceeding expectations, we raised the company's profit forecast. We expect EPS to be 2.36 yuan, 3.24 yuan, and 4.53 yuan respectively. The net profit from 2017 to 2019 will maintain a compound growth rate of 44.8%. The company has strong technical strength in the field of electric motor control and servo drives for new energy vehicles, and has excellent customers. We are optimistic about the development of the NEV industry, approve the company's business structure, and give a 35 times valuation, corresponding to the target price of 82 yuan, maintaining the “buy” rating. Risk warning: the risk of falling product prices, or the risk of electric logistics vehicle sales growth falling short of expectations.