The company released the adjusted rights issue plan, which intends to invest in a non-public offering of no more than 300 million shares to the controlling shareholder, Central, and raise a total of no more than 5 billion yuan, which will be used to invest in the construction of a high-end electric vehicle R & D and production base in Germany. It is expected to open up the domestic market in the future and get a good return on investment. Major shareholders take all the shares of this additional offering, demonstrating the company's ambition. The company has a stable leading position in the field of aluminum alloy internal and external accessories, the layout of new energy vehicle industry is perfect, and the development prospect is bright. The new energy vehicle policy has been introduced, and the stability of the policy is conducive to turning losses into profits for Wuzhoulong and Jiangsu Carway, and promoting the company's performance growth. In addition, the company joins hands with the right way, the layout of power batteries and new energy vehicles and other areas, the development prospect is promising. We expect the company's earnings per share from 2017 to 2019 to be 0.55,0.66 and 0.76 yuan respectively, giving a 2018 price-to-earnings ratio of 20 times and a reasonable target price of 12.50 yuan to maintain the buy rating.

Support the main points of rating

Major shareholders are responsible for the issuance of additional shares, demonstrating the company's ambition. The company plans to set up an R & D center and production base in Germany for the development and production of advanced electric vehicles. The base is planned with an annual production capacity of 100000 vehicles, and the funds raised will be used for the construction of an annual production capacity of 30,000 vehicles in the first phase, which is expected to create good economic benefits after reaching production. Major shareholders take all the shares of this additional offering, demonstrating the company's ambition. The company is expected to rely on the advanced technological advantages of the German automobile manufacturing industry and the new energy vehicle industry to develop and produce high-end electric vehicles. In the future, the company is expected to make use of the company's domestic layout of the new energy vehicle platform to open up the domestic middle and high-end electric vehicle market, and get a good return on investment.

The layout of new energy vehicles is perfect, and the long-term prospect is promising. New energy vehicles are the future development direction, and the stability of subsidy policy is conducive to the healthy development of the industry. The introduction of the recommended catalogue to expand supply is expected to promote the rapid growth of new energy vehicle sales. The company has a sound layout in the new energy vehicle industry. Wuzhoulong and Jiangsu Carway have entered the recommended catalogue and are expected to turn losses into profits. 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. The company has a stable leading position in the field of aluminum alloy internal and external accessories, the layout of new energy vehicle industry is perfect, and the development prospect is bright.

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 0.55,0.66 and 0.76 yuan respectively. Taking into account the company's broad prospects for improving the layout of new energy vehicles, we will give the company a price-to-earnings ratio of 20 times earnings in 2018 with a reasonable target price of 12.50 yuan and maintain its buy rating.