Event: The company issued an announcement. The operating income for Q1 to Q3 of 2016 was 961 million yuan, an increase of 3.65% over the previous year, and net profit of 37.96 million yuan, an increase of 35.58% over the previous year. The view of China Investment Electronics: The division reform has accelerated the release of high-end products, further increased investment in research and development of high-end products such as IGBT, and is full of development momentum. Since this year, the company has continued to promote division reform. The IGBT product team has focused on promoting the serialization of sixth-generation IGBT and MOS products; the high-end diode team has focused on the serialization of TRENCH SBD and FRD products; and the bipolar product team has focused on promoting the serialization of SCR and discharge tube products for middle and high-end applications. By further promoting the expansion of module technology into high-end application fields, the company has achieved the extension of technology promotion from chips to modules and from a single product to solutions, maximizing its comprehensive advantages in the field of technology, and rapidly expanding into key target application areas. With the gradual mass production of the company's new products, the company's development momentum has been strongly guaranteed, and its performance throughout the year is still guaranteed. The construction of process platforms has been continuously strengthened, and process technology transformation capabilities have been further enhanced. The ability to control process technology is the core competitiveness of the continuous development of power semiconductor enterprises. The company continuously optimizes processes based on the accumulation of original technology. At present, it has achieved the integration and optimization of process technology platforms for 4-inch wire-to-plane, TRENCH high-end diodes, and CMOS process technology platforms, and the integration and optimization of six-inch wire-to-plane, TRENCH high-end diodes, and CMOS process technology platforms, and the integration and optimization of six-inch wire-to-MOSFET and IGBT process technology platforms; the company's comprehensive process technology “ability to control” has been fully reflected. Actively promote research and development and manufacturing of third-generation new materials and devices in order to overtake leading international companies in the field of power semiconductors, strive to be the first to enter the ranks of leading international companies in the domestic power semiconductor device industry at the end of the 13th Five-Year Plan period, and establish a national brand with international influence. Investment points: The company is a leading “chip-level” power semiconductor enterprise focusing on design+material innovation and special processes. It is also a scarce “autonomous and controllable” target for A-shares that have accumulated more than 50 years of technology. The company will achieve industry breakthroughs through long-term technology and market accumulation, which coincides with the investment and financing boom of leading local companies and the “golden cycle” of rapid development of leading international peers such as Infineon; actual controller changes and equity incentive plans mark the end of internal governance, and are expected to usher in a sustainable rapid development cycle. The explosion of high-growth industries and autonomy and control have led to the rapid growth of high-end power semiconductors such as IGBT/intelligent module IPM. New energy vehicles and their charging equipment are in high demand for IGBT chips and module products. Power modules account for about 10% of the cost of power modules, with local demand alone reaching 60 billion yuan. Historically, the company has provided strong guarantees and support for construction related to the national military industry. Today, under the obvious trend of electromagnetization of high-end weapons and equipment, domestic substitution is imminent to achieve autonomy and control; the company's capabilities have reached the international level, and it is expected that the company's capabilities have reached the international level, and the scarce “actual mass production and implementation” capability. It is expected that it will rely on strong demand to achieve high value-added product volume and profit levels. Quick upgrade. Third-generation power devices welcome a huge potential market, and the company has sufficient subjective and objective conditions to meet new opportunities. Third-generation power semiconductors and existing high-end products have obvious inheritance in core links such as materials/structure/process/packaging. Under the company's IDM model, they can fully meet the development needs of new materials and devices. The upward expansion of technology has reached completion, and expectations for high-end production capacity expansion and technological upgrading are strong. Give it a “Highly Recommended” rating, with a target price of 14 yuan. Net profit for 16-18 is expected to be 0.95/2.05/350 million yuan, EPS 0.13/0.28/0.47 yuan, a year-on-year growth rate of 121%/115%/71%. The trend of industry resource integration gives companies strong internal and epitaxial development expectations; military/new energy is in urgent need of breakthroughs, and high-value-added products continue to optimize profitability; under the emerging pattern of power semiconductor strategies, the current situation of “small companies in big industries” gives enough room; given the high growth in future performance and PEG considerations, it has shown a trend of increasing sales revenue and gross margin, and potential to break through the scarcity of the industry's high valuation center and target target, 50 times PE for 17 years, with a target price of 14 yuan, with long-term investment value. Risk warning: Localized replacement of local semiconductors, and the risk of new application fields falling short of expectations.