The company issued an incentive plan for stock options: the company will grant 13.7 million stock options to 10 core executives, including Liu Zhenjiang (chairman), at an exercise price of 16.93 yuan per share, 50 per cent per year for two years. Due to the impact of equity incentive costs, we slightly downgrade the company's EPS in 2016-2018 to 0.34 Universe 0.32max 0.38 yuan (0.00Unix 0.05max 0.02, without considering additional issuance), and maintain the "overweight" rating. In view of the strong excitement of this stock option (5.48% of the total share capital) and the high exercise price (16.93 yuan per share, higher than the current price premium), it shows the company's confidence in the long-term development in the future. Raise the company's target price to 24.91 yuan.

Strong excitement + low conditions for exercising power + high exercise price, binding the interests of senior executives and demonstrating confidence in long-term development. The number of stock options has reached 5.48% of the total share capital, and the incentive targets are relatively concentrated on 10 senior executives. The exercise conditions of this stock option are based on the net profit in 2015, and the net profit growth in 2016 and 2017 is not less than 10% and 20%, respectively. Thanks to the devaluation of the RMB, the exercise conditions are relatively easy to achieve. The exercise price of the stock option is 16.93 yuan per share, which shows confidence in the long-term development of the company compared with the current price (16.80 yuan per share).

Stock option incentive binds the interests of senior executives to promote the company to develop by leaps and bounds.

This stock option incentive is the re-capital operation of the company after the first refinancing in the capital market. The rapid launch of the first refinancing + first stock option incentive nine years after listing shows that the company has begun to attach importance to the listed company as a capital operation platform. The high share of major shareholders (59.87%) + external high-quality assets (Tongrn auto parts + Tongrn drive equipment) have laid a solid foundation for the company to achieve great-leap-forward development in the future.

Catalyst: implementation of non-public offering; expected promotion of asset securitization or extension.

Core risk: asset securitization or extension expansion is blocked.