The three-quarter report on key investment points is in the median performance forecast and is in line with market expectations. The company achieved operating income of 1.78 billion yuan (+116.2%) and net profit of 71.79 million yuan (+92.7%) in the first three quarters; in the third quarter, it achieved operating income of 570 million yuan (+171%) and net profit of 16.14 million yuan (loss of 30.17 million yuan in the same period last year). The three-quarter report is in the median performance forecast and is in line with market expectations. In the third quarter, Dongan headquarters sold 73,000 engines (Q2:80,000 units), net profit was 5.98 million yuan (Q2:26.86 million yuan), a single unit sold 7,852 yuan (Q2:8087 yuan), a single unit's profit was 221 yuan (Q2:653 yuan); Dongan Mitsubishi engine sold 90,000 units (Q2:130,000 units), contributing investment income of 10.16 million yuan (Q2:25.27 million yuan), and a single unit's profit was 313 yuan (Q2:545 yuan). The month-on-month profit for the third quarter was mainly affected by cost disturbances such as overhauls (sales volume dropped sharply month-on-month due to high temperature holidays in August) and technological upgrades (increased production capacity). Looking ahead to the fourth quarter, the monthly sales volume is expected to be very impressive. Looking ahead to the fourth quarter, benefiting from the increase in production capacity of Auchan in Changan in Nanjing (doubling), the increase in production capacity of the CX70 in Changan in Chongqing (doubling), and the combination of traditional peak sales seasons, market demand is expected to increase significantly. The company is ready to increase its production capacity. The production capacity of the headquarters will increase from 800 units/day at the beginning of the year to 1,300 units/day. It is expected that the monthly sales data will be very beautiful, and it is expected that it will continue to reach new highs. The 6AT transmission is expected to be mass-produced in the first half of next year, helping to increase the valuation. The Dongan Mitsubishi 6AT transmission project was established in 2011, and mass production is expected to be achieved by the first half of 2017. It is estimated that early supporting customers include independent brands such as Haima and Zotye. Mass production of 6AT transmissions will further strengthen the market position of the company's core powertrain suppliers and help improve valuations. At the same time, the M12T supercharged engine, a key project of the company headquarters, has completed prototype development and performance calibration, and vehicle matching work is currently being carried out. It is expected that the models distributed will be launched in the second half of 2017. The company has the greatest potential to become a powertrain platform for Changan Group. Referring to the vehicle and parts capital structures of SAIC Motor Group and Huayu Automobile; BAIC Motor Co., Ltd., and Bohai Piston, Changan Group is also expected to build its parts platform. The company has the greatest potential to become an integrated platform: 1) Changan Group directly holds 55% of Dongan Power's shares, with a large shareholding ratio; 2) Dongan Power's business conditions are improving, and its performance has drastically reversed. From the end of 2015 to the beginning of 2016, the company completed core management changes, and all key positions such as chairman and general manager were changed to Dongan Dynamics personnel (previously employees of Changan Group), injecting new impetus into the company's development. Risk warning. Sales volume of supporting models fell short of expectations; promotion of new products such as pressurized engines and 6AT fell short of expectations; progress in group asset consolidation fell short of expectations, etc. Earnings forecasts, valuations and investment ratings. Considering cost fluctuations in the third quarter, the 2016 EPS forecast was lowered to 0.28 yuan (0.33 yuan before adjustment), and the 2017/2018 EPS forecast was maintained at 0.52/0.73 yuan. The current price is 11.89 yuan, corresponding to 43/23/17 times PE in 2016/17/18, respectively. The reversal trend in the company's performance has been established. It is expected that the launch of 6AT products next year will help increase valuations. It has great potential to become a powertrain platform for Changan Group in the long run. Combining the growth rate of the company's performance and the average valuation level of the industry, we believe that the company's reasonable valuation is about 35 times that of 2017 PE, maintaining a “buy” rating, with a target price of 18 yuan.