The incident company announced on the evening of September 5 that Chen Hankang, the controlling shareholder of the company, and his co-actors intend to reduce their holdings by no more than 50 million shares through major transactions, accounting for 4.4% of the company's total share capital to supplement the working capital of Zhongzhi New Energy Vehicle Co., Ltd. The majority shareholders reduced their holdings to assist Zhongzhi New Energy without changing the company's long-term positive trend, and the majority shareholders reduced their shareholding to supplement the working capital of Zhongzhi NEV, without changing the company's long-term positive trend. Affected by incidents such as fraudulent compensation inspections for new energy vehicles, the introduction of the national subsidy policy for new energy vehicles in 2016 was later than expected. In the current market environment, there is a lack of subsidy support, and new energy vehicle companies are facing greater cash flow pressure to produce and sell new energy vehicles. The capital obtained from the majority shareholders' holdings reduction will be used to supplement the working capital of Zhongzhi New Energy Vehicles, ease the temporary operating difficulties of Zhongzhi New Energy Vehicles, and demonstrate the majority shareholders' determination to expand and strengthen Zhongzhi's new energy vehicles. Moreover, the majority shareholders have a clear commitment to inject Zhongzhi's new energy vehicles into the company. The stable development of Zhongzhi's new energy vehicles is very important to the company's future. In the long run, new energy vehicles are a development direction firmly supported by the state. We judge that the new subsidy policy will be implemented soon, and that the business environment for new energy vehicles in Zhongzhi will improve. The strategy is transforming the entire NEV industry chain, and companies with competitive advantages are gradually improving the layout of the entire NEV industry chain to enhance their long-term competitiveness. Through external mergers and acquisitions and joint ventures, the company has successively laid out businesses such as core components for new energy vehicles, financial leasing, battery materials, and power battery production, while also hosting new energy vehicles. As of July 2016, the total number of intended orders for all types of pure electric buses and logistics vehicles for Zhongzhi NEV is over 24,600 units. We believe that it is a probable event that Zhongzhi NEV has the conditions for injection this year. After completing the injection in the future, the company is expected to achieve a closed loop of the entire NEV industry chain composed of battery materials, battery motor electronic control, vehicle manufacturing, and leasing operations, and the strategic layout has long-term competitiveness. The emerging business grew strongly, maintaining high performance growth throughout the year. Judging that the financial leasing business developed rapidly, the net profit target of 220 million yuan for the full year of 2016 remained unchanged. The company achieved net profit of 114 million yuan in the first half of the year, an increase of more than 231% over the previous year, of which the financial leasing business accounted for nearly 50% of the profit contribution. We expect that the company's performance in the second half of the year will continue to grow. Among them, the financial leasing business will continue to grow at a high rate, and is expected to contribute significantly to net profit of about 110 million yuan throughout the year; the new energy auto parts business will contribute 0.7 billion yuan; the traditional business will contribute 0.4 billion yuan; and the total net profit for the year will reach 220 million yuan. The long-term future will improve. Reiterating the “buy” rating, we expect the company's net profit in 2016-2018 to be 2.2/2.67/336 million yuan, EPS 0.19/0.24/0.30 yuan respectively, corresponding to the current stock price of 48X/39.5X/31.4X, respectively. We believe that Kangsheng Co., Ltd. is transforming the operation of the entire NEV industry chain, and that the strategic layout has long-term competitiveness. Considering the major shareholder's commitment to inject new energy vehicles, the company's future development will continue to improve. The majority shareholders' holdings reduction did not change the company's long-term value, kept the target price of 13-14 yuan unchanged, and reaffirmed the “buy” rating. Risk warning: The performance of Zhongzhi's new energy vehicles falls short of expectations, and policy risks in the NEV and financial leasing industry.