Key point supporting the rating 2. Shareholders' holdings reduction should be compensation, and they are strongly optimistic about the company's future development. As of June 30, 2016, Germany's Ebbsler reduced its holdings by a total of 18.375 million shares. We estimate that the two shareholders reduced their holdings mainly to pay compensation and blood transfusions for the German business. Considering that a total of about 200 million yuan has been obtained after this tax reduction, it is estimated that subsequent holdings reduction of about 12 million shares will meet compensation and blood transfusion needs. We believe that the reduction in holdings by the two shareholders will have no impact on the company's business, and we are still strongly optimistic about the company's future development. New energy vehicles are fully deployed, and electric logistics vehicles are expected to explode. The company plans to acquire 35% of Jiangsu Kawei's shares. Previously, it had acquired 48% of Shenzhen Wuzhoulong's shares, subscribed for 20% of Changchun New Energy's shares, and the controlling shareholder Zhonghuan Investment acquired 75% of electric vehicles in Stuttgart, Germany. The NEV industry has a perfect layout and bright prospects. Electric logistics vehicles are expected to explode in the second half of the year. Both Wuzhou Dragon and Jiangsu Kawei have a variety of electric logistics models, which are expected to receive a large number of orders, driving the company's rapid growth in performance. The main risks faced by the rating 1) The development of business such as interior and exterior parts fell short of expectations; 2) The development of the NEV business fell short of expectations. Valuation We estimate that the company's earnings per share for 2016 to 2018 will be 0.97 yuan (excluding non-recurring profit and loss due to compensation), 1.08 yuan, and 1.19 yuan, respectively, giving the company 20 times the 2017 price-earnings ratio and a reasonable target price of 21.60 yuan, maintaining the purchase rating.