Main points of investment:

Event: the company issued a notice that "the non-public offering of shares has been examined and approved by the Development and Review Commission of the China Securities Regulatory Commission".

The smooth passing of the private private placement dispelled the worries of the market and reflected the strong executive ability of the company. We believe that this meeting is of great benefit to the company! We reiterate that this is not only a good supplement to the capital deficiency of Yineng Electronics, but also because the combined table of Yineng Electronics has brought rich performance for the company. It is expected that the company will increase its capital by 100 million in 2016, significantly increase its production capacity and solve the development bottleneck caused by a single financing channel and lack of funds. And in the future 100 million can in the industry wind + market recognition + sufficient orders + economies of scale, the performance will continue to exceed expectations. By 2020, the national target of annual production of 2 million vehicles and 5 million new energy vehicles is expected to bring an annualized growth of 60 per cent to the industry and will continue to bring rapid development opportunities for key component manufacturers. At the same time, we expect that Yineng, relying on its many years of solid cooperation experience with vehicle factories and battery factories, will continue to open up major customers such as GAC and Jinlong on the basis of keeping its old customers stable. no matter in the passenger car, logistics vehicle or bus field will get different orders, and further sufficient orders will make the scale effect more prominent, and the gross profit margin will have higher room for improvement. All in all, we expect to achieve 250 million net profit in 2016, of which BMS is expected to achieve revenue of 800 to 1 billion yuan, bringing about 160 million of profits; conservative estimates of pack can achieve about 1 billion of revenue and bring about 80 million of profits. Given that the company will hold an 80% stake in Yineng after the rights issue, Yineng is expected to contribute about 200 million in net profit to dawning.

The logic of the reversal of the headquarters performance in 2015 has been verified, and the estimated net profit of 330 million in 2016 is likely to be realized. We believe that there is a high probability that this department will achieve the sales of 7000 new energy vehicles (including 2000 passenger cars and 5000 logistics vehicles) in 2016. according to the net profit of 50,000 yuan for passenger cars and 10,000 yuan for logistics vehicles, new energy will contribute 150 million yuan to the operating net profit of the company. in addition, dawning axles contribute about 70 million yuan to the company's net profit every year, minus the loss of 40 million of the traditional models that may exist. Dawning headquarters can make a net operating profit of about 180 million. At the same time, it is considered that the Changzhou Yellow Sea sold by the company in December 2015 is likely to recognize 150 million yuan in after-tax non-recurrent profit or loss in 2016. All in all, dawning headquarters is expected to make a net profit of 330 million in 2016.

We believe that in the future, the company will continue to seek the cooperation and development of the new energy industry chain, and is strongly optimistic about the company's future development prospects. Maintain profit forecast and strongly recommend buying. It is estimated that the revenue from 2015 to 2017 is 5.404 billion yuan, 7.797 billion yuan and 9.792 billion yuan respectively, and the corresponding net profit is 114 million yuan, 530 million yuan and 594 million yuan respectively. After considering the additional issuance, the corresponding EPS is 0.18,0.75 yuan and 0.84 yuan respectively, and the corresponding PE is 59 times, 14 times and 13 times respectively. According to the segment valuation method, with reference to the valuation of comparable companies, dawning headquarters is given a valuation of 20 times and Yineng Electronics 40 times, with a target market value of 15 billion, corresponding to the target price of 21.40 yuan.