Main points of investment:

Event: dawning shares responded to a full investigation based on the feedback of the CSRC on its application documents for non-public offerings, and announced a number of documents, including statements and promises of non-targeted issuers, motions of the board of directors and supervisors, and so on.

It is confirmed that the performance of Yineng exceeded expectations. In 2015, the operating income of Yineng Electronics was 641 million yuan, an increase of 5.4 times over the same period last year, and the net profit was 63.16 million, a 10-fold increase over the same period last year. The expected net profit of the supermarket site (15 million yuan). We believe that the main reasons for exceeding expectations are: first, to take advantage of the industry wind. In 2015, especially in the second half of the year, the production and sales of new energy vehicles are booming, bringing opportunities for key parts manufacturers. Second, Yineng has a stable position in the upstream and downstream, has accumulated a lot of experience, data and customer resources, and has established a close cooperative relationship with domestic large-scale new energy vehicle manufacturers and battery manufacturers. The main customers in 2015 include vehicle companies such as Chongqing Changan and some battery car companies such as Guoxuan Hi-Tech. Third, Yineng electronic orders have been in short supply all the time. In addition to BMS business, through cooperation with Samsung and other excellent battery suppliers, the smooth development of pack business.

We believe that the private private placement of dawning is progressing smoothly and will supplement the funding deficiency of Yineng Electronics. We believe that the management of dawning Co., Ltd. has been actively coordinating the meeting, and the progress so far has exceeded our expectations. The announcement has disclosed in detail Dingzeng's statement and commitment as well as Yineng's business model and order structure. We believe that this increase is progressing smoothly, which will not only lead to increased performance for dawning, but also significantly increase the company's production capacity by increasing capital by 100 million. New BMS production capacity of 25,000 sets per year, PACK3000 sets / year, is expected to increase sales revenue of 275 million / year, net profit of 25.28 million / year, to solve the development bottleneck caused by single financing channels and lack of funds.

In the future, Yineng will continue to exceed expectations in the case of industry wind + market recognition + order adequacy + scale effect. By 2020, the 60% annualized growth of the industry will continue to bring rapid development to key component manufacturers. At the same time, we expect Yineng to rely on its many years of solid cooperation experience with vehicle factories and battery factories, on the basis of maintaining stable old customers, will continue to open up major customers such as GAC, so that economies of scale will be more prominent and gross profit margins will have higher room for improvement. All in all, we expect 2.5 billion of the company's operating income to be realized in 2016, followed by a net profit of 250 million. Given that dawning will hold an 80% stake in Yineng after the IPO, it is expected that Yineng will contribute 200 million net profit to dawning.

The logic of the performance reversal of this department in 2015 has been verified. It is estimated that the net profit of returning home will be 114 million yuan in 2015. Among them, the operating net profit in the fourth quarter is expected to be 128 million, plus 45 million non-recurrent profit and loss, deducting the annual loss of about 40 million of the sold Changzhou Huanghai bus, basically turning losses into profits. We expect our department to achieve the sales of 7000 new energy vehicles (including 2000 passenger cars and 5000 logistics vehicles) in 2016. based on 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, Changzhou Huanghai, which went on sale 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.

Raise your profit forecast and keep buying. We estimate that the revenue from 2015 to 2017 will be 54.04,83.97 and 10.864 billion yuan respectively, and the corresponding net profit will be 1.14,5.30 and 594 million yuan respectively. Raise the company's profit forecast by 20%. After considering the IPO, the corresponding EPS is 0.18,0.75 and 0.84 yuan respectively, and the corresponding PE is 49 times, 12 times and 10 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.