1. Company Overview: The company's leading products are rare earth permanent magnet materials and products, brown corundum series products, logistics equipment and control and information systems. Currently, the production capacity of rare earth permanent magnet materials has reached 3,000 tons; it has a production capacity of 60,000 tons of brown corundum blocks per year, and the national market share has reached about 30%. In recent years, through a series of acquisitions and restructuring, the company has gradually formed a product line of rare earth magnets, electric motor control, and intelligent logistics equipment. In November 2015, the company also launched a fixed increase plan to inject assets related to the NdFeB business owned by the majority shareholders. At the same time, it will raise capital to lay out emerging business areas such as new energy vehicle drive systems, electric wheelchairs for medical rehabilitation, fire robots, fire simulation training systems, and smart factory systems. 2. Company highlights: 1. Proposed increase in assets injected into major shareholders to further consolidate the magnetic materials business. In November 2015, the company issued a fixed increase plan to issue a total of 61.1776 million shares at 10.02 yuan/share for a total of 61.1776 million shares at a price of 613 million yuan to acquire 100% of Ganzhou Dongji's shares under Hengdian Holdings, the controlling shareholder of the company, and NdFeB business-related assets held by Hengdian Import and Export. Through the acquisition of Ganzhou Tongcheng, the injection of Ganzhou Dongcheng and Inlova imports and exports, and the addition of the original Inlova Magnetic Industry, the total NdFeB production capacity will reach 7,300 tons, promoting the top two domestic magnetic materials companies. The synergy effect is obvious, achieving complementarity in production capacity, technology, and market, improving overall competitiveness, and providing strong support for the company's downstream business expansion. At the same time, the total net profit forecast for the underlying assets for 2016-18 is 467.5 million, 55.85 million yuan, and 68.33 million yuan. If the capital injection is completed, it will bring a real profit contribution to the company and improve the embarrassing situation of losses in the main business. 2. The financing plan to actively lay out emerging industries through supporting financing projects and supporting assets injected by the majority shareholders shows that the company plans to issue no more than 61.18 million shares at an issue price of 10.02 yuan to Hengdian Holdings, Juzhou Assets, and Silicon Valley Huiyin (Silicon Valley Huiyin No. 1), raising no more than 613 million yuan in supporting capital. It is used for fire robot and fire training simulation industrialization projects, new energy vehicle drive system development and industrialization projects, R&D and industrialization projects of high-performance magnets for power motors of new energy vehicles, repayment of interest-bearing debt, and additional working capital. With this support to raise capital, the company has focused on two major emerging industry directions, including: 1) The company in the field of fire fighting robots combines its own micromotor and equipment manufacturing experience to implement fire robot projects through its subsidiary Lianyi Electric. After completion of the project, it is planned to add an annual production capacity of 2,380 units of fire robot human products and 5 sets of fire simulation training systems per year. Part of the project was put into operation in year 3, and full production began in year 5. Production is expected to increase revenue by 280 million yuan and net profit of 28.88 million yuan. Firefighting robots are one of the special robots supported by the state. If the technology is mature, they are expected to become immediate needs in the future, and the market space is large. According to estimates of fire engine deployment and configuration requirements, about 2-3 firefighters will be equipped with a fire robot in the future. A rough estimate is that the number of fire robots owned in China should be around 30,000 to 60,000. Combining the current price of the JMX-LT50 firefighting robot commonly used in China (starting at 300,000 yuan) and the Swedish Brokk50 demolition robot (starting at 2 million yuan), the total demand for fire robots in China is expected to reach 15-30 billion yuan in the future, with an average annual market demand of several billion yuan. 2) In addition to laying out the new energy vehicle drive system in the field of fire robots, the company's fixed expansion layout this time focuses on actively expanding the downstream NdFeB industry chain. On the one hand, it plans to invest 130 million yuan to implement a high-performance magnet development and industrialization project for new energy vehicle power motors through Inlova Magnetic. The plan is to fully achieve a production capacity of 600 tons of high-performance magnets for new energy vehicle power motors after delivery in the fourth year. After delivery, the company is expected to increase revenue by 220 million yuan and net profit of 30 million yuan. Furthermore, the company plans to invest 200 million yuan to implement R&D and industrialization of new energy vehicle drive systems through Lianyi Motor The project, after three years of planning, can form a production capacity of 40,000 sets of new energy vehicle drive systems per year, and is expected to increase revenue by 580 million and net profit by 50 million yuan after delivery. Currently, new energy vehicles are still in the early stages of development, and the future market space is broad. According to the “Energy-saving and New Energy Vehicle Industry Development Plan (2012-2020)”, it is planned that by 2015, the cumulative production and sales volume of pure electric vehicles and plug-in hybrid vehicles will reach 500,000 units; by 2020, the cumulative production and sales volume will exceed 5 million units. China's NEV industry will enter a stage of rapid growth in the next few years. The company's current layout of the NEV sector will not only effectively absorb the NdFeB production capacity of upstream companies, but will also help the company seize development opportunities and accelerate the transformation and upgrading of the industrial chain. 3. Investment suggestions: If this capital injection and supporting financing are successfully implemented, the company will further upgrade and improve the NdFeB industry chain and extend to the downstream Xinyuan automobile industry. At the same time, through cooperation with the Robotics Research Institute of Harbin Institute of Technology, the company will enter the fire robot industry from a high starting point and enter the field of intelligent equipment. The transformation and upgrading is in line with the future direction of industrial development, and the prospects are bright. Considering the increase in distribution factors, it is estimated that the EPS for 15-17 will be -0.05/0.26/0.39 yuan, corresponding to the 16-year dynamic PE, 63 times. The company's past performance has been poor. With this fixed increase transformation, the company's profit is facing an inflection point, so we give it a recommended rating. 4. Risk warning: 1. Fixed capital increases have not been successfully implemented;