Incident: The company recently released its 2017 semi-annual report. During the reporting period, the company achieved operating income of 294 million yuan, an increase of 14.39% over the previous year; net profit to mother of 70.84 million yuan, an increase of 4.74% over the previous year; net profit after deducting non-return to mother of 70.49 million yuan, an increase of 4.45% year on year. The semi-annual report was in line with expectations. The electric vehicle motor controller business is growing rapidly, and the industry is booming. The main reason for the increase in performance was the increase in sales of the company's electric vehicle motor controller business. In the first half of 2017, the company's electric vehicle motor controller business achieved revenue of 233 million yuan, an increase of 16.41% year on year. As a result of the first half of 2017, R&D investment continued to increase by 23.25 million yuan, and costs increased 32.32% year on year. As a result, the gross margin level fell 7.23 pcts year on year, and gross margin reached 39.89%, and remained at a high level. In the first half of 2017, despite being affected by the short-term downturn in the NEV industry, the company strengthened cooperation with industrial and downstream enterprises through: 1) leading technical advantages; 2) the company's customer base was distributed among most mainstream domestic special vehicle manufacturers and parts suppliers represented by mainstream new energy buses and pure electric logistics vehicles. The scattered customer base gave the company a competitive advantage during the downturn in the NEV industry in the first half of 2017; 3) The company was a core member of the Watermar Innovation Alliance. The company used the Watermar Innovation Alliance platform to establish stable partnerships with many logistics vehicle companies and obtain electric logistics vehicles Motor controller orders. At present, the company has contacted many domestic passenger car companies to carry out technical docking and prototype testing. As of June 30, 2017, the company has invested a total of 124 million yuan to build a production base and R&D center in Xiamen and promote the construction of a marketing service network, and has now completed 58.04% of the overall investment progress. In the second half of 2017, along with the steady growth trend of new energy passenger vehicles, the company's fund-raising project progressed smoothly, and the company's electric vehicle motor controller business will maintain steady growth. Benefiting from the recovery of the industrial control industry, the inverter business is developing steadily. In the first half of 2017, due to the continued recovery of the domestic industrial control industry, customer demand for the company's medium- and low-voltage inverters and servo drives increased, bringing opportunities to the company's medium- and low-voltage inverter business, achieving revenue of 53.43 million yuan, an increase of 16.69% year on year, and cost increased 16.69% year on year. Although gross margin decreased slightly by 1.19% year on year, it remained at a high level of 40.12%. In the second half of 2017, the company increased its market share by improving the core performance of medium- and low-voltage inverters and reducing costs. Against the backdrop of a steady, moderate and positive domestic industrial control industry, the company's inverter performance can be expected. The overall financial situation of the company is good and the operation is steady. In the first half of 2017, the company's sales expenses increased by 34.62% year on year, mainly due to the expansion of sales scale, resulting in an increase in transportation and handling costs, after-sales service expenses and sales rebates; management expenses increased 16.64% year over year, mainly due to an increase in R&D investment, leading to an increase in R&D expenses and an increase in employee remuneration. Among them, R&D investment increased 11.76% year on year, due to an increase in R&D personnel and an increase in the rental area of R&D centers; accounts receivable increased 32.93% year on year, and net operating cash increased by 1870% year on year, mainly due to the increase in R&D expenses Sales increased in the current period. The company's financial indicators are relatively healthy, and the overall operating conditions are good. Investment advice: Considering the steady growth trend of new energy passenger vehicles in the second half of 2017, the domestic industrial control industry showed a continuous recovery. As a major domestic supplier of electric vehicle motor controllers and a leading domestic supplier of medium and low voltage inverters, the company will benefit from the continuous development of the industry. We expect the company's EPS from 2017 to 2019 to be 1.03, 1.39, and 1.88, respectively, and the net profit growth rates will be 38.0%, 35.1%, and 35.0%, respectively. The investment rating for Buy-A is given. The target price for 6 months is 36 yuan. Risk warning: NEV industry growth falls short of expectations, industrial control industry recovery falls short of expectations, fund-raising projects fall short of expectations