Incident: The company announced the signing of a memorandum of joint venture cooperation with Ford to establish a new Chinese-foreign joint venture independent brand pure electric passenger car manufacturer. Both parties will each hold 50% of the shares. Comment: Double points drive Ford and Zotye to join hands in a joint venture. Driven by the double credit policy, traditional mainstream car companies have accelerated the deployment of domestic new energy vehicles one after another. Previously, Volkswagen and Jianghuai had joint ventures and Great Wall invested in Yujie. This time, Ford and Zotye are planning to establish a new joint venture to develop, produce, and use their own brands of pure electric vehicles and lay out mobile travel. This is an excellent choice under double credit pressure. At present, the two sides have mainly reached a preliminary cooperation agreement, and details such as the investment scale and business model of the joint venture will be determined in the future. For Ford, it can ease the pressure of double integration and accelerate the deployment of new energy sources. Currently, Ford's two joint ventures in China are under a lot of pressure on fuel consumption points and new energy credits. Although Ford already has 2 main PHEVs (Fusion Energi sold 16,000 units in 2016, C-Max Energi 80,000 units) and 1 BEV (FocusElectric sold 739 units in 2016) in the US, it still takes time to introduce China and transform them into suitable products, and there is relatively little accumulation in BEVs. Through Zotye Ford's joint venture with a pure electric vehicle company, it will help Ford reduce the pressure on fuel consumption credits and even new energy credits. By 2020, Ford plans that the penetration rate of new energy in its products will reach 10%-25%; by 2025, 70% of Ford's models sold in China will provide electric versions, and in the future, all Ford's new energy vehicles will be introduced to the Chinese market. For Zotye, it can improve the technical level of new energy and vehicle processes. Zotye New Energy started early in China, focusing on pure electric cars. In 2016, sales volume reached 37,000 units, with a market share of 11%. This year's main models are the Cloud 100S, E200, E30, etc., with cumulative sales volume of 17,000 units/YOY +56% in January-July, of which the cumulative sales volume of the Cloud 100S is 50,000 units/YOY +33%, the cumulative sales volume of the E200 is 50,000 units/YOY +70%, and the Sesame E30 is 30,000 units. Furthermore, the company continues to increase its investment in pure electric technology. The partnership with Ford will leverage Ford's advanced technology in new energy vehicles and vehicle processes for Zotye. The traditional car market is positioned accurately, and new energy vehicles have been deeply accumulated. The joint venture with Ford is conducive to the enhancement of both Zotye's product strength and brand power. The company's products focus on the fourth and fifth tier regions, with strategies focusing on appearance, configuration, channels, and rapid iteration of wolf style. In the future, the company will establish a correlation matrix between vehicle performance and components to ultimately achieve positive vehicle development. Furthermore, the company is an early entrant in the field of new energy vehicles. Development began in 2005, and has accumulated complete experience in the development and sales of electric vehicles over 11 years. This time, the company and Ford set up a pure electric vehicle company in a joint venture to continue to increase investment in the field of new energy. It will not only promote the improvement of the company's product strength, but also promote the improvement of the company's brand power in the form of a joint venture. Combined with the company's continuous promotion of positive development and new energy research and development, the company is expected to achieve better long-term development. Investment advice: The company's 2017/2018 EPS is expected to be 0.76/1.04 yuan, respectively, an increase of 1495%/38%, corresponding to the current PE 15X/11X, and maintain the “buy” rating. Disclosure of potential shareholding information: According to the company's announcement disclosed on June 1, 2017, after the company's previous additional issuance is completed, Tianfeng Zhixin, a direct investment subsidiary of Tianfeng Securities Co., Ltd., will hold 118,355,151 shares of Jinma shares, accounting for 6.47% of the company's total share capital. Risk warning: The sales volume of the main power/new models is lower than expected, the progress of new energy projects is lower than expected, the company's plans to strengthen R&D capabilities have changed, and the progress of the shift towards positive development is slow.