Key investment points: The three major industries are developing together. The company went public in 2007. Taking advantage of the capital market's financing platform, the company's industry gradually evolved from the special motor industry to three major industries: lithium industry, automobile industry, and smart mechanical and electrical industry after 2 times of non-public stock issuance and 2 major asset restructuring. The smart mechatronics industry will focus on developing new energy vehicle motors and servo motors in the future. The smart mechatronics industry is a traditional dominant industry with decades of manufacturing experience. MiG Motor, which was acquired by the company in 2015, is a leading servo motor company in the industry. It continues to grow rapidly every year. The market performance of traditional motors has recovered this year. The smart mechatronics industry, especially new energy vehicle motors and servo motors, will be the focus of the company's future development. The development of mica+ore lithium extraction together. The company has an industrial chain from mining, mineral processing, and lithium carbonate processing from lithium carbonate to cathode materials. The company has 5 mining rights and 8 prospecting rights. The construction of the Yifeng project is expected to be completed this year. The company is rich in mineral resources, and its long-term resource reserves exceed 100 million tons. As downstream demand for lepidolite increases, the rise in lithium mica prices will become an important source of profit for the company. The company has built a production line with an annual output of 3,000 tons of lithium carbonate. Last year, the output was about 1,000 tons. Through technical reform, the annual production capacity reached 5,000 tons. At the same time, the cost is expected to be drastically reduced. The current technical reform is expected to be put into production in September, using roasting technology. At the same time, construction of the company's fund-raising project to produce 10,000 tons of lithium carbonate per year and the joint venture spodumene production project of 15,000 tons of lithium carbonate and lithium hydroxide have already begun. It is expected that production will begin in the first half of next year. After the application of the new technology, it is estimated that the cost of preparing lithium carbonate from lepidolite will be around 70,000 yuan. The main source of the company's spodumene ore is Baowei Materials. The company has exclusive underwriting rights for some spodumene in Canada and Australia. Automobile industry: The company has three main platforms for electric vehicles: Jiulong Automobile, Yichun Bus Factory, and Jiangte Electric Vehicle. Kowloon Motor Company is a company that was merged and acquired in 2015. The company has a certain advantage in the commercial vehicle sector. In the first half of this year, the reapplication of the model catalogue, announcement catalogue, and duty-free catalogue led to a significant decline in production and sales of Kowloon Motor. With the completion of the catalogue application and the gradual implementation of major orders signed by Kowloon Motor with Zhuhai Guangtong and Shenzhen National Transportation, etc., we expect that the performance of Kowloon Motor in the second half of the year will gradually be released. Maintain a “buy” rating. The company owns the entire mica lithium extraction industry chain, holds upstream lepidolite resources, and enjoys the dividends of mica price increases. With the completion of technical improvements, lithium carbonate production capacity will increase to 5,000 tons in 2017. Costs will drop rapidly, and profits will increase dramatically. The company also has two major business platforms, Jiulong Motor and MiG Electric. Assuming that the fixed increase is completed in 2018 and the fixed increase project performance is released as scheduled, the final lithium carbonate equity production capacity will increase to 22,500 tons/year. Each 10,000 tons of lithium carbonate production can increase the company's gross profit by about 900 million yuan (calculated at the price of 160,000 yuan/ton, 70,000 yuan/ton cost), thus causing the company's valuation to decline rapidly. Assuming that the total share capital increases to 1,762 million shares after the increase is completed, we expect the 2017-2019 EPS to be 0.30, 0.40, and 0.53 yuan/share respectively after additional dilution. Considering the increase in demand in the new energy industry to which the company belongs, assuming that the increase is completed in 2018, and considering additional dilution, a valuation of 70 times in 2018, corresponding to the target price of 28.00 yuan, maintaining the “buy” rating. Uncertainty analysis. The risk of project construction falling short of expectations and market demand falling short of expectations.