Investment Highlights Launched the fourth phase of the Stock Options Incentive Plan. The exercise price was 12.34 yuan per share. On December 7, the company announced the draft fourth phase of the stock option incentive plan. It intends to grant no more than 15.17 million stock options to executives and core technical personnel. The exercise price is 12.34 yuan per share (higher than the current market price). The exercise conditions are that the net profit due to the mother for 2018-2020 is not less than 2.0, 2.4, and 280 million yuan. We believe that the terms of reference for the fourth phase of the company's equity incentive plan are relatively relaxed, which is conducive to binding the interests of the company's management and core employees. New executives are in place. The new president and executive vice president have rich experience in the rail transit industry. On December 6, the company's board of directors deliberated and approved the appointment of Xiao Dong as the company's president and Zhang Junqing as the company's executive vice president. Mr. Xiao Dongsheng has served successively as the president of Germany's NKT Cable Group in China and the general manager of the German Knorr-Bremse Group (the world's largest rail transit core component company) Wuxi Co., Ltd., and has been the company's vice president and executive vice president since December 2015. Mr. Zhang Junqing has worked successively as the Deputy General Manager of Tangshan Bus (a subsidiary of CRRC) and the director and general manager of CRRC Logistics Co., Ltd. We believe that the new president and executive vice president's rich experience in the rail transit industry will help the company's future business development. Current orders exceeded 2 billion yuan, and new winning orders increased dramatically. As of the 3rd quarter of 2017, the company's overall new winning orders increased by more than 200% compared to the same period last year (excluding SMA RT and Qihui Electronics-related data), and the company held a total of 2,045 billion yuan in on-hand orders (including data related to SMA RT and Qihui Electronics). The 3-year fixed increase has been completed. The issue price is 14.91 yuan/share. All were announced by the company and partner executives on August 2. The fixed increase and share changes have been completed, and the issue price is 14.91 yuan/share. The number of shares issued was 27.6 million shares, raising a total of 410 million yuan in capital. All capital raised will be used to supplement the company's working capital, help the company reduce debt ratio and financial expenses, and enhance capital operation space. The distribution targets Gu Qingwei, Hou Wenqi, Zhang Xia, and Xing Jianping. They are all executives of the company or partner companies, demonstrating their confidence in the company. The rail transit industry is booming in 2018-2020: the trend of train tendering is improving, urban rail and subway trains have maintained high growth and train bidding has resumed, and the trend is positive. Since December 2016, the total number of tenders in the past year has reached 429 standard columns, and we expect to maintain a high level of 400 columns/year in 2018-2020. Urban rail subways maintained high growth. 2016-2017H1 China Railway and China Railway signed a total of 4236 and 186.7 billion yuan of new city-rail subway orders, an increase of 79% and 70% over the previous year, ensuring high growth in the industry. We believe that by 2020, the number of urban rail and subway cars is expected to reach 6,600, and the compound growth rate will exceed 24%. Investment advice: The margin of safety is high; performance is expected to increase dramatically next year, and the company will adjust management, which is conducive to management sorting and business integration. The fourth equity incentive was launched, with an exercise price of $12.34 per share; the 3-year fixed increase has been completed, and the issue price is $14.91 per share. The boom in the rail transit industry improved in 2018-2020, and the company's new winning orders increased sharply year-on-year, ensuring an upward inflection point in performance. The company's 2017-2019 performance is expected to be 78 million, 230 million, and 300 million yuan, corresponding PE is 76/27/20 times, maintaining a “buy” rating. Risk warning: the integration of mergers and acquisitions falls short of expectations, risk of falling railway investment; new products fall short of expectations