Key investment dates: December 07, 2017 Attending Executives: Vice President of Strategic Investment, Secretary of the Board of Directors, etc. Company introduction The company was founded in June 2002 and is a high-tech enterprise engaged in R&D, production, sales and service of high-end rail transit equipment. Currently, the company's main products are divided into two categories: rail transit vehicle equipment and rail transit ground equipment, with eight major business segments. Rail transit vehicle equipment includes: vehicle power supply, vehicle air conditioning, vehicle cables, and on-board inspection systems. Rail transit ground equipment includes: ground power supplies, shielded door/platform gate systems, subway braking management systems, and cargo/passenger transport information systems. At the same time, the company also provides other supporting products and services according to customer needs. Recent hot topics In 2017, the company completed the acquisition of 100% of SMA Railway Technology GmbH's shares. Headquartered in Kassel, Germany, SMA RT is mainly engaged in R&D, production and sales of innovative auxiliary power converters and other electrical equipment for rail transit vehicles. It is a well-known enterprise and technology leader in the global rail transit power supply field. It has subway/tram auxiliary power supply technology, and has a MEE-NT technology platform. It can achieve lightweight, miniaturized, flexible, high-density, and highly integrated automotive auxiliary power supplies, and has a broad base of cooperation and application cases with foreign OEMs. The four main sectors plan future strategies and terrestrial products: 1) Traditional products solve power supply problems related to ground, signals, and communications. Currently, the market share is very high. 2) Screened door system: For example, the safety gate solution - Guiyang Line 1, it usually takes 1-2 years for products from development to mass production. The current development progress of shielded doors is that they can not only meet product requirements for safety, energy saving and environmental protection, but also add intelligent modules such as advertising in the future. Furthermore, the company will continue to develop products to increase the added value of products (face brushing) in the future. 3) Energy storage products: For example, subway energy feedback and automatic braking energy feedback, Dongguan has now opened two trial operation stations. Vehicles: 1) Vehicle air conditioning (currently used in subways, will expand the field of trains in the future) 2) Auxiliary power supply (currently used in general railways, will expand subways and trains in the future) 3) Special cables (currently mainly used in high-speed rail, and will expand subways in the future). Station informatization and safety inspection (Shenyang company), freight/passenger transport informatization, safety management. (Smart station series products). Service: Level 4 and 5 for train maintenance. The number of rail trains in China is the largest in the world, and the maintenance market is in its infancy. The strategic plan is that each sector will contribute 100 million dollars in net profit in the future, that is, net profit will reach 4-5 billion yuan. Research points Performance reversal Confidence is sufficient: The company is confident that the performance will be V-reversed in 2018. The SMA will be based on technical advantages and will gradually increase performance: domestic subways can save 4.4 tons per train to achieve lightweight energy efficiency. China's subway trains fall within the global overall weight range, with an average axle weight of 16 tons, while foreign countries are already far below 16 tons, so future technical capabilities and power systems will refer to lightweight technology. There is still strong demand for rail transit construction in the Yangtze River and Pearl River Delta, and there is a high demand for intelligent product upgrades for traditional rail transit equipment: the entire industry is currently in urgent need of lightweight product solutions to reduce overall locomotive weight by 5%, and build an intelligent power supply system to reduce personnel expenses and improve efficiency. This demand will be where future enterprise value will be used. The company aims to become an early supplier in the rail transit industry, and the equipment strategy will achieve the sector strategy from outside to inside: the characteristics of early suppliers are that they are ahead of national policies, while the company will actively seize valuable opportunities for localization of new products and break the original supplier structure. The company currently has plenty of orders in hand and will vigorously promote the implementation of equity incentives: by the end of the third quarter, the company had orders in hand totaling 2 billion dollars. The winning bid was of high quality. For example, the air conditioning sector achieved an order volume of 800 million dollars, that is, 700 million orders from the headquarters, 200 million from Haixing, and 200 million from Germany. Company management will establish a matrix management structure, and the group and subsidiaries will develop collaboratively: subsidiary management will establish a matrix management structure to vertically manage various sections such as human resources, finance, and strategy to achieve a two-way assessment, connect the strengths and resources of each subsidiary, and improve efficiency. Risks suggest that the expansion of new lightweight battery technology falls short of expectations, and there have been major changes in the market pattern.