Investment highlights The high performance growth in 2017 was in line with market expectations. The company's 2017 revenue was 4.172 billion yuan, up 28.96% year on year; operating profit was 443 million yuan, up 64.48% year on year; net profit was 366 million yuan, up 56.36% year on year, in line with market expectations. The company's high performance growth is mainly due to the company's outstanding performance in the air conditioning business for new energy buses and increased market share. At the same time, the company's new products for new energy buses, smart heaters, air conditioners, and battery thermal management systems have good market acceptance. Benefiting from the increase in sales volume and the share of new products, the gross margin of the company's main business increased from 25.1% in 2016 to 28.2% in 2017, driving the profit growth rate significantly higher than the revenue growth rate. In terms of expenses, sales expenses increased by 44% year on year, mainly due to an increase in transportation costs; management expenses increased by 18.7% year on year; and financial expenses decreased by -220% year on year, mainly due to an increase in interest expenses due to the company's increase in short-term loans during the reporting period. The largest manufacturer of air conditioners for large and medium-sized buses in China is promoting thermal management of new energy sources. The company is the largest manufacturer of air conditioning for large and medium buses in China. In 2017, the company delivered 57,000 units of air conditioning products for large and medium buses, an increase of 10% over the previous year, with a gross margin of 44.2%. In terms of product structure, the company supplied more than 28,000 air conditioners for large and medium-sized new energy buses in 2017, an increase of more than 10% over the previous year. At the same time, the company's sales volume of smart air conditioners increased from more than 600 units in 2016 to more than 4,600 units, an increase of more than 600%. It has entered many mainstream bus manufacturers and bus companies, becoming a new growth point for the company's business. In terms of business expansion, new energy bus battery thermal management system products have achieved a major breakthrough from scratch, with sales volume exceeding 2,500 sets. The company acquired Shougang Futian and Suzhou Tongchuang during the reporting period, linking high-quality customers such as Beiqi Foton and Suzhou Jinlong. The market share is expected to continue to rise in 2018, bringing new growth. The new energy passenger vehicle business has huge room for growth and is expected to experience high growth. In 2017, the company's passenger car air conditioning achieved revenue of 1,868 billion yuan, an increase of 18.57% over the previous year; the gross margin was 15.11%, which remained basically unchanged. The company has strong automotive air conditioning research and development capabilities. In 2017, the company invested 150 million yuan to build an environmental simulation wind tunnel laboratory, which is expected to be put into use in April 2018. In terms of passenger car customers, the company focuses on high-quality customers from major domestic independent brands, including Jianghuai, SAIC Group, Brilliance Motor, Changan Automobile, and Beiqi Foton, etc., and will supply air conditioning products for BYD starting in 2018. The company has also entered the SAIC Volkswagen, Volkswagen MEB platform, and Honda's supply chain. The new energy passenger vehicle business has huge room for growth in the future. With the explosion of new energy vehicles, it is expected to usher in high growth. Actively expand compressor business and strengthen the layout of rail transit and cold chain business. At the end of the reporting period, the company's compressor business had reached a production capacity of 500,000 sets, and the development of some new energy bus compressors and passenger car compressor products was basically completed, and sales are expected to be formed in 2018. Furthermore, the company's rail transit air conditioning business segment continues to maintain a rapid growth trend, making breakthroughs in many cities and fields. The company's refrigeration and air conditioning business segment developed rapidly. The number of sales units exceeded 1,500, an increase of 104%, and sales revenue increased 117%. Furthermore, through the acquisition of 100% of the shares of Lumikko Technology Soy in Finland, the company enhanced the R&D, production and management capabilities of the refrigeration business sector and built solid internal capabilities for the development of the company's refrigeration business. Risk warning: 1. The sales volume of new energy vehicles fell short of expectations; 2. The launch of new products fell short of expectations. Profit forecast and valuation: Maintain the company's 2018/19 EPS forecast at $0.96/1.12, respectively. The company's current price is 11.45 yuan, corresponding to 12/10 times PE in 18/19, respectively. The company is the leader in the bus air conditioning industry, especially the energy bus air conditioning industry, and its market share is expected to continue to rise. In the long run, the company will increase its NEV thermal management business layout, and there is huge room for growth. It will continue to recommend and maintain its “buy” rating.