This report is read as follows:

Equity incentive fees and exchange losses suppress the company's performance in the short term, and the customer development of new car enterprises will gradually release the performance.

Main points of investment:

Maintain and increase holdings. According to the company's annual report, the net profit of returning home in 2017 was 150 million yuan, an increase of 18% over the same period last year. Considering that the company needs to gradually expand its new business and suffer exchange losses in the near future, the eps in 2018-20 is adjusted to 0.69 (- 0.11) / 0.90 (- 0.50) / 1.17 yuan, the industry 15-20 times PE hub in 18 years is considered, and 25 times PE (valuation premium of high growth in leading position and new business) is given in 18 years, and the target price is lowered to 17.13 yuan to maintain increase.

Equity incentive fees and exchange losses suppress the company's performance in the short term. 1) the net profit increased by 18% in 2017, which was basically in line with expectations, mainly due to: a. Equity incentive increases the cost by 11.03 million yuan, excluding the 27% year-on-year increase in net profit. Spending on R & D of new products has increased by 52% compared with the same period last year. At present, a number of products are being developed in cooperation with customers such as Daimler and BYD, and will be mass-produced in the next 1-2 years. 2) according to the company's quarterly report for 2018, the net profit of Q1 increased by 2% compared with the same period last year, mainly due to an increase in exchange losses that increased the financial expenses of Q1 by 156% compared with the same period last year. The quarterly report revealed that the net profit of H1 homing in 2018 was 7477-89.72 million yuan, a year-on-year growth rate of 0%. 20%.

The advantages of overseas giant customers lock in the steady growth of all kinds of business. The revenue of ① commutator was 1 billion yuan in 2017, an increase of 15 percent over the same period last year, accounting for 72 percent of the revenue. Revenue from the three new businesses of high-strength elastic parts, automotive electronically controlled parts and lightweight parts, and multilayer insulated wires reached 290 million yuan, an increase of 58 percent over the same period last year, of which revenue from high-strength elastic parts was 180 million yuan, an increase of 60 percent over the same period last year. Gross profit margin increases 1pct. The sales of the top five customers of ② account for 45%. The leading customer advantages of Bosch, Japan Denso, Daimler and Marlborough ensure the steady supply and growth of the company's business.