1. The company recently signed a “Letter of Intent to Acquire” with Shenzhen Chengjie Intelligence and its major shareholders. It plans to acquire 100% of Chengjie Intelligence's shares by combining 70% of the issued shares +30% in cash. Chengjie Intelligence is priced at 650 million yuan. The promised performance for the next three years is 35, 65 million, and 75 million yuan respectively, and the investment premise is that the audited net profit after deduction in 2017 is not less than 20 million yuan. Chengjie smart products are mainly mid-range core equipment for battery production, and can form a good synergy effect with the subsidiary Haoneng Technology and Shenzhen Yuchen's lithium battery equipment business. 2. The integration of Chengjie Intelligent means that the company is about to form a relatively complete lithium battery equipment line layout, which is of far-reaching significance for the company to develop the entire line business and expand its market share of lithium battery equipment. At present, Haoneng Technology has achieved a leading position in the domestic market in the field of coating machines and roller presses, but the entire front-end field only accounts for about 30-35% of the value of battery processing line equipment, and the middle and rear segments account for 65%-70% of value. Meanwhile, Chengjie Intelligence is a leading enterprise that has accumulated 14 years of development experience in the field of winding and production equipment. The company currently has more than 500 employees, a plant area of more than 30,000 square meters, an annual production capacity of 1,800-1900 units of fully automatic winding equipment, and 900-1000 units of various types of fully automatic production equipment. 3. On August 20 of this year, Keheng Co., Ltd. announced that it plans to acquire all of Yuchen Automation's shares with 450 million yuan. Yuchen is the core supplier of late-stage lithium battery equipment, and there is a lot of room for complementarity with the company in terms of customer structure and product structure. The company plans to acquire shares with 35% cash +65%. Yuchen promises that the 2018-2020 results will not fall below 30,000, 40, and 50 million yuan, respectively. Yuchen has established good cooperative relationships with companies such as CATL, China Airlines, Yiwei, Tianyi, BAK (China), PHILIPS (Netherlands), Weijia (Germany), Schabigao (Italy), Southco (US), and Valeo (France). 4. Haoneng Technology has become a first-class coating machine manufacturer in China, and its share in the supply systems of CATL, BYD, etc. has increased dramatically: on July 12, the company announced on an interactive platform that Haoneng Technology won the bid for 9 high-speed double-layer coating machine equipment in the Ningde Era. This indicates that Haoneng has become one of the core of the CATL equipment supply system. According to the CATL prospectus, the total production capacity of CATL and SAIC Motor in 2019 is expected to reach 30GWh. The company's coating machine products are highly competitive, and it is hoped that they will use this opportunity to enter the Ningde supply chain and share growth dividends. 5. Profit forecast and investment suggestions: The Yinlong issue was resolved successfully. The company will confirm the revenue from all Yinlong contracts within the year. The two parties agreed that the 277 million yuan contract for Yinlong will complete the equipment inspection report by November 20, 2018, so Haoneng can use inspection as a point to confirm revenue. Since the above contract transaction amount was discounted compared to 372 million yuan at the beginning of the year, the price reduction for cathode materials in 2018 was significant, so we lowered our 2018 and 2019 net profit forecasts from 371 million yuan and 546 million yuan to 1.12 million yuan and 153 million yuan. The net profit forecast for 2020 was 237 million yuan, corresponding to PE 28.1, 20.5, and 13.3X respectively, maintaining the purchase rating! Risk Warning: Major New Energy Policy Adjustments, Company Acquisition Integration Fails to Meet Expectations