Investment recommendations We downgraded Taiyo Electric's rating from recommended to neutral, and lowered the company's target price by 34% to 3.10 yuan. The reasons are as follows: The company believes that the goodwill formed from the acquisition of Shanghai Electric Drive and Beijing Petra is showing signs of significant depreciation. It plans to withdraw about 20.00-2150 billion yuan from Shanghai Electric Drive, and plans to increase Beijing Petterai by about 250-300 million yuan. The company lowered its 2018 performance forecast to a loss of 21-23 billion yuan; the overall gross margin of the motor industry is under pressure, and the profit growth of FY19 and FY20 is expected to be relatively weak in FY19 and FY20. We expect net profit from the mother in 19/20 to be 245/276 million yuan, returning to the level of 2013; motor assembly and manufacturing is a weak link in the new energy industry chain. The industrial chain is relatively shallow, the downstream is under strong downward pressure from subsidies, and the upstream is subject to frequent fluctuations in raw materials, so there is no hope of a rebound in profitability in recent years. According to our forecast, the two-year gross margin is about 17.6%/17.4%, and the net profit margin is about 2.3%/2.4%. What is our biggest difference from the market? Up to now, we have downgraded all covered motor industry targets to a neutral rating, indicating profit pressure on the industry, and recommending maintaining neutrality until around 2020 to observe the progress of industry consolidation. Potential catalyst: The two declines in new energy subsidies in 2019-2020 continued to weigh on the company's performance. Profit forecasts and valuations are based on the reasons described above, and we lowered the company's 2018 and 2019 earnings forecasts per share by 739.5%/26.3% to -0.90 yuan and 0.10 yuan. The current stock price of the company corresponds to 35.1x P/E in 2019. We downgraded the company rating to neutral, and lowered the target price by 34% to 3.10 yuan, which corresponds to 30.0x/26.7x P/E in 19/20. There is 14.4% downside compared to the current stock price. Risky upward stock price risk brought about by the fuel cell concept.