The company is a leader in the ETC industry in China, and the interests of management are highly tied to the company, which is a leading manufacturer in the ETC industry in China. According to the prospectus, the company's market share is around 40%. The company's high market share is mainly due to its early participation in ETC-related product development and standard setting, and has occupied a high position in the industry. Considering ETC's low penetration rate and potential product upgrades, we believe the company's main business is expected to maintain a steady growth trend. Looking forward to the future, the company's development of new growth points is worth looking forward to. According to the prospectus, the company's executives have a high shareholding ratio, and there is plenty of motivation to develop new businesses under the binding of high interests. Smart cars are rising to the height of the country, and the mandatory progress of the V2X policy is expected to exceed expectations. According to China Net, a spokesperson for the Development and Reform Commission said that it is currently speeding up the formulation of smart car innovation and development strategies. From the electrification of automobiles to the intelligence of automobiles, the development of smart cars is rising to the height of the country. We believe common technologies and infrastructure such as high-precision maps and V2X are important components. Among them, V2X is a necessary condition for future driverless driving, and sensors such as cameras alone cannot guarantee data breadth and accuracy. V2X also includes V2V (vehicle collaboration) and V2I (vehicle road collaboration). In terms of space, only V2V communication modules are considered. If the market size is forced to be promoted, the unit price of the corresponding product is about 1000 yuan. According to the company's revenue and market share estimates, the ETC market size is less than 2 billion yuan. Looking at the timing, considering that smart cars are rising to national heights, the progress of policy enforcement is expected to exceed expectations (currently market expectations are after 2020). From participating in top-level design to cooperating with SAIC Motor, the smart car V2X is expected to open up room for growth. V2X and ETC are in the same category of automotive communication, and mature technologies all belong to the DSRC dedicated communication field. At the same time, V2X and ETC also fall under the Ministry of Transport's deployment responsibilities. In terms of R&D, according to the company's official website and prospectus, the company has completed V2X product development, including vehicle communication and vehicle road communication modules. In terms of application, the company has participated in projects related to the Ministry of Transport and has also been used in SAIC's NEV tour exhibition. Considering that V2X has significantly expanded compared to the ETC market and the company is highly competitive, we believe that the company's smart car V2X business is expected to open up room for growth. Covered for the first time, a “gain” rating was given. We believe that the market is not fully aware of the company's V2X business space and competitiveness. Considering that the main business is expected to maintain steady growth, we expect the company's net profit in 2017 and 2018 to be 130 million yuan and 150 million yuan, respectively. Considering the market space and the company's outstanding competitiveness, combined with the current industry valuation level (63X in 2017) and the company's sub-IPO attributes, we gave a target price of 55 yuan, corresponding to the 2017 and 2018 valuations of 50X and 43X. Risk warning: The progress of the V2X industry falls short of expectations; the market valuation center has declined significantly