Yufu Co., Ltd. announced on the evening of July 23 that Zhihang New Energy, a holding subsidiary of the company, and the 18th Research Institute of the First Research Institute of China Aerospace Science and Technology Corporation (hereinafter referred to as “China Aviation 18th Institute”) reached a “Strategic Cooperation Agreement on Civil-Military Integration”. We believe that the intelligent aviation new energy power battery industry chain layout has taken shape, and that “civil-military integration” will promote industrial upgrading; we are optimistic about the company's long-term development and maintain the purchase rating, with a target price of 31.00 yuan. The main points supporting the ratings, the 18th China Aviation Institute has a strong background and deep accumulation. The 18th China Aviation Institute is a precision mechatronic control equipment development unit and China Aerospace Servo Professional Technology Center. It has a history of development for more than 50 years. It currently has more than 1,600 employees, 1 academician of the Chinese Academy of Engineering, 2 national experts, 6 receiving special government allowances, 5 group-level academic and technical leaders, 1 group-level process technology leader, 4 national technical experts, and 11 aerospace technology experts. Cooperation methods are multi-level to promote the upgrading of the new energy industry. The two sides will jointly form a cooperative expert group and project working group. The PACK pack and battery management system of the 18th China Aviation Institute are matched with Zhihang's new energy lithium batteries to form a series of power battery system products adapted to market needs; establish mutual procurement and supply relationships; and jointly promote applications in industry, agriculture, transportation, transportation, national defense and other fields. At the same time, the 18th China Aviation Institute provides guidance and training on new energy for intelligent aviation. Furthermore, the two sides are carrying out technical cooperation and jointly building a research institution for the civil-military integration of the new energy industry. The traditional business is developing steadily, and the performance of the new energy business has increased significantly. The company is a leader in the domestic polyester industrial yarn industry. It has a complete production, supply and marketing business chain. Currently, it is operating well and developing steadily. Zhihang New Energy currently has an effective production capacity of about 3.5 GWh of power type 18650 batteries, which has become one of the leading cylindrical power batteries in China; it also has a complete production line of ternary cathode materials and PACK systems. We expect that there is a high probability that Zhihang New Energy will fulfill its performance promises this year. Listed companies' equity ratio is expected to increase further, significantly increasing the performance of listed companies. The main risk facing ratings is that the NEV policy falls short of expectations; overcapacity in power batteries has led to a sharp drop in prices. The valuation is based on the current share capital. We expect the company's earnings per share for 2017-2019 to be 1.24, 1.45, and 1.61 yuan respectively. The price-earnings ratio corresponding to the current stock price is 20, 17, and 16 times, respectively, maintaining the buying rating, with a target price of 31.00 yuan.