Incident: On December 2, the Ministry of Industry and Information Technology announced the “Catalogue of Recommended Models for Promotion and Application of New Energy Vehicles” (4th batch). A total of 678 new energy vehicles were selected, and there were 244 types of trucks and special vehicles, including 165 vans. The reduction in shareholders' holdings did not hinder the normal operation of the company: On December 6, Ketai Holdings, the controlling shareholder of the company, and Xinjiang Rongxutai, a shareholder holding 5% or more of the shares, respectively, reduced their holdings by 10.8 million shares, accounting for 3.375% and 1.9 million shares, accounting for 0.594%. The main reason for the reduction was capital requirements. The company's fundamentals did not change, which had no impact on the company's operations. Special vehicle logistics vehicles enter the catalogue, and the company's new energy vehicle operations will benefit: the company began deploying new energy vehicle operations in December 2014 and completed the establishment of the Shanghai Jietai New Energy Business Registration in January 2015. Currently, the company holds 100% of the shares in Jietai New Energy. Shanghai Jietai is the company's NEV operation platform. It can provide customers with a series of services such as NEV operation, leasing and after-sales. The company has set up eight subsidiaries in Shanghai, Guangdong, Beijing, etc., and obtained relevant qualifications for pure electric vehicle urban passenger transportation and urban logistics business in Shanghai in July 2015. The operation routes of new energy logistics vehicles are relatively determined, which can effectively avoid restrictions on the application of charging facilities to vehicles. With the rapid development of logistics business in China, the operation of electric logistics vehicles has good market demand and development prospects. Invest in inverter energy-saving hybrid power sources and other projects to enrich the product structure: The company's main business involves intelligent energy-saving power equipment, new energy vehicles and engineering labor spare parts business. Among them, power equipment and diesel generator sets are affected by macroeconomics, demand in domestic and export markets is weak, and profits are declining. In order to improve and enrich the main business, the company announced on July 9, 2016, that it plans to use its own capital to invest in construction, inverter energy-saving hybrid power and intelligent switchgear R&D and industrialization projects. The project construction investment is about 115 million yuan. The construction period of the project is 2 years. After delivery, it is expected to form a production capacity of 2,000 sets of variable frequency energy-saving hybrid power sources and 4,000 power distribution cabinets per year. The estimated revenue is about 400 million yuan and net profit is about 50 million yuan. The project will give full play to the company's pioneering advantage in related fields in the field of energy saving and environmental protection, and become a new growth point for the company's performance. Investment suggestions: The entry of special vehicle logistics vehicles into the catalogue favors the company's new energy vehicle operations, and the addition of variable frequency energy-saving hybrid power supplies will become growth points for the company's performance. The company's 2016-2018 EPS is expected to be 0.13, 0.24, and 0.34 yuan, respectively, and the corresponding PE is 152.8, 80.0, and 57.3 times, respectively, covering the “increased holdings” rating for the first time, with a target price of 21 yuan for 6 months. Risk warning: special vehicle subsidies do not meet expectations, macroeconomic downside risks, investment falls short of expectations