The company has recently issued a number of announcements. It has recently issued a multi-point layout in the fields of new energy vehicles and power batteries: 1) adjusting the non-public stock offering plan to raise no more than 5 billion yuan in total capital and use it for Germany's high-end electric vehicle R&D and production base projects; 2) Jointly established “Ningbo Jingwei Power Battery Co., Ltd.” with Lianyungang Zhengdao and Beijing Zhiyun (Ningbo Zhengwei), which mainly produces lithium titanate batteries, and has completed commercial registration procedures and obtained a business license; 3) signed a “Memorandum of Strategic Cooperation” with Hong Kong Zhengdao Group to expand the field of cooperation and jointly develop clean energy vehicles. Through a series of collaborations, the company is expected to form a full industry chain layout covering power batteries in the field of new energy vehicles. It has a strong competitive advantage and is expected to reap fruitful results in the explosion of new energy vehicles. New energy vehicle subsidy adjustment policies have already been introduced. Policy stability is beneficial for Wuzhoulong and Jiangsu Kawei to turn losses into profits. Furthermore, the company is focusing on promoting the listing of participating companies such as Wuzhoulong, Jiangsu Kawei, and Wuxi Xingyi, which is expected to obtain rich investment returns and promote rapid growth in the company's performance. We expect the company's earnings per share to be $1.11, $1.31, and $1.49 respectively for 2017-2019, with a reasonable target price of $25.00, maintaining the buying rating.
Key points to support ratings
Together with the right path, the prospects for the layout of the entire new energy industry chain are promising. The company announced that it plans to expand cooperation fields with Zhengdao Group to fields such as motors, electronic controls, range extenders, etc., and jointly develop and produce clean energy vehicles. The total investment of the joint venture headquarters is expected to reach 12 billion yuan. Through comprehensive cooperation, the company is expected to form the layout of the entire NEV industry chain, including power batteries. Vertical integration has advantages such as strong costs and stable supply, and is expected to help the company reap fruitful results in the explosion of new energy vehicles.
Lay out lithium titanate battery production and control the core components supply chain. After the subsidy policy was adjusted in 2017, the national subsidy for fast charging new energy buses was as high as 2,400-4,200 yuan/kilowatt hour, which is expected to usher in good development opportunities. Lithium titanate batteries have the advantages of good safety, long life, fast charging, etc., and are more suitable for use in fast charging buses and other fields. The company previously had a presence in fields such as new energy buses and passenger cars. This participation in the establishment of a lithium titanate battery manufacturer is expected to complement Wuzhoulong New Energy Bus Technology, etc., and will play a strong role in driving the development of the company's NEV business.
The main risks faced by ratings
1) The development of the new energy vehicle business fell short of expectations; 2) The development of the interior and exterior parts business fell short of expectations.
valuations
We expect the company's earnings per share to be $1.11, $1.31, and $1.49 respectively for 2017-2019, with a reasonable target price of $25.00, maintaining the buying rating.