It is planned to acquire more than 840 million yuan of equipment to enter the automotive interior and exterior mold market. Recently, the company announced that it plans to purchase 100% of Chaoda Equipment's shares by issuing shares at a transaction price of 840 million yuan, with an additional price of 6.5 yuan per share. At the same time, the company plans to allocate no more than 4.7 billion yuan of capital to no more than 10 investors, and the distribution price of capital allocation is not less than 6.5 yuan/share, using inquiries for quotations. Chaoda Equipment promised to complete net profit of not less than 57.5 million yuan, 66 million yuan, and 75.7 million yuan in 2016-2018. According to this performance commitment, the company's acquisition of PE was 15 times higher (2016). If the merger and acquisition is successfully completed, the company will take the opportunity to enter the automotive interior and exterior mold market; superior equipment is the standard for high quality automotive interior and exterior mold. According to the “China Mold Industry Yearbook (2012)”, in 2011, Chaoda Equipment ranked 32nd in China's mold industry, and is the only mold company with an output value of over 100 million yuan that specializes in manufacturing molds for various automotive components and foam parts. The downstream customers of Chaoda Equipment are well-known auto parts companies at home and abroad. In the 2015 global auto parts supplier ranking according to “American Auto News” statistics, there are 17 companies engaged in automotive interior and exterior business, of which 8 are Chaoda Equipment customers. In addition to high-quality customer resources, Chaoda Equipment has full-process manufacturing capabilities such as independent design, casting, processing, and equipment for interior and exterior molds, and its efficiency is high. Therefore, Chaoda Equipment's mold gross margin exceeds 40%, similar to Haomai Technology, the invisible champion of the global mold industry, far exceeding the industry average; potential synergies are significant, and growth or exceeding expectations. We believe that if this merger and acquisition can be successfully completed, the potential synergies will be very obvious: (1) Customer collaboration. The downstream customers of Tianqi Motor are automakers, and Chaoda Equipment is auto parts companies and automakers (fewer vehicles). (2) Products complement each other. Tianqi Model is the world's largest supplier of automobile covers, and Chaoda Equipment is a leading domestic automotive interior and exterior supplier. If the transaction is completed, Tianqi Model will expand its product line and enter the automotive interior and exterior mold market. According to statistics and analysis from the China Mold Association, the domestic market space is about 6.6 billion yuan, and the global market space is about 8 billion US dollars. (3) Increased efficiency. The gross margin of Chaoda Equipment's mold business exceeds 40%, and Tianqi Mold is only less than 30%. This includes the reasons for personnel cost control, as well as the reasons for the foundry process. Through this merger and acquisition, Tianqi Motor is expected to draw on its experience in superior equipment and improve efficiency; the target price is 9.28 yuan, and the purchase rating is maintained. Considering the potential performance inflection point of the mold business in 17 years, we maintain the valuation, target price, and ratings of the aforementioned report unchanged. Diluted EPS for 2016-2018 is expected to be 0.20 yuan, 0.27 yuan, and 0.37 yuan, and the target price is 9.28 yuan, corresponding to 35 times PE in 2017, maintaining the buying rating; risk warning. Automobile sales have continued to decline, and subsidies for new energy vehicles have declined.