Main points of investment:

With the comprehensive layout of the vehicle network industry chain, there are significant advantages in the field of new energy vehicles. The company holds InTester (51% of listed companies and 49% of industrial funds). From January to June this year, Inteste sold a total of 131400 T-BOX, an increase of 1.5 times over the same period last year, and accounted for nearly 40% of the new energy vehicle installed T-BOX model market. It will be accompanied by the rapid growth of the new energy vehicle market for a long time in the future. According to the preliminary communication between the company and customers on the purchase intention of T-Box products. Customer demand for T-Box products is expected to be about 314000 units in 2017 (the unit price is about 900yuan), an increase of about 137.16% over the 132400 units shipped in 2016. The company will further expand the use of T-Box products in traditional energy vehicles in addition to the existing new energy vehicles. It is expected that the penetration rate of loading networking equipment will reach 30% by 2020, with a market capacity of about 7.4 billion yuan.

Holding ninth five-year smart car (58.23% equity), independently developed vehicle network operation service is applied by more than a dozen high-end car companies, such as Toyota, Ford, Mercedes-Benz, BMW and so on, with mature operation mode, rich industry experience and high market share. Participate in Guangzhou Lianxun and Caihong Wireless, participate in the establishment of Xingmin Automobile Industry Fund, comprehensively implement the transformation and upgrading strategy, and realize the full layout of the intelligent network connection of "Tmurboxtel-vehicle networking operation".

The "double points" policy of new energy vehicles and the "timetable for banning the sale of fuel vehicles" will be released soon, which will greatly promote the construction of new energy vehicle networking platform. In November 2016, the Ministry of Industry and Information Technology issued the notice on further doing a good job in safety supervision of the promotion and application of new energy vehicles, installing on-board terminals for all new energy vehicles from January 1, 2017, and defining the national three-level monitoring system for new energy vehicles: enterprise monitoring platform, local monitoring platform and national monitoring platform. The intelligent network layout of the company's "Tmurbox-vehicle-vehicle networking operation" will actively invest in the construction of new energy vehicle networking platform, and can expand a variety of data-centered application value-added services. The "double points" policy of new energy vehicles and the timetable for banning the sale of fuel vehicles will soon be released, which will promote the rapid growth of annual production and sales of new energy vehicles, and greatly promote the safety terminal sales and platform construction of new energy vehicles. According to the Roadmap of Energy Saving and New Energy vehicle Technology, the annual sales of new energy vehicles are expected to exceed 2 million by 2020. The production and sales of new energy vehicles have great room for growth and substitution: in 2016, China produced and sold nearly 500000 new energy vehicles (nearly 28 million), and the number of new energy vehicles is nearly 1 million (the number of vehicles is close to 200 million).

After a certain increase, the employee stock ownership plan is bound to benefits, and Intel will make a comprehensive merger next year. The fixed increase of about 1.46 billion yuan was approved by the CSRC on September 6, and the funds raised will be invested in key projects such as "T-box Automation production and data Operation Center", "production and Construction of Intelligent vehicle Terminal equipment", "vehicle networking R & D and Evaluation Center", and "Intelligent driving Service Operation Center", and will further increase its stake in the Ninth five-year Plan to 82.89%. In August this year, the company announced the first phase of the employee stock ownership plan (draft), which plans to subscribe for about 62 million yuan, bound to a total of 37 core interests, including directors and deputy general managers. With the help of capital, talent and technology, the company will further develop rapidly. At present, the industrial fund holds the remaining 49% stake in Intel, which will be fully transferred to Xingmin Zhitong in 2018, when the company's net profit is 57.04 million yuan in 2016 and 38.55 million yuan in the first half of 2017, an increase of 28% over the same period last year). The company's profits will further increase.

Profit forecast and investment rating: based on the principle of prudence, when the non-public offering is not finally completed, the dilution of equity and the impact on performance will not be taken into account. Do not take into account the factors that affect the performance of Intel Tester to continue to list 49% equity in 2018. It is estimated that the company's 2017 / 2018 / 2019 EPS will be 0.17 / 0.23 / 0.33, and the corresponding PE will be multiple of 67-51-36. The non-public offering plan for 2016 has been approved by the CSRC. If the subsequent non-public offering is successfully completed, it will further enhance the company's core competitiveness and profitability, and maintain the "overweight" rating.

Risk hint: the penetration rate of T-box products is lower than expected; the development progress of car networking is lower than expected, the non-public offering cannot be successfully completed, and the remaining 49% of Intel's equity acquisition progress is lower than expected.