Event

The company announced that it intends to acquire 37.5% equity of Zhejiang Spatio-temporal Energy Technology Co., Ltd. for 979 million yuan, and has signed a framework agreement on equity transfer.

Comment

Strategic expansion of new energy, improve the company's profitability and development prospects. Zhejiang time and space energy was founded in 2014, specializing in the research and development, production and sales of power battery system products, widely used in many types of new energy vehicles, including pure electric passenger vehicles, urban logistics vehicles, etc., the main products include Dongfeng Junfeng pure electric animal car, Dongfeng Junfeng ER30 pure electric passenger car, Dongfeng 8849 (tentative name, vehicle model EQ5041XXYACBEV, etc.) After the same) pure electric animal car, Dongfeng Yifeng A08 pure electric bus. With the rapid development of new energy vehicles in China, the company's net profit in 2015 and 2016 was 54 million yuan and 80 million yuan respectively. We believe that the company seizing the historical opportunity of the high growth of China's new energy vehicles and taking a stake in Zhejiang time and space energy will greatly enhance the profitability and development prospects.

Diversified expansion to enhance the space for long-term development. With the steady development of mold business and abundant orders on hand, the company continues to expand new energy vehicle customers. 2017H1 has signed new energy vehicle customers, such as Smart car, Weima Automobile, etc., and has signed stamping parts and assembly and welding business supply agreements with NIO Inc. Automobile and Guoneng Automobile. In the field of military industry, Shenyang Tianqi Mould, a wholly-owned subsidiary, has obtained the certification of weapons and equipment quality management system, has the ability of research and development, production and service of military products in related fields, and has made steady progress in the field of military industry.

Investment suggestion

Based on the mold, actively extend the industrial chain, the layout of emerging industries, performance valuation is expected to improve. It is estimated that the EPS of the company from 2017 to 2019 is 0.20,0.25,0.30 respectively. Buy rating, target price is 10 yuan.

Risk hint: the number of new car development is lower than expected; overseas business development is not as expected; acquisition progress is not as expected.