2016half a yearDegree performance growth 40%-50%, in line with expectations:The company announced that in the first half of 2016 to achieve net profit attributable to the parent company of 086 million yuan-093 million yuan, year-on-year growth of 40%-50%, corresponding to EPS of 0.20 yuan-0.22 yuan. Among them, 2 quarterly net profit attributable to the parent company of 0.49 billion yuan-0.55 billion yuan, year-on-year growth of 42%-60%, chained growth of 29%-46%. in line with expectations. In the second half of the year, with the power battery put into production, theThe company's performance growth will accelerate.

Power battery capacity gradually built, electronic cigarette rapid growth, lithium primary battery stable growth: the report period, the company's performance rapid growth: 1) power battery capacity in accordance with the expected completion, and gradually realize the sales; 2) electronic cigarette own brand gradually mature, ODM / OEM business benefited from the focus on the sales strategy of the large customers, rapid growth in performance 3) lithium primary battery with the advantage of the product and production capacity scale, the application field , market size, profitability gradually improved, stable growth.

Rapid expansion of power battery capacity, shortlisted in the fourth batch of battery specification catalog, will usher in volume growth: the company has lithium iron phosphate and ternary batteries two mainstream power battery core technology, and layout from 2.6Ah to 75Ah 18650?00 cylindrical, soft pack and square hard shell and other power battery. In order to cope with the future strong demand for power batteries, the company bold layout of power lithium capacity: a capacity of 1.8GWh (1GWh ternary + 0.8GWh lithium iron phosphate) will be put into production in October 2016, has been built in 1.0GWh capacity; the second phase of the planning and construction of 2.5GWh ternary and 0.7GWh lithium iron phosphate, will be in the end of 2016 to 2017 In the first quarter of 2017 to achieve full production capacity, when the total capacity of 5.0GWh (3.5GWh ternary + 1.5GWh lithium iron phosphate), will be among the first echelon of the power battery industry.June 20, 2016, the company was shortlisted for the Ministry of Industry and Information Technology, the fourth batch of "automotive power storage battery industry specification conditions" directory. The company successfully shortlisted, is the embodiment of the company's technical strength and industry status, eliminating the uncertainty factor, favorable to the company's power battery subsequent capacity expansion. The company's power battery has been in June to start formal supply, is expected to ship more than 0.9GWh, contributing to earnings of more than 100 million yuan.

Traditional areas to maintain stability, emerging markets fast entry, primary battery business will grow steadily: the company in the field of lithium primary battery in the domestic first, the world's third leading position. 2015 the company's lithium primary battery revenue of 694 million yuan, year-on-year growth of nearly 20%, the profitability of a record high. In recent years, the development of urbanization and urban intelligence drive the development of smart meter, smart home and smart security and other areas of the industry, predicted that the company's lithium primary battery in the traditional water, electricity, gas, heat meter and other traditional business areas will maintain a compound annual growth of 20% or more. At the same time, the company is actively expanding the application of lithium primary batteries in emerging fields: 1) civil field, in recent years to the non-stop electronic toll collection system (ETC) and on-board unit (OBU) as the representative of the high-speed development of intelligent transportation, the company as the industry's main power supply supplier, is expected to benefit from the ushered in doubled growth: 2) the field of military, the company's power supply business for underwater weapons will be launched in 2017, is expected to achieve 2-3 times growth. Based on this, we believe that the company's primary battery field will maintain a compound annual growth rate of more than 30%, effectively supporting the company's performance.

E-cigarette performance bottomed out of the reversal channel, subsidiary mcvill listed on the new three board ushered in the development opportunity: the company is a leading enterprise in the electronic cigarette battery segment. since 2014 the rapid promotion of recyclable electronic cigarettes impacted the disposable electronic cigarette market, the company's performance has been dragged down. since 2015, the company's new e-cigarettes and oil cigarette products to adapt to consumer demand, and continue to develop new products, superimposed on its own branded big smoke products into the U.S. market and form sales, we predict that the business will have greater growth in 2016, the electronic cigarette business will usher in a strong recovery. At the same time, in 2015, the company's holding of McWell company listed on the new third board, is expected to 2016 will be a substantial increase in revenue, boosting the company's performance rapid growth.

The second batch of employee stock ownership plan launched, fundraising projects to accelerate capacity expansion, open a new journey of development:In December 2015, the company successfully implemented the first batch of employee stock ownership plan, the company today announced the second batch of employee stock ownership plan draft, plans to not more than 30 million funds from the secondary market to buy about 578,600 shares (July 7 share price measurement), accounting for about the company's total share capital of the participating objects for the inclusion of the Supervisors, director secretaries and company supervisors, including 200 employees, the lock-up period for 1 year. The Employee Stock Ownership Plan will deepen the Company's incentive system, mobilize employees' enthusiasm and creativity, attract and retain outstanding talents and business backbones, and enhance cohesion and competitiveness. In addition, the company raised 600 million yuan in 2015 for the production of 1GWh power battery factory. in April 2016, the announcement of the proposed non-public offering of 0.8 billion shares to raise no more than 1.6 billion yuan to invest in automotive lithium battery and system integration capacity. The fundraising project will accelerate the company's capacity expansion, and the company has started a new journey of development.

Profit forecast and investment advice:Comprehensive analysis, it is expected that the company's 2016/2017/2018 EPS will be 0.70 yuan, 1.38 yuan, 1.84 yuan respectively. Taking into account the company's comprehensive power battery layout, especially the ternary battery layout fast and high-speed, is expected to become the leading enterprise of ternary battery in the future. Give the company 2017 40 times PE, corresponding to the target price of 55 yuan, maintain "buy" rating.