1–3Q17 earnings preannounced to fall 50–65% YoY, lower thanexpected

Hiconics Eco-energy Technology preannounced that its 1–3Q17 netprofit attributable to shareholders could fall 50–65% YoY to Rmb50–72mn, and 3Q17 net profit attributable to shareholders could fall 34–86% YoY to Rmb6.01–28.01mn. Subsidiary Hiconics Technologyshould see a large YoY decline in earnings in 3Q17, dragging theparent company’s performance.

Trends to watch

FV segment to recover in 4Q17

Hiconics Eco-energy Technology to give up the EV leasingbusiness and the operation of charging stationsIndustrial automation solution segment to maintain stronggrowth

Energy saving and environmental protection business grewsteadily in 1H17

Valuation and recommendation

We keep our earnings forecast intact due to the recovery of the AFVsegment we anticipate in 4Q17. Maintain BUY and TP at Rmb6.28,implying 33x 2018e P/E.

Risks

AFV sales volume and EV leasing business disappoint; GPM of VFDsdeclines.