敏实集团(00425) 　　What's new 　　The National Development & Reform Commission(NDRC) has granted Minth subsidiary, Mi’an, approval tostart construction of a pure electric vehicle project. 　　Comments 　　The NDRC green light is strong recognition of Minth’sR&D capability, its efforts to expand its product portfoliointo alternative fuel vehicles, and its supply chain.Alternative fuel vehicles are a huge potential market and an areawhere nearly all auto and parts companies are seeking growth.Minth will introduce third-party investors to share in theproject’s uncertainties and investment to develop andsell electric cars. Minth’s strength lies in its electricpowertrain’s core components and lightweight parts. Over thelast five years, Minth has sunk Rmb100mn into AFV R&D,invested US$20mn to set up a JV with Clean Wave to developelectric motors, and spent US$16.5mn to set up Min’an, whichhas been approved to start the pure electric vehicle project.Minth will remain open and flexible to exploring possiblebusiness opportunities in the AFV market. The NDRCapproval offers Minth much more room to play in the AFVmarket, but it first needs to find its exact business model.AFV and lightweight parts now more likely to becomeMinth’s next core business. Minth will also reap the benefitsof having an associated electric car company, as it will enable itto have a better grasp of the related technology. 　　Valuation and recommendation 　　The result of the US presidential election does bring some degreeof uncertainty to Minth’s NAFTA business, but we think thecompany is well positioned to take any necessary counter-actionsto maintain its double-digit revenue growth and favorable margininto 2017. The recent retreat offers a dip-buy chance forinvestors. We reiterate our BUY rating and HK$34 TP. 　　Risks 　　Electric cars turn out to be a white elephant business.