The recent abnormal stock price is mainly due to the rise in market expectations for policy. The summary of the second meeting of the revision of the Technical conditions for Motor vehicle Operation Safety (GB7258-2004) clearly shows that it is agreed to delete the limited condition of "mainly driving on mountain roads" in the revised draft of the standard. The modification of this qualification greatly increases the feasibility of the policy, and also expands the imagination space of the retarder industry. If the revised scheme can be successfully implemented, the domestic retarder industry will usher in a good opportunity for development.

The company's hydraulic retarder is in the final experimental stage. The company's hydraulic retarder has been in the process of development in recent years, and the company also has corresponding technical reserves. It is understood that the company's hydraulic retarder is in the final experimental stage. We believe that if the company's hydraulic retarder can be successfully industrialized, even without the enforcement of relevant policies, the company is likely to usher in huge development opportunities.

The company is actively entering the field of trucks. It is understood that the company is actively entering the field of trucks, but there is no definite substantive progress yet. It is expected that if the GB7258 revision plan can be promulgated and implemented as expected, it will have a significant stimulating effect on the expansion of the company's truck field.

Maintain the company's "overweight" rating. Although the short-term valuation of the company is high, we maintain the company's "overweight" rating, taking into account the strong expectations of the relevant policies, the broad market space faced by the company after the introduction of the policy, and the broad prospects of the company's hydraulic retarders.

Risk hint

1) if the launch time of the relevant automobile retarder policy is later than expected or the relevant content is lower than expected

2) the effect of the company's hydraulic retarder is not as good as expected.

3) the systemic risk caused by the continued sharp decline in the market.