Investment proposal Longji Machinery is a leading automobile brake parts company, and its main business is stable and has maintained continuous growth. The company has an O2O concept for the aftermarket. The EasyCar Business Model it holds conforms to the characteristics of the aftermarket industry, and difficult times such as early R&D have passed, so the progress of later promotion will accelerate, and it is expected to become a leading enterprise in the O2O model in the aftermarket. The company should enjoy the valuation premium of the O2O concept in the automotive aftermarket. We predict that the company's profit forecasts for 15/16/17 are 0.26 yuan, 0.42 yuan, and 0.58 yuan, and the corresponding PE is 85/55/42 times. For the first time, coverage gave a “Highly Recommended” rating. Investment points The company is a leading domestic automobile brake component product company: 1) The company is one of the largest domestic brake parts companies with the largest number of product models. Products include brake discs, ordinary brake hubs, load brake hubs, brake pads, etc. 2) The company started with exports, and currently has both domestic and foreign markets. It mainly targets the AM (after-sales maintenance) market outside of China. Customers include spare parts dealer giants NAPA and AUTOZONE. The domestic market mainly focuses on the OEM (manufacturer support) market, and customers basically cover domestic own-brand automakers and axle companies of automakers. The company's brake parts business will continue to improve steadily: 1) The company's overseas AM market is a stabilizer of the company's performance. It is closely related to the volume of ownership and usage in the foreign automobile market, and the volatility is relatively small. Moreover, the RMB depreciation window opens to objectively promote the company's export business. 2) The company's domestic OEM business is highly correlated with domestic automobile sales. The decline in commercial vehicles narrowed in 2015, and the high growth rate of own-brand cars provided a guarantee for the growth of the company's OEM business. Foreign OEM and domestic AM markets are developing smoothly: 1) The company will enter two new business areas through joint ventures with foreign companies, foreign OEM and domestic joint venture brand OEM. In 2015, the company built joint ventures with Germany's SHW Company and Denmark's Budweiser, respectively, and completed and put into operation one after another, which is expected to become a new profit growth point for the company. 2) The domestic AM market has reached a huge scale, and the company has entered the domestic aftermarket through the Vehicle Easy strategy of increasing its holdings. Che Yi has a unique business model and broad development prospects: around the small B end, opening up the B2B2c chain in the aftermarket, forming four major functional modules: 1) Part 1 B2c system, including the Car Care Network (www.cheyian.com), Car Maintenance App, and WeChat Store. For consumers, solve drainage, diversion, etc. for the small B-side. 2) Part 2 Small B-side ERP management system to solve small B-side internal management and connection problems with other systems, such as order requirements, inventory management, parts procurement, personnel management, procurement, etc. 3) Part 3 B2b car easy configuration system, a platform for matching small b and big B needs, solving problems such as bargaining power and quality assurance for small b side. 4) Part4 logistics distribution system to solve small B-end parts distribution problems. China's automobile market is shifting from incremental to stock, and there is huge room for future market development. The number of cars owned in China has exceeded 150 million, the age of cars is constantly increasing, and the future market space is vast. However, the concentration on the supply side of the aftermarket is low, and there is a lack of post-market service platforms in mature markets. The company has a strategic development vision. Currently, it holds about 37% of Che Yi's shares and is the largest shareholder. We judge that the company will supply products to the small B-side through Che Easy's B2b platform, which will become a strong springboard for the company's intervention in the market. Risk warning: Automobile sales have declined further, Auto Easy Development has fallen short of expectations, and the progress of cooperation between the company and foreign companies has fallen short of expectations.