Key investment events: The company will jointly fund the establishment of an industrial investment management company with Dongyuan (Tianjin) Equity Investment Fund Management Co., Ltd. and Shanghai Jier Business Consulting Co., Ltd., with the tentative name “Beijing Longji Dongyuan Industrial Investment Management Co., Ltd.” Longji Dongyuan plans to register a capital of 10 million yuan, of which the company will invest 4 million yuan and hold 40% of the shares, Dongyuan Investment will invest 5 million yuan and hold 50% of the shares, and Geer Business will invest 1 million yuan and hold 10% of the shares. The industrial investment company will help Longji Machinery carry out industrial integration and layout. After its establishment, Longji Dongyuan will focus on the company's development strategy, with the automotive aftermarket industry and high-end automobile brake components as the main investment direction, cooperate with the company in joint ventures, mergers and acquisitions and industrial integration, continuously improve the company's industrial layout, promote the company's strategic development, consolidate the company's industry position, accelerate the company's upgrading and transformation, and enhance its comprehensive competitive strength. On the one hand, it will help the company integrate and acquire automotive aftermarket resources. This foreign investment participation in the establishment of Longji Dongyuan will provide implementation channels and project resources for the company's integration, acquisition of automotive aftermarket resources, and acceleration of Shanghai Cheyi's business upgrading. Among them, the partner Geer Business was registered and established on April 20, 2011. It is mainly engaged in business consulting, enterprise management consulting and other services related to the automotive aftermarket. Using the partner's deep understanding of the automotive aftermarket and expertise in analyzing mergers and acquisitions targets and prospects for mergers and acquisitions, it is conducive to improving the scientific nature of the company's decisions. On the other hand, it will speed up the entry of the company's products into the high-end brand market system. In recent years, the company has been seeking to improve product technology, upgrade product grade, and increase product production capacity, thus entering the supporting system for middle and high-end brands at home and abroad, further opening up profit margins. Through the establishment of Longji Dongyuan and the investment of future mergers and acquisitions funds, there will be an opportunity to accelerate the speed at which the company's products enter the high-end brand market system, thereby realizing the transfer of technology and production capacity for high-end automobile brake components, and rapidly improving the company's technical level and management level, further enhancing the company's profitability. Profit forecast and investment advice: We forecast that the company's operating income for 2015-2017 will be 1,438 million, 1,690 million and 1,981 million yuan, respectively, and net profit of 71 million, 118 million and 170 million yuan respectively, up 57%, 65%, and 45% year-on-year respectively. Regardless of allotment of shares, the corresponding EPS is 0.24 yuan, 0.39 yuan, and 0.57 yuan respectively. Considering the scarcity of the Internet+automotive aftermarket target, in the future after the establishment of the industrial investment company, the company will carry out extrinsic mergers and acquisitions, and the secondary market will give the company a certain valuation premium. It is estimated that Longji Machinery's reasonable target price is 50 yuan, maintaining its “increased holdings” rating.