Investment points We recommend the company's core logic: (1) The company's fundamentals are undergoing positive changes, and the dual path of changing the decline in net interest rate year by year is expected to be successful, which in turn will drive high performance growth in 2015-2017. (2) Through the acquisition of Shanghai Auto Easy to enter the Internet+automotive aftermarket, the company expanded from traditional manufacturing to the automotive service industry and the Internet. Referring to comparable listed companies, traditional valuation methods will be broken through, and will instead move closer to the valuations of leading companies in the Internet+ aftermarket. The company is a leading domestic automobile brake parts company and is currently actively undergoing transformation. On the one hand, internationally renowned enterprises in the traditional main business carry out joint ventures, implement product upgrades, and move upward into the OEM support system of international high-end car companies and domestic joint ventures; on the other hand, they use the Internet+ business model to enter the automotive aftermarket with huge market space. We judge that upgrading the traditional main business will expand the company's market share and increase gross profit margin, while entering the automotive aftermarket will enable the company to expand new profit sources and stand on the Internet + bandwagon. Establish joint ventures with internationally renowned companies, carry out product upgrades and product line extensions, and increase the company's profits. In 2014, the company established Longji Budwey Brake Caliper Company with the Danish company Budweiser to produce brake calipers, expand the product line of automobile brake components, improve the product structure, make the company basically have the production conditions for brake assemblies, and can achieve general contracting of automobile braking systems. It is estimated that starting in 2015, the project will bring the company net profit of about 4.5 million yuan, and 8.5 million yuan and 9.6 million yuan in 2016 and 2017. In January 2015, the company established Acevilonghi Brake Disc Company with German SHW. The brake disc products produced will enter the OEM support system of international high-end companies and domestic joint ventures. It is expected that production will be completed in the second half of 2016. After reaching production, 2016 and 2017 will bring the company about 13 million and 40 million in net profit. The profits of the two joint ventures increased Longji Machinery's 2015-2017 EPS of 0.02 yuan, 0.07 yuan, and 0.17 yuan, respectively. The market size of the automotive aftermarket is estimated to be around 770 billion in 2015, and will exceed 1 in 2017. Trillions. The number of cars owned in China has been growing steadily. By the end of 2014, it had reached 154 million vehicles. The market size is second only to the US, and is expected to reach 360 million vehicles by 2020. The increase in ownership has brought opportunities for the rapid development of the automotive aftermarket. According to the forecast of the China Distribution Association, China's automotive aftermarket is expected to reach 770 billion in 2015 and exceed 1 trillion in 2017. Participated in O2O+C2B2b automotive aftermarket e-commerce platform company Shanghai Cheyi. In order to quickly enter the automotive aftermarket, the company chose to directly participate in the existing platform company Shanghai Cheyi. The total number of shares transferred in October 2014 and April 2015 reached 37%, becoming the largest shareholder, surpassing 12% of the shares of the second-largest shareholder (who is also the founder of Cheyi) by 12%. Che Yi can not only complete the functions of online customer attraction and offline diversion through the Che Yi Security platform, but also implement online procurement transactions between service providers (b) and accessory suppliers (B). More importantly, its software system can provide comprehensive solutions and customer management functions for service providers (b), thus achieving the purpose of improving efficiency, reducing costs, improving user experience, and thus obtaining benefits through the Internet. As of October 2014, Che Easy has more than 100 parts dealers, more than 500 service providers, and more than 60,000 registered car owner users in Shanghai. The unique software system and open platform will enable its model to be quickly replicated across the country. 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 yuan, 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, and the possibility of future extrinsic mergers and acquisitions, the secondary market will give the company a certain valuation premium. It is estimated that the reasonable target price for Longji Machinery is 50 yuan, covering the first time, a “increase in holdings” rating. Risk warning: Automobile production and sales volume fell short of expectations; production progress and market development of the joint venture fell short of expectations; and Shanghai Auto Easy's aftermarket business fell short of expectations.