Focus on the automotive oil retail market and seek segments that maximize profit: automotive oil is a field with high technical intensity among lubricant products. The specifications include OEM standards and association standards, and the corresponding sales channels are generally OEM channels and retail channels. OEM products have a long development cycle and a high entry threshold. The domestic market is dominated by central enterprises and imported first-tier brands. The company is positioned in a retail market that is more suitable for itself and seeks to maximize profits. Low market share, active expansion of dealer size after listing: the company's market share in 2016 was only about 1%. The huge blank market is the direction of the company's channel layout. The sales force is planned to expand by 50% in 2017, and management adheres to the development direction of “technology+quality+service”. Under the premise of a sharp rise in income tax, Q1 revenue and profit increased by 39.3% and 55.1%, respectively. The operation of dealer capital determines channel efficiency and quality. We believe that building a win-win model for manufacturers, dealers and consumers is the core competitiveness of import substitution, and we are optimistic about the company's long-term steady growth. The commissioning of the project promoted the release of performance: the company produced 52,600 tons of lubricants in 2016, with sales volume of 52,000 tons; 2017Q1 lubricant production was 17,700 tons, with sales volume of 19,000 tons. Sales-driven growth is in line with the company's position. The fund-raising project was put into operation in July and will form a single shift with a production capacity of 80,000 tons of lubricant, 20,000 tons of antifreeze, and 1,000 tons of brake oil. The new plant is currently an Industry 4.0 plant with a leading level of integration among domestic lubricant companies. Production and management efficiency is high, and production flexibility is high. Investment advice: Considering the impact of income tax, we expect the company's net profit attributable to shareholders of listed companies in 17-19 to be 1.60, 2.12 and 244 million yuan respectively, corresponding to EPS of 0.80, 1.06 and 1.22 yuan. The company's lubricants have a market of nearly 60 billion yuan, a low market share of 1%, and there is room for improvement. We are optimistic about future growth and maintain a buy-A investment rating of 30 yuan. Risk warning: risk of rising raw material prices, etc.