Profit for the first half of 2017 is expected to increase by no less than 500% year on year. On July 18, Guanghui Baoxin issued a performance forecast announcement. It expects net profit from the mother to increase by no less than 500% year on year to 384 million yuan or more in the first half of the year (the month-on-month growth rate is not less than 8.8%). Key points of focus: The performance increase in the first half of the year was not less than 500%, and continued to grow month-on-month. Baoxin's net profit for the first half of the year is expected to increase by no less than 500% year-on-year and no less than 8.8% month-on-month. The company believes that the increase in performance is mainly due to: 1) the smooth integration with Guanghui, which led to the steady and steady growth of the Group's automobile sales and after-sales service business revenue; 2) after integration with Guanghui, the synergy effect gradually became apparent; and 3) the acquisition of 6 4S stores in the first half of the year contributed to the Group's profits. Maintain a good brand portfolio; the BMW 5 Series contributed to strong growth. As the two major brands distributed by Baoxin, BMW and Jaguar Land Rover achieved a high growth rate in the first half of the year. BMW increased 30% year on year, and Jaguar Land Rover maintained continuous positive month-on-month growth. The brand portfolio continues to strengthen, and we believe that the company's share of luxury car sales is expected to increase further. The sales performance of the BMW 5 Series in the first month was good. We believe that the BMW 5 Series will drive strong growth and increase the company's automobile sales ASP and gross profit margin. The future expansion of the distribution network is expected to bring about growth. In the first half of the year, the company acquired 6 luxury car 4S stores to further expand the company's distribution business; the synergy between the company and Guanghui will continue to enhance economies of scale, improve management efficiency, reduce cost rates and reduce costs through centralized procurement. Valuation and recommendations Since we were too optimistic about Baoxin's fee rate, we lowered our profit expectations for 2017 and 2018 by 6.2% and 15.4% respectively to $919 million and $1.13 billion. Maintain the recommended and target price of HK$5.5, corresponding to a price-earnings ratio of 12.3 times in 2018. Risk financing costs have increased; integration of M&A targets has fallen short of expectations.