Investment highlights: Sales rebounded strongly in June, and electric vehicles doubled. Zotye Auto's sales volume in June was 20,000 units, +4.9% year on year and +41.1% month on month. We estimate that it will benefit from the resolution of transmission capacity issues. Flagship models such as the T700, SR9, and Damai X7 have begun to climb in volume. The sales volume of electric vehicles is 3,743 units, +165% over the same period last year, continuing the growth trend. Automatic transmission supply bottlenecks have been removed. For models in the price range of 100,000 to 150,000 yuan, automatic transmission configurations are the main sales. Due to limited automatic transmission production capacity bottlenecks in the early stages, the company was unable to deliver orders for high-end models on time. Considering that SAIC Transmission completed production capacity expansion in March and that Dongan Mitsubishi 6AT has begun batch support, the automatic transmission supply problem has been eliminated, laying the foundation for a subsequent increase in sales volume. The model structure has been upgraded, and sales will hit bottom and rebound. The company currently has a complete product lineup and a reasonable structure. The T600, SR7 and Damai X5 focus on the SUV market in the 80,000 to 120,000 yuan range, the T700, SR9, and Damai X7 focus on the 10-10,000 yuan SUV market, and the Cloud 100S, E200, and E30 focus on the electric vehicle market. The company's models are stylish in appearance, rich in configuration, and outstanding cost performance, fully exploiting the car buying demand in wire cities. With the arrival of the peak automobile sales season, the company's sales volume will improve month by month, and we expect sales volume of 340,000 vehicles throughout the year. Zotye is rich in new energy products, has obvious channel advantages, and third- and fourth-tier cities lead the sales volume. The price of micro/small pure electric passenger cars is as low as 50,000 to 70,000 yuan (after the subsidy), and the purchase threshold has been significantly lowered. At the same time, the cost of using vehicles has been drastically reduced. They will replace low-speed electric vehicles and electric tricycles, and the space is vast. Zotye is rich in electric models, and the third to fifth tier cities have channels and market advantages. The cumulative sales volume in the first six months of 2017 was about 12,000 units, leading the small car market. Profit forecasts and investment advice. Zotye completed the product structure upgrade and ushered in a period of rapid development. Electric vehicles continued to be popular, with sales volume estimated at 340,000 and 480,000 units in 17/18. The EPS for 17-19 is expected to be 0.91 yuan/1.29 yuan/1.53 yuan, respectively, giving the 2017 dynamic PE an average of 20 times, the target price of 18.2 yuan, and a “buy” rating. Risk warning: 1. Systemic risk; 2. New car sales are lower than expected.