Key investment points 2017H1: Net profit of 40 million yuan, a year-on-year increase of 42.7%, in line with market expectations. In the first half of 2017, the company achieved revenue of 850 million yuan, an increase of 41.3% year on year; realized net profit of 40 million yuan, an increase of 42.7% year on year. The company's revenue and performance growth rate in the first half of the year was significantly higher than that of the automotive industry, mainly because: 1. Steel wheels and in-vehicle wireless and integrated products all achieved significant growth, with steel wheels increasing by 30.1% year-on-year, and in-vehicle wireless and integrated products increased by 39.4%; 2. 95 Smart Driving started in October 2016, contributing 45.52 million yuan in revenue and 2.23 million yuan in net profit in the first half of the year. The company's guidelines expect to achieve net profit of 4685-62.46 million yuan in the first three quarters of this year, an increase of 20%-60% over the previous year. We expect the growth rate to be close to the upper limit. Traditional business: Revenue increased 30.1% year over year, and profitability increased. The company is the first listed steel wheel company in China, and its business covers China, Europe, North America, South America, etc. In the first half of the year, the company's steel wheels achieved revenue of 620 million yuan, an increase of 30.1% over the previous year, accounting for 73.5% of the company's total revenue; gross margin was 20.2%, an increase of 1.81 percentage points over the same period last year. The increase in revenue from steel wheels is mainly due to increased demand in the downstream market, and sales of commercial vehicle wheels, especially truck wheels with a high unit value, increased rapidly over the same period last year. The steel wheel business is actively developing new customers, and a strategic framework agreement was signed with Beiqi Foton in March of this year. Connected car business: Continued development of new customers, T-BOX sales increased 1.5 times year-on-year. In the first half of the year, the company's in-vehicle wireless and integrated products achieved revenue of 98.96 million yuan, an increase of 39.4% over the previous year; smart driving design and services reached 45.52 million yuan. By acquiring high-quality leaders in various segments of the Internet of Vehicles, the company is expected to open up and share data at various levels and markets in the future, and replicate or learn from business models, with great potential for synergy. In the first half of the year, the company's various connected car businesses progressed smoothly. Among them, vehicle wireless (terminals) sold 131,400 units, an increase of 150% over the previous year, and the market share increased markedly; Intest completed BAIC 4G T-BOX product development, verification, and mobile app development and launch; 95 Smart Driving and Mobike reached cooperation in developing customer service platforms to improve the user service experience, and cooperated with BMW China in the cooperative operation of connected driving digital services. Fixed growth: Increased sales help transformation and accelerate development; increase executive holdings and employee shareholding boost confidence. The company plans to issue no more than 160 million additional shares and raise no more than 1.46 billion yuan in capital, of which Wang Zhicheng, the controlling shareholder of the company, promised to subscribe for no less than 100 million yuan. The fund-raising projects include the automated production and data operation service project of the T-Box vehicle terminal (RMB 490 million), the smart vehicle terminal equipment production and construction project (RMB 340 million), the marketing service network construction project (66.04 million yuan), the Internet of Vehicles R&D and evaluation center construction project (360 million yuan), and the smart driving service operation center (RMB 200 million). On the one hand, the additional development project helps improve the company's production capacity; on the other hand, it helps R&D reserves and accelerates the company's transformation and development. At present, the company has submitted a second feedback response to the Securities Regulatory Commission. In addition, the company plans to launch an employee stock ownership plan to raise no more than 62.09 million yuan to purchase the company's shares, of which Yi Zhou (director) and Mi Feng (deputy general manager) purchased 48.32% of the current shareholding amount. Risk warning: The consolidation effect of the merger and acquisition targets was lower than expected; the progress of the epitaxial merger and acquisition was lower than expected; the profit of the wheel business declined sharply, etc. Profit forecast and valuation: The company's performance growth rate for the first half of the year was high, and the company's profit forecast was raised. The estimated EPS for 2017/18/19 was 0.16/0.21/0.25 yuan (the original forecast for 17/18 was 0.15/0.18 yuan). The current price is 10.32 yuan, corresponding to 2017/18/19 65/49/42 times PE respectively. The company's steel wheels and Internet of Vehicles business grew rapidly; executives increased their holdings and employee shareholding to enhance confidence; strategically transformed the Internet of Vehicles business to accurately position cards in the data field, refer to comparable company valuations in the Internet of Vehicles industry, and maintain the company's “gain” rating, with a target price of 11.5 yuan.