There was a correction in the company's performance in the first half of the year. The company released the 2017 semi-annual report. During the reporting period, the company achieved revenue of 1,021 billion yuan, a year-on-year decrease of 22.77%; net profit of 62.0784 million yuan, a year-on-year decrease of 41.97%; EPS was 0.04 yuan/share, compared to 0.08 yuan/share for the same period last year. The decline in performance is mainly affected by new energy commercial vehicles. The second half of the year is expected to improve in the first half of 2017. Influenced by the national NEV subsidy policy and entry policy, sales of new energy vehicles, especially new energy commercial vehicles, declined in the first half of the year. According to data from the China Automobile Association, domestic commercial vehicle (bus) production and sales in the first half of 2017 were 218,700 units and 220,400 units, respectively, a year-on-year decrease of 15.07% and 13.64%. Affected by this, the company's new energy vehicle business segment revenue in the first half of the year fell by 78.40% year on year, which is the main reason for the decline in the company's performance. Expectations for new energy vehicles have picked up since the second quarter, and the production and sales scale of commercial vehicles (buses) have increased by 32.41% and 31.27%, respectively, from month to month. Continued improvement in bus sales is a probable event, and the company's performance is expected to continue to improve. The production capacity of mica for lithium extraction has increased, and the joint venture has entered the field of lithium pyroxene extraction. The company's lithium salt production capacity will reach 30,000 tons. The company currently has 3,000 tons of lithium carbonate production capacity from lithium mica. The company plans to increase production to 5,000 tons through technical improvements. The project is expected to be completed in the third quarter of this year. The project to prepare lithium carbonate from 10,000 tons of lepidolite, which was funded through a non-public offering, is also progressing. After completion, the company will have 15,000 tons of lithium mica production capacity to prepare lithium carbonate. Recently, the company announced that the wholly-owned subsidiary plans to invest 40 million yuan to establish “Jiangxi Baojiang Lithium Co., Ltd.” with Baowei Materials, to enter the field of lithium pyroxene extraction, and build new spodumene to produce 15,000 tons of lithium carbonate and lithium hydroxide with a construction period of 10 months. The company will have a lithium salt production capacity of 30,000 tons/year (equity production capacity of 22,500 tons/year) after the completion of all projects to prepare lithium carbonate from lepidolite and spodumene. In the second half of the year, lithium carbonate production capacity was expanded and production was released, and the company's performance can be expected. Profit forecast and investment recommendations: We expect the company's 2017-2020 net profit to be 406 million, 577 million and 938 million yuan respectively, EPS of 0.28, 0.39 yuan and 0.64 yuan respectively, and the dynamic PE corresponding to the closing price of 12.28 yuan on August 7 is 44x, 31x and 19x respectively. The second half of the year will enter the peak NEV consumption season, and the company will gradually increase its lithium salt production capacity, strong profitability, and maintain a “buy” rating. Risk warning: production capacity investment falls short of expectations, lithium salt prices fall, production and sales of new energy vehicles fall short of expectations