Key investment events: The company released its semi-annual report. In the first half of 2017, it achieved operating income of about 490 million yuan, an increase of 23.3% over the previous year; realized net profit of 75.47 million yuan, an increase of 28.1% over the previous year. The performance was basically in line with expectations. Sales volume fluctuated in the second quarter, but it is still expected to maintain rapid growth throughout the year. The company's automotive lubricant sales in the first quarter of the first half of the year increased sharply to 16,800 tons year on year, thus driving operating income and net profit to increase 39% and 55% year on year, respectively. The sharp increase in sales volume in the first quarter was due, on the one hand, to the rapid expansion of sales channels, which showed results, and on the other hand, because dealers concentrated on stocking after the Spring Festival. Influenced by centralized stocking in the first quarter, and since the second quarter of every year itself is a low season for the industry, automotive lubricant sales in the second quarter fell by about 30% month on month to 11,000 tons. Overall, however, the company's sales volume and performance grew rapidly in the first half of the year. Against the backdrop of the income tax rate being raised to 25%, the net profit of the mother increased by 28%. The peak consumption season in the third quarter has arrived, and we are still optimistic about the company's performance in the second half of the year. The company is a typical “small leader in a big industry”. It is entering a period of rapid growth, and there is plenty of room for growth. As the third-tier leader in the industry, the company directly targets overseas giants, positions its products at the middle and high-end, avoids price competition, and benefits the most in the context of increasing industry concentration and continued import substitution. The company is deeply involved in channel expansion and brand building. Currently, it has more than 600 first-class distributors. It will continue to gain strength in the depth and breadth of regions covered in the next few years, and brand awareness will further increase. The new production capacity is gradually reaching production in July this year. The bottleneck in production capacity has been lifted, helping the company to develop sustainably. The compound growth rate of the company's net profit over the past five years has exceeded 20%, and it has accelerated year by year, entering a virtuous cycle. Currently, the company's products account for only about 1% of the market. There is no growth ceiling in the short term, so there is huge room for imagination in the future. The company's product development and brand channel construction are still going strong. In the first half of the year, the company launched the high-end diesel engine oil Extreme Protection 850 and fully synthetic GT950X gasoline oil, which highlighted piston cleaning performance, oil sludge protection performance, and excellent oxidation resistance and wear resistance. It gained a good market reputation with excellent product quality, further consolidated the middle and high-end positioning strategy, and the share of high-end products increased steadily. At the same time, the company has stepped up its brand promotion efforts and further increased its market share in key regions through support policies for key dealers. Profit forecasts and investment advice. We expect the company's net profit from 2017 to 2019 to be $157 million, $207 million, and $267 million respectively. We will maintain a compound growth rate of 33% over the next three years. Considering the company's high growth in the future, we will give the company 35 times PE, corresponding to the target price of 36.28 yuan, and maintain the “buy” rating. Risk warning: risk of fluctuations in raw material prices; risk of increased competition in the lubricant market; risk of new production capacity falling short of expectations.