Event: The company's 2017 semi-annual report: achieved operating income of 487 million yuan, +23.29% year-on-year; realized net profit of 75 million yuan, +28.07% year-on-year, and EPS of 0.38 yuan/share. Main opinion: 1. The performance of the 17H1 company increased 28.07% year on year, which is basically in line with expectations. The net profit of the parent company of the 17H1 company increased 28.07% year on year. Among them, the net profit of the parent company in Q2 was 28 million yuan, the same as the previous year, down 40.42% from the previous year. The year-on-year increase in 17H1 performance was generally in line with expectations, mainly due to the increase in lubricant sales during the reporting period. In terms of operating data: 17H1 sold 28,000 tons of automotive lubricants, with revenue of 434 million yuan (89.19% of revenue); 0.36 million tons of industrial lubricants, revenue of 38 million yuan (7.84% of revenue); gross sales margin was 34.42%, down 1.91 percentage points from the previous year; net sales margin was 15.50%, up 0.58 percentage points from the previous year. 2. Demand for automotive lubricants is becoming high-end. The company is expected to continue to benefit from the high end development of the lubricants industry. As a leading enterprise for middle and high-end automotive lubricants in China, the company adheres to a differentiated development strategy and is deeply involved in the middle and high-end automotive lubricants field. While avoiding participation in disorderly competition in the field of low-end lubricant products, the company enjoys high profit margins brought about by the high-end development of the lubricants industry. 2017H1, domestic automobile sales volume was 13.35 million units, up 3.8% year on year, and is expected to increase 5% for the whole year. As residents' living standards and environmental requirements improve, demand for middle and high-end automotive lubricants will gradually increase in the future, and the company is expected to continue to benefit. 3. The fund-raising project is put into operation, and capacity bottlenecks are lifted. On April 28, 2017, the company opened Qingdao Huangdao Industrial Park. The additional production capacity includes 80,000 tons/year of lubricants, 20,000 tons/year of antifreeze, and 1000 tons/year of brake fluid. It is expected to replace the former Qingdao Laoshan plant within 17 years (original production capacity: 40,000 tons/year of lubricants, 20,000 tons/year of antifreeze, and 100 tons/year of automobile maintenance products), the company's lubricant production capacity doubled, production capacity bottlenecks lifted, and the company's performance growth period was rapid.。 4. Investment rating and valuation: Considering the company's share capital transfer in 2017, the company's EPS in 2017/18/19 is expected to be 0.80/0.92/1.00 yuan respectively, corresponding to PE 33/28/26 times, maintaining the “recommended” rating. 5. Risk warning: Fund-raising projects are progressing less than expected risks; downstream demand falls short of anticipated risks.