Incident Company announced its semi-annual report. In the first half of 2017, it achieved total revenue of 563 million yuan, an increase of 42.1% over the previous year; net profit of 57 million yuan, an increase of 65.8% over the previous year, and is expected to grow 50% to 90% year-on-year in the third quarter. The overall strong growth in business analysis comes partly from the mid-to-high-end of products, and the other part comes from pre-installed volume: excluding mergers, the original main business achieved revenue of 465 million (up 17.34% year on year) and net profit of 41 million yuan (up 17.8% year on year). By product, the company's high-end products, intelligent CID products, increased by 64.77% year on year, and gross margin increased 1.09% over last year, while the share of low-end multi-functional entertainment CID in total revenue fell to 31.03% from 50.28% in the same period last year. The rapid growth of high-margin high-end products led to strong growth in the company's original main business. Considering the company's gradual reduction in the rear installation business, we expect the front-loading business to account for more than 60% of the original main business. The external acquisition business began to be consolidated in the second quarter, and overall operations were steady: Sanqi Communications and Inka Technology had combined revenue of RMB 92,323,900 and RMB 5.828 million, respectively, and consolidated net profit of RMB 12.9586 million and RMB 3,6038 million, respectively. The completion rate of the 2016 annual results of Sanqi Communications and Inca Technology was 102%/103%, respectively. Three Flag Communications and Inca Technology achieved net profit of 13.12 million yuan/3.6 million yuan respectively, and their 2017 commitment to net profit after deducting no less than 50 million yuan/12 million yuan. Given their current good performance performance and the gradual emergence of synergies with Soling Co., Ltd. in the overseas Internet of Vehicles business, we expect that Sanqi and Inca's performance performance this year can be guaranteed. The multi-product strategy and vehicle network layout continue to expand the company's development space: on the one hand, in the domestic front-loading market, the company has implemented a “multi-product penetration strategy” to continuously accelerate the penetration rate of new products such as front-mounted ADAS, LCD instruments, and HUD; on the other hand, in the overseas front-loading market, the company has deepened the development of overseas intelligent buses and online car-hailing services through collaboration with Sanqi Communications and Inca Technology, and continues to dig deeper into the existing overseas front-loading business, and the products have penetrated more points. Expanding the commercial vehicle market through the acquisition of Hangsheng Industrial: Hangsheng promises that the net profit for 2017 will not be less than 16 million yuan, and the official implementation of the “Technical Conditions for the Safety of Operating Buses” in April this year will drive significant growth in Hangsheng's video surveillance and ADAS business. On the other hand, Soling can introduce star products with years of technology accumulation and R&D experience, such as TBOX, HUD, Internet of Vehicles, and ADAS in the passenger car front and rear assembly market, into commercial vehicles, thus helping Hangsheng to further increase its share of the commercial vehicle market. The company is expected to achieve rapid expansion in the commercial vehicle automotive electronics market through Hangsheng Industrial's channel advantages in the commercial vehicle market and the successful delivery of its products and technology to Hangsheng. Profit forecast We maintain the company's profit forecast for 2017/2018/2019 to achieve net profit of 1.61/2.21/293 million yuan, corresponding to EPS of 0.38/0.52/0.70 yuan, respectively. The investment proposal is based on the continuous advancement of the company's front-loading business and the forward-looking strategic layout of “horizontal” product line (mainly intelligent cockpit and ADAS) + “vertical” customer upgrades (mainly passenger cars entering high-end models and the current acquisition of Hangsheng into the commercial vehicle front-loading market). We gave the company a 45/33/25 times valuation in 2017/2018/2019, maintaining an “increase in holdings” rating. Risk indicates that mergers and acquisitions are not as good as expected; risk of impairment of goodwill; risk of increased competition in the industry