Investment highlights Net profit for the first half of the year increased more than 5.2 times year on year. The company achieved revenue of 100 million yuan in the first half of 2017, an increase of 44.1% over the previous year. Gross profit was 1.34 billion yuan, up 40.5% year on year. Net profit attributable to the parent company was 400 million yuan, an increase of 5.2 times over the previous year. The company's net profit growth rate was much higher than revenue, mainly due to lower expenses and higher growth in extended service revenue, driving up the level of net interest rates. We believe that the high profit growth achieved in the first half of the year was partly due to the normalization of business after being acquired; on the other hand, the integration effect brought about by Guanghui's entry into the market was obvious. The company still has many growth drivers. The company's growth momentum mainly comes from the following aspects: 1. There is still room for improvement in business integration. Prior to Guanghui's acquisition of Baoxin, there was a significant decline in revenue due to lax management. After the official entry, performance gradually returned to normalization. At the same time, after Guanghui joined, Baoxin was thoroughly reformed, mainly reflected in the increase in gross margin and revenue in terms of after-sales and extended services. It is expected that there is still room for improvement in integration; 2. Store expansion brought about by mergers and acquisitions. In the future, Baoxin will draw on Guanghui's experience and stick to the acquisition model as the main focus. Annual acquisition expenses are 1-2 billion yuan. The brands are mainly BMW, Land Rover, and Masha, and mergers and acquisitions have led to business expansion. 3. The elasticity of BMW's new cycle. As of the first half of this year, the company has 45 BMW/MINI stores. BMW's revenue accounts for about 50% of new car revenue. In the future, with the advent of BMW's new cycle, Baoxin is expected to benefit from the profit elasticity brought by new products. 4. New businesses such as used cars and financial leasing are expected to grow rapidly. Our opinion: Overall, the company achieved excellent results in the first half of the year. We believe that it is mainly due to the normalization and integration effects of the business after Guanghui officially joined. This is not only reflected in revenue growth, but also a marked decrease in the cost rate. Looking ahead, we expect Baoxin's performance to maintain a rapid growth trend, mainly based on: 1. There is still room for growth in integration; 2. The growth brought about by the expansion of mergers and acquisitions; the company benefits from BMW's new cycle; and 4. The growth of emerging businesses such as used cars and automobile financial leasing. According to the unanimous expectations of the market, the current valuation of the company corresponds to a price-earnings ratio of 11.9 times /9.0 times in 17/18, so it is recommended to pay attention. Risk warning: The impact of BMW's new product cycle is not as good as expected; the merger integration effect is not as good as expected.