Key investment points: In September, sales volume improved sharply from month to month, and the share of high-end models increased further. Zotye Auto sold 33,000 units in September, +8.4% year-on-year, +43.0%, and pure electric vehicles sold 2504 units, +45.0% year-on-year. We expect the T700, T600 Coupe, SR9, and Damai X7 high-end models to account for about 70% of sales, and the profit structure continues to improve. The model structure upgrade was completed, and the profit during the peak season in the second half of the year was impressive. The company's product structure upgrade has basically been completed. The T600, SR7, and Damai X5 focus on the SUV market in the 80,000 to 120,000 yuan range, the T700, SR9, and Damai X7 focus on the SUV market in the 100,000 to 150,000 yuan range, and the Cloud 100S, E200, and E30 focus on the electric vehicle market. After domestic automobile consumption enters the peak season in August, the withdrawal of the purchase tax will stimulate price-sensitive consumers to buy cars in advance. Flagship models such as the T700, SR9, and Damai X7 have increased rapidly. Among them, sales of the T700 have repeatedly reached new highs, leading to significant improvements in bicycle profits. We expect Q3 performance to rise, and net profit in the second half of the year will exceed 1 billion yuan. Zotye is rich in new energy products, has obvious channel advantages, and third- and fourth-tier cities lead the sales volume. The price of micro/small pure electric passenger cars is as low as 50,000 to 70,000 yuan (after the subsidy), and the purchase threshold has been significantly lowered. At the same time, the cost of using a vehicle has been drastically reduced. We believe that it will replace low-speed electric vehicles and electric tricycles, and the space is vast. Zotye is rich in electric models, and the third to fifth tier cities have channels and market advantages. The cumulative sales volume in the first nine months of 2017 was about 19,500 units, an increase of 23.4% over the previous year, with the highest market share for small cars. Cycling profits have increased dramatically. In April 2017, Zotye Auto disclosed a net profit of 200 to 230 million yuan, +440% to +520% year-on-year, and excluding restructuring expenses of 55 million yuan. As a result, Zotye Auto's quarterly profit for the 2nd quarter reached 250 million yuan, +25% year-on-year, while sales volume was -30%. Net bicycle profit increased from 2,676 yuan to 5,307 yuan this year. Considering that sales volume in the first half of the year exceeded 100,000 vehicles, we expect Zotye Auto's net profit to exceed 500 million yuan from January to June '17. Profit forecasts and investment advice. Zotye completed the product structure upgrade and ushered in a period of rapid development. Electric vehicles continued to be popular, with sales volume estimated at 340,000 and 480,000 units in 17/18. The EPS for 17-19 is expected to be 0.81 yuan/1.16 yuan/1.37 yuan respectively, giving dynamic PE in 2017 20 times the average, target price of 16.2 yuan, and a “buy” rating. Risk warning: 1. Systemic risk; 2. New car sales are lower than expected.