Zhengtong United's revenue grew steadily in the first quarter of 2018. The company controlled its automobile 4S dealership business and supply chain business through its wholly-owned subsidiary Wuhan Zhengtong United Industrial Investment Group Co., Ltd. (Zhengtong Joint). Zhengtong Lianhe's revenue for the first quarter of 2018 was RMB 10.07 billion, an increase of 40.14% over the previous year, and achieved a steady increase in revenue. Its net profit attributable to shareholders of its parent company, China Zhengtong Auto Service Holdings Co., Ltd. (Zhengtong Auto), was RMB 321 million, up 54.01% year on year, and net interest rate reached 3.2%. According to the company's disclosure, sales of the company's luxury brand models increased 30% year over year to 21,000 units, mainly due to increased sales of Mercedes-Benz and Porsche. The turnover period for imported models was 45 days, and the inventory digestion rate was positive. According to the company's auto finance business disclosure, the company's auto finance related business revenue for the first quarter of 2018 was 247 million yuan, and net profit after tax was about 150 million yuan. A total of more than 17,000 loans have been issued, with a total loan amount of more than 4.3 billion yuan. The interest rate on loans is about 5.5%-6%, while the bad debt ratio is about 0.3%, which is superior to the bad debt ratio of bank auto finance. The total net profit of the company's main business for the first quarter was approximately 472 million yuan. Profit forecasts and investment suggest that the company's main car dealership business achieved steady growth. At the same time, after the auto finance business completed a capital increase in the fourth quarter of 2017, its core capital reached 2 billion yuan, which helped the company develop auto finance loan business. Net profit attributable to shareholders of the parent company in 2018-2020 is estimated to be 15.9/19.4/2.22 billion yuan, up 34%/22%/14% year on year. The company's current stock price is HK$5.95 (as of April 27, 2018), corresponding to the 2018 profit EPS of 7.7 times P/E. The valuation is low and the buying rating is maintained. Risks suggest that auto finance loan scale growth is lower than expected; ABS issuance costs or channel fees have risen more than expected; excessive growth in loan size has triggered window guidance; and car sales have fallen short of expectations.