Stock price performance: 1) Passenger car sector: The SW Passenger Vehicle Index rose 5.48% this week. Among the 12 passenger car labels we selected, the top three increases this week were in that orderGreat Wall Motors(+11.0%),Changan Automobile(+8.6%),BAIC Blue Valley(+8.0%), the last three places in this week's increase in orderXiaokang Co., Ltd(+0.1%),Lifan Co., Ltd.(+1.4%), *ST Haima (+2.0%); the top three year-to-date increases were Great Wall Motor (+69.7%), in that order,FAW Xiali(+38.4%),Guangzhou Automobile Group(+15.9%), the top three year-to-date increases were Xiaokang Co., Ltd. (-23.0%), *ST Haima (-4.7%),SAIC Motor Group(+1.1%)

2) Auto parts sector: The SW auto parts index rose by 2.83% this week. Among the 20 auto parts targets we selected, the top three increases this week were in order ofDesai Siwei(+12.9%),Xusheng Co., Ltd(+9.2%),Tuopu Group(+8.7%), the last three places in this week's increase in orderNingbo Gaofa(+0.7%),Weifu Hi-Tech(+0.9%),Tiancheng Automatic Control(+1.1%); the top three year-to-date increases in that orderSungwoo Co., Ltd(+70.9%),Weichai Power(+62.1%), Desai Siwei (+46.9%), and the top three year-to-date increases were Xusheng Co., Ltd. (-13.3%), in that order,JUNSHENG ELECTRONICS(-1.8%), Ningbo Gaofa (-1.2%).

Valuation indicators: 1) Passenger car sector: The current SW passenger car P/E (TTM) is 13.9. Among the 12 passenger car brands we selected, the average P/E (TTM) value is 28.8. The top three places are BAIC Blue Valley (163.0), FAW Xiali (113.5), Lifan (60.7), and the last three are Xiaokang (-63.0), Changan Automobile (-12.3), in that orderJianghuai Automobile (-11.1);

The average value of EV/EBITDA was 10.6. The top three were BAIC Blue Valley (37.7), JAC (18.9), and FAW Xiali (15.1), and the last three were *ST Haima (-2.4) in that order,Zotye Auto(5.0), Changan Automobile (5.7).

2) Auto parts sector: Currently SW auto parts P/E (TTM) is 16.6. Among the 20 auto parts targets we have selected, the average P/E (TTM) value is 22.0. The top three are Tiancheng Automatic Control (64.5), Desai Siwei (46.4), Xusheng Co., Ltd. (37.8), and the last three are Weifu Hi-Tech (8.2), in that orderNingbo Huaxiang(9.4),Huayu Auto(10.5);

The average value of EV/EBITDA was 10.6. The top three were Tiancheng Automatic Control (38.1), Xusheng (26.6), and Xingyu (24.9), and the last three were Huayu Auto (3.6), Ningbo Huaxiang (3.6), and Weichai Dynamics (4.7) in that order.

Industry rating: Looking at the longer cycle dimension, the growth attributes of the automobile industry weaken and the cyclical attributes increase. Automobile sales that grew rapidly ten years ago will be converted into replacement demand for the next ten years. 2019 is the starting point of the upward cycle, maintaining the industry's “recommended” rating.

Risk warning: The risk that the macroeconomic economy continues to decline, technological progress in the industry falls short of expectations, policy implementation falls short of expectations, and the progress of company-related projects falls short of expectations.