1H17 performance exceeded expectations Weifu Hi-Tech announced 1H17 results: operating income of 4.728 billion yuan, up 40.45% year on year; net profit attributable to parent company was 1,326 billion yuan, up 40.52% year on year, corresponding to profit of 1.31 yuan per share. The company withheld non-net profit of 1,208 billion yuan, an increase of 45.64% over the previous year. Development trend 2Q investment income increased again, and the division's business contribution increased. 2Q investment income was 482 million yuan, up 25.2%/2% year over month. Among them, the investment income of couplers and joint ventures was 438 million yuan, an increase of 27% year over year, mainly driven by high growth of Bosch Automotive and Zhonglian Electronics. Net profit growth rates in the first half of the year reached 55% and 14%, respectively. The company's 2Q investment income accounted for 71% of net profit attributable to mother, down 1/2 percentage points year over year. The company headquarters and consolidated business contributions increased. At the same time, the company's 2Q profit continued to improve, up 45% year on year. Fuel injection products continue to grow at a high rate, and the passenger car segment is less dragged down by the industry. The company's fuel injection system revenue increased 54.09% in the first half of the year. Weifu Gasoline and Weifu Jinning, the company's main subsidiaries of fuel injection systems, benefited significantly from the hot heavy truck market, and net profit increased 31% and 127% year-on-year. The company's revenue from post-processing systems, which mainly supplies passenger cars, increased by 19.4%, which was less affected by the passenger car industry, and mainly benefited from the high sales growth of the company's customer Geely. Profitability increased significantly from month to month in 2Q, with sufficient cash to guarantee epitaxial expansion. Looking at the first quarter compared to the first quarter, the company's 2Q profitability increased significantly, with a net interest rate of 30%, +3.7ppt QoQ, gross profit margin of 22.2%, and +2.3ppt QoQ. The company's cash flow continued to improve. The balance of cash and equivalent at the end of the first half of the year was 1.6 billion yuan, an increase of 550 million yuan over the previous year, which can provide sufficient guarantees for the company's subsequent epitaxial expansion and shareholders' cash dividend returns. The profit forecast takes into account that the heavy truck industry may continue to exceed expectations in the second half of the year, while the profitability of all divisions of the company is expected to continue to improve. We raised our 2017 and 2018 earnings forecasts per share by 9% and 7% from RMB 1.98 and RMB 2.22 to RMB 2.15 and RMB 2.38, respectively. Valuation and recommendations Currently, the company's stock price corresponds to 11.8x 2017e P/E. Maintain the recommended rating for A/B shares and the target price of RMB 30/HK$30. Maintain the company's target price of HK$30 for B shares, and the A/B shares correspond to 14x/12x 2017e P/E. Sales of risky heavy trucks and passenger cars fell short of expectations.