The company released its 2017 interim report, achieving operating income of 1,980 million yuan, an increase of 95.36%; net profit of 123 million yuan, an increase of 84.10% over the previous year, corresponding earnings per share of 0.31 yuan; and the company's interim report performance was in line with our and the market's expectations. We believe that the company's power lithium battery business is expected to expand on a large scale in the 3rd quarter. The traditional polyester industrial yarn business is growing steadily, and there is a big gap in market expectations. The purchase rating was maintained, and the target price was raised to 35.00 yuan. Key points supporting the ratings, earnings in the interim report increased dramatically, and performance increased significantly from quarter to quarter: the company achieved operating income of 1,980 billion yuan in the first half of 2017, an increase of 95.36%; realized net profit of 123 million yuan, an increase of 84.10%, corresponding to earnings per share of 0.31 yuan. Among them, the second quarter achieved quarterly revenue of 1,121 billion yuan, a year-on-year increase of 94.49%, a year-on-year increase of 30.35%; net profit of 81.44 million yuan, a year-on-year increase of 79.03% and an increase of 96.71%, corresponding to earnings per share of 0.20 yuan. The power battery business developed rapidly, significantly increasing the company's performance: Zhihang New Energy, a holding subsidiary of the company, achieved revenue of 586 million yuan and net profit of 96.03 million yuan in the first half of the year, contributing 48.97 million yuan to listed companies. Zhihang New Energy has a production capacity of 10,000 tons of cathode materials, a production capacity of 500,000 lithium battery cells per day (about 1.7 GWh), and a complete production line for PACK systems; major customers include Zhongzhi Automobile, Schutz Bus, etc. We estimate that in the first half of the year, battery sales will be around 0.6 GWh (half of which are expected to be PACK products). It is expected that its cell production capacity will expand to 3.5 GWh in the third quarter. There is a high probability that the performance promises will be fulfilled throughout the year. At the same time, the shareholding ratio of listed companies is expected to increase further. The polyester industrial yarn business is developing steadily, and product gross margin continues to rise: the company is the leader in the domestic polyester industrial yarn industry, with a complete production, supply and sales business chain; the gross margin for the first half of the year was 22.51%, an increase of 5.04 percentage points over the previous year, achieving net profit of 75.78 million yuan, providing effective performance and cash flow support for the company. The main risks facing ratings The NEV policy falls short of expectations; the power battery business falls short of expectations. The valuation is based on the current share capital. We expect the company's earnings per share for 2017-2019 to be 1.24, 1.45, and 1.61 yuan respectively. The price-earnings ratio corresponding to the current stock price is 21, 18, and 16 times, respectively, to maintain the buying rating. The target price was raised from 31.00 yuan to 35.00 yuan, corresponding to the price-earnings ratio of 28 times in 2017.